Environment and Planning - Environmental planning - Development control - Consents, approvals and permits - Conditions - Relevance and reasonableness - Generally - Requirement that condition reasonably and fairly relate to development permitted - Question of fact.

Land Use Planning and Approvals Act 1993 (Tas), s 51(3A).

Western Australian Planning Commission v Temwood Holdings Pty Ltd [2004] HCA 63, 221 CLR 30; Reid v Western Australian Planning Commission [2016] WASCA 181, followed.

Judgment Number: [2021] TASSC 8

1. The respondents, Mr and Mrs Smith, own some land at Longford. In January 2019 they applied to the Northern Midlands Council, the appellant in these proceedings, for a permit for it to be subdivided into two lots. They did so in order to develop the smaller of the two proposed lots to be used for visitor accommodation in the form of a holiday unit. The Council approved the proposal and issued a permit, but it imposed a number of conditions. Condition 4 is the subject of this appeal. By that condition the Council required the respondents to enter into an agreement with it under Part 5 of the Land Use Planning and Approvals Act 1993 ("the LUPA Act") covenanting that the lot in question must only be used for the purpose of visitor accommodation.
2. The respondents were aggrieved by the imposition of that condition, as well as another condition that is not presently relevant. They appealed to the Resource Management and Planning Appeal Tribunal. They were successful in relation to the condition in question. The Tribunal made a decision requiring the condition to be deleted: P & J Smith v Northern Midlands Council [2019] TASRMPAT 15. The Tribunal was constituted by its Chairperson, Ms M Duvnjak, and two members, Mr D Masters and Ms K Loveday.
3. This is an appeal by the Council from the Tribunal's decision. Under s 25(1) of the Resource Management and Planning Appeal Tribunal Act 1993 ("the RMPAT Act"), the right of appeal to this Court is available only "on a question of law". The Council contends the Tribunal erred in law in various respects. The solicitor for the respondents notified the Court at an early stage that they would submit to any order that the Court might make in these proceedings. Because of the COVID-19 pandemic, the legal representatives of the Council were offered an opportunity to make all of their submissions in writing, rather than at an oral hearing. They chose to take that course.
4. Part 5 of the LUPA Act provides a mechanism for the creation of restrictive covenants that run with the land burdened by them. Its more significant provisions can be summarised as follows:
   • Under s 71(1), a planning authority may enter into an agreement with an owner of land in the area covered by a planning scheme. (In this case the Council was the planning authority and the area was covered by the Northern Midlands Interim Planning Scheme 2013.)
   • Under s 72(2)(a), an agreement may provide for the prohibition, restriction or regulation of use or development.
   • Under s 72(1), such an agreement binds the owner to the covenants specified in the agreement.
   • Under s 78, such an agreement can be registered under the Land Titles Act 1980.
   • By virtue of s 79(a), one effect of registration is that the burden of any covenant in the agreement runs with the land as if it were a restrictive covenant to which s 102(2) of the Land Titles Act applies.
   • By virtue of s 79(b), another effect of registration is that the agreement becomes enforceable between the parties to it and any person deriving a title under any such party.
   • Under s 74(2), an agreement may provide that it ends on or after the happening of any specified event, or after a specified time, or after the cessation of a use or development for a specified purpose.
5. If a Part 5 agreement does not expire under s 74(2) and is not ended under s 74(3), it must remain in force. The LUPA Act does not contain any provision enabling a landowner to apply to any authority for the termination of the agreement. In this case the required agreement did not make any provision for it ever to expire under s 74(2). As a result, it was an agreement that was to remain in force unless and until the Council ended it pursuant to s 74(3).
6. The land in question is on the eastern side of Wellington Street. Wellington Street runs north-south along the eastern side of the town of Longford. There is agricultural land to the east. There are residences on the eastern side of the street, but the land on the eastern side is in the Rural Resource Zone.
7. The Council approved the subdivision on the basis that it satisfied a provision in the planning scheme, cl 26.4.2 P1(b). That provision read as follows:

"The subdivision ... is for the purpose of creating a lot for an approved non-agricultural use, other than a residential use, and the productivity of the land will not be materially diminished."

