The proposed subdivision fails to comply with the purpose of the Rural Zone of the Nillumbik Planning Scheme.

The proposed subdivision fails to comply with the Small Lot Subdivision Policy of the Nillumbik Planning Scheme.

Subdivision would lead to the further fragmentation of land specifically designated for its productive agricultural potential.

The form of the subdivision is consistent with the objectives of the Rural zone and the Environmental Significance Overlay.

The proposed