1. Visitor accommodation constituted "an approved non-agricultural use, other than a residential use". There was no provision in the scheme that allowed the subdivision of land in the Rural Resource Zone for the purpose of creating a lot for a residential use. In its reasons, at [28], the Tribunal suggested that the reason for the Council requiring a Part 5 agreement was "to ensure protection of the Rural Resource Zone objectives and statements by limiting residential use and development".
2. Section 63 of the LUPA Act makes it an offence for a person to use land in a way that is contrary to a planning scheme. Without a Part 5 agreement, the Council would still have been in a position to prevent the lot in question from being used for residential purposes, rather than visitor accommodation. If there were a change of zoning in the future whereby the use of the relevant lot for residential purposes would no longer contravene a planning scheme, the Part 5 agreement, so long as it remained in force, would require the relevant lot not to be used for any purpose other than visitor accommodation, and could be enforced by means of injunctive relief if necessary. Alternatively if a future planning scheme gave the Council a discretion to permit the use of the lot for residential purposes, and the Council wished to permit that use, it would be insufficient for the Council to issue a permit because it would also need to go to the trouble of terminating the Part 5 agreement under s 74(3). Further, if the owners of the relevant lot ever decided to cease using it as accommodation and use it for farming purposes ordinarily permitted in the Rural Resource Zone, it would be necessary for them to persuade the Council to terminate the Part 5 agreement.
3. The Council's power to impose conditions when granting the permit was conferred by s 51(3A) of the LUPA Act. Under that subsection, a permit "may be subject to such conditions or restrictions as the planning authority may impose". There is a substantial body of case law as to the principles applicable to the imposition of permit conditions by planning authorities when such an unfettered discretionary power is conferred.
4. Strictly speaking the Council's power to impose permit conditions was not entirely unfettered. It was obliged by ss 5 and 51(2)(a) of the LUPA Act to seek to further the objectives of the Resource Management and Planning System of Tasmania, and also the objectives of the planning process established by the LUPA Act, as set out in Schedule 1 to that Act, when determining the application for the permit. However none of those objectives relate specifically to the power to impose permit conditions. There is therefore no basis for distinguishing the many cases concerning the principles to be applied when a planning authority has an unfettered discretion to impose permit conditions. I note at this stage that one of the statutory objectives, in Schedule 1, Part 1, cl 1(b), required the Council "to provide for the fair ... use and development" of land.
5. One of the leading Australian authorities as to permit conditions is the decision of the High Court in Western Australian Planning Commission v Temwood Holdings Pty Ltd [2004] HCA 63, 221 CLR 30. The prerequisites for the valid imposition of a condition of planning approval were said by McHugh J in that case at [57] to be as follows:

"A condition attached to a grant of planning permission will not be valid therefore unless:

1. The condition is for a planning purpose and not for any ulterior purpose. A planning purpose is one that implements a planning policy whose scope is ascertained by reference to the legislation that confers planning functions on the authority, not by reference to some preconceived general notion of what constitutes planning.
2. The condition reasonably and fairly relates to the development permitted.
3. The condition is not so unreasonable that no reasonable planning authority could have imposed it." [Footnotes omitted.]
4. The respondents' legal practitioner relied on that passage in his submissions to the Tribunal. He argued to the effect that the Council did not have the power to impose the condition in question. He argued to the effect that none of the three requirements listed by McHugh J were satisfied.
5. The Tribunal decided that the condition in question arguably satisfied the first of the three requirements, but that it did not satisfy the second. That is to say, it concluded that the condition arguably had been imposed "for a planning purpose", but that it did not "reasonably and fairly" relate to the development permitted. On that basis, it concluded that the Council did not have the power to impose the condition, and ordered that the permit be varied by deleting the condition.
6. When the Tribunal hears and determines an appeal, it considers the matters in dispute afresh, stands in the shoes of the original decision-maker, and has a duty to make the "correct or preferable decision": LUPA Act, s 62(3) and (4); the RMPAT Act, s 23; Drake v Minister for Immigration (1979) 24 ALR 577 at 589; Kain v Glamorgan Spring Bay Council [1996] TASSC 28; (1996) 90 LGERA 326 at 335 (Wright J); St Helen's Area Land Care & Coast Care Group Inc v Break O'Day Council [2007] TASSC 15, 16 Tas R 169 at [71]. In this case, there were two issues before the Tribunal in relation to the condition that required a Part 5 agreement - (i) whether, as a matter of law, there was a power to impose that condition; and (ii) if so, as a matter of discretion, whether it was preferable that the condition be removed or not. The submissions of the parties to the Tribunal, the Tribunal's decision, and the submissions in the proceedings before me all focussed on the first of those issues, but the second issue was a live issue in the Tribunal proceedings.
7. The proposition that a permit condition will not be valid unless it "reasonably and fairly relates to the development permitted" is well entrenched in case law. In Pyx Granite Co Ltd v Ministry of Housing and Local Government [1958] 1 QB 554, the English Court of Appeal was concerned with a grant of permission by a Minister for quarrying operations in the Malvern Hills, subject to conditions as to operating hours, dust emission controls, and removal of equipment when it was no longer required. Lord Denning MR said, at 572:

"The principles to be applied are not, I think, in doubt. Although the planning authorities are given very wide powers to impose 'such conditions as they think fit', nevertheless the law says that those conditions, to be valid, must fairly and reasonably relate to the permitted development. The planning authority are not at liberty to use their powers for an ulterior object, however desirable that object may seem to them to be in the public interest."

1. That decision was reversed on an unrelated ground by the House of Lords: Pyx Granite Co Ltd v Ministry of Housing and Local Government [1960] AC 260. However the requirement that, to be valid, a condition must fairly and reasonably relate to the permitted development was adopted by the House of Lords in Fawcett Properties Ltd v Buckingham County Council [1961] AC 636. That case concerned a permit for the erection of "a pair of farm-workers' cottages" and a condition limiting the occupation of the houses to persons employed in particular industries. The land in question was within a "green belt". It was held that the conditions were not valid.
2. In Newbury District Council v Secretary of State for the Environment [1981] AC 578, the House of Lords held that a permit condition was void because it did not fairly or reasonably relate to the permitted development. Permission had been given in 1962 for the use of two redundant aircraft hangars as warehouses for the storage of synthetic rubber, subject to a condition requiring that the buildings be removed at the end of 1972. Lord Fraser of Tullybelton said at 609:

"There was nothing that I can see about the change of use to a wholesale warehouse which required or justified a condition for removal of the buildings. The reason why the planning authority ordered their removal was to improve or restore the amenity of the neighbourhood by getting rid of ugly buildings. No doubt that was a very proper object, but it had nothing particularly to do with the use of the buildings as warehouses."

1. The questions whether a permit condition is imposed for a planning purpose rather than an ulterior purpose, and whether the condition reasonably and fairly relates to the development permitted, are both questions of fact. That was made clear by Martin CJ, with whom Newnes and Murphy JJA agreed, in Reid v Western Australian Planning Commission [2016] WASCA 181. Martin CJ reviewed the judgments in Temwood Holdings and observed, at [35] that all members of the High Court in that case were agreed upon the tests to be applied in order to ascertain the validity of a condition of subdivision approval, "which includes the requirement that the condition reasonably and fairly relate to the subdivision proposed". Referring to the principles enunciated in Temwood Holdings and other High Court cases, he said, at [37]:

"Those principles require the establishment of a connection or relationship between the planning purpose for which the condition has been imposed, and the likely or possible consequences of the proposed subdivision. That connection or relationship must be established as a matter of fact. A relevant connection or relationship will not be established merely because the application for subdivision approval provides an opportunity or occasion to impose a condition in the furtherance of a proper planning purpose. Rather, the relevant connection or relationship must be between the planning purpose to be served by the condition and the likely or possible consequences of the proposed subdivision - such as a need for public open space, or a foreshore reserve, or improved road access as a consequence of residential subdivision and development." [Footnotes omitted.]

1. In Temwood Holdings, McHugh J treated the question whether a condition reasonably and fairly related to the permitted development as a question of fact. In his reasons at [71]-[74], he addressed the question "Did the condition reasonably and fairly relate to the development permitted?" The condition in question required a developer of a large area of land, as a condition of subdivision approval for part of that land, to cede a portion of foreshore land, not within the land then being subdivided, to the Crown, free of cost and without any payment of compensation. After reviewing some findings of fact made by the Town Planning Appeal Tribunal (WA), McHugh J concluded, at [74]:

"... there is no ground for concluding that the condition was so unreasonable that no reasonable planning authority could have imposed it. Accordingly, the condition was validly imposed."

1. The requirement that a valid permit condition be "not so unreasonable that no reasonable planning authority could have imposed it" is based on the principle discussed in Associated Provincial Picture Houses Limited v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223 whereby a decision made by an authority with statutory powers will be invalid if it is so unreasonable that no reasonable authority could ever have made it. It is also important to note that the question whether there is any evidence of a particular fact is a question of law, and that the question whether a particular inference can be drawn from facts found or agreed is also a question of law: Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 355.
2. The permit in question was for a two-lot subdivision, creating a lot for visitor accommodation. The condition in question required the respondents to enter into a Part 5 agreement that contained a single covenant, requiring that the lot in question be used only for visitor accommodation. That condition so obviously relates to the development permitted by the permit that any contrary proposition is not arguable. To be a valid exercise of power, the condition also had to be reasonable and fair. Minds might differ as to whether that condition was reasonable and fair. From the Council's perspective, it might be thought that there was nothing unreasonable or unfair in compelling the respondents to covenant not to use the relevant lot for a purpose other than the authorised purpose of visitor accommodation. From the respondents' perspective, it might be considered unnecessary and therefore unfair and unreasonable to require a Part 5 agreement when the use of the lot for residential purposes was unlawful, the Council had various ways of enforcing the planning scheme, and the Part 5 agreement might one day, perhaps after a change of zoning, present an obstacle to an otherwise lawful change of use. It follows that it was open to the Council to conclude that the condition reasonably and fairly related to the development permitted, and that the Tribunal erred in law in concluding that the Council had no power to impose the condition. The Council's central contention in this appeal is that the Tribunal erred in law in reaching that conclusion. Whilst I accept that that is correct, my reasoning is radically different from that of the Council. It contended that it had the power to impose the condition because the condition reasonably and fairly related to the development permitted.
3. Although I accept that, as a matter of law, the Council had the power to impose the condition, and that the Tribunal erred in law in deciding that it did not have that power, it does not necessarily follow that this appeal should be allowed. The Tribunal should have concluded that the imposition of the condition was within power, and then gone on to decide whether as a matter of discretion, it was preferable for that condition to remain or to be removed. It is clear from the Tribunal's reasons that it considered the condition to be unnecessary and unreasonable.
4. In its reasons at [28] the Tribunal said:

"[28] Council identified that under the existing Scheme provisions, an application for a change of use from visitor accommodation to residential use would likely be approved providing a 'potential backdoor route' for an approval of two lots with residential use which the objectives of the Scheme provisions specifically prohibit. In the Tribunal's view, however, any perceived deficiencies in the Scheme provisions with respect to the protection of the land located in the Rural Resource Zone cannot properly be sought to be cured by the imposition of a condition. While it may be argued that the imposition of Condition 4 is for a proper planning purpose, that is to ensure protection of the Rural Resource Zone objectives and statements by limiting residential use and development, the necessary connection between the planning purpose and the possible consequences of this subdivision if the condition is not imposed, is not established."

"[30] The permit already requires the land to be developed and used for a two lot subdivision (Creation of a lot for visitor accommodation), that Lot 2 is created for a visitor accommodation use. The use of Lot 2 for a use other than visitor accommodation requires approval by a planning authority subject to being satisfied that compliance with the applicable standards of the Scheme has been demonstrated. The imposition of a condition requiring the Appellants to enter into an agreement pursuant to Part 5 of the LUPA Act in the terms required by Condition 4 which binds the Appellants and any future registered proprietors of 165 Wellington Street, Longford, in the Tribunal's view, imposes an unnecessary burden on the Appellants when the permit already identifies that the only approved use of lot 2 is visitor accommodation. Any other use would constitute a breach of the permit."

"[35] The imposition of a condition requiring a Part 5 agreement in the terms sought would potentially deny the Appellants and any other subsequent owner from making an application for a change of use, even in circumstances where the Scheme permitted the use applied for. Again, the Tribunal is not satisfied that Condition 4 fairly and reasonably relates to the development, but rather seeks to cure potential deficiencies in the Scheme provisions which may allow an approval of a change of use to residential use in the event that the Appellants, or a future owner, were to make such an application.

[36] Under Part 5 of the LUPA Act, an agreement may provide for the restriction or regulation of a use or development, 7 and provide for conditions subject to which use or development may be undertaken. 8 Condition 4 as drafted does not identify a cessation date for the covenant that would be created under the Part 5 Agreement. It appears likely, therefore, that there would need to be an agreement between the Council and any persons bound by the covenant in the agreement to bring the agreement to an end.

[37] The Tribunal accepts the submission of the Appellants that the imposition of Condition 4 would restrict the change of any future use of the land and has the effect of creating a restrictive covenant registered on title, until such time as there is agreement reached between the Council and an owner that the agreement may be ended.

[38] While the LUPA Act allows for an application to the Tribunal in circumstances where an owner of land seeks an amendment to a proposed agreement [emphasis added], the LUPA Act provides no statutory mechanism to enable an owner to apply for a variation to a registered Part 5 agreement or any application to have such an agreement set aside. The condition creates a restriction on use regardless of any provisions of the Scheme relating to permitted or discretionary uses that may be applied for, or any changes in the Scheme standards which may arise.

[39] The reasons for the imposition of Condition 4 was not the subject of any evidence. Council submitted that the imposition of a condition is for proper planning purposes as such a condition is required to ensure the approved visitor accommodation use is complied with. Mr Williams submitted that there is no reason why a planning authority may not impose a condition simply noting the present status of the use that is approved. He referred to the reasoning of the High Court in Temwood as authority for that proposition. In the Tribunal's view, however, no additional condition is required as the permit conditions as drafted clearly limits the two lot subdivision to one creating an additional lot for visitor accommodation use only." [Footnotes omitted.]

1. Having regard to the Tribunal's comments about Condition 4 in those paragraphs, it is clear that, if the Tribunal had realised that the imposition of the condition was within power, it would have gone on to decide, as a matter of discretion, that it was preferable for the condition to be removed. By virtue of s 25(5) of the RMPAT Act, when this Court hears and determines an appeal of this nature, it "may make such orders as it considers appropriate". If the Tribunal had understood that the imposition of the condition was within power, there is no reason to think that the Tribunal might have taken a different view as to its reasonableness, fairness or desirability. It would therefore be inappropriate to remit the matter to the Tribunal for reconsideration. The most appropriate order is one dismissing the appeal.
2. For these reasons the appeal is dismissed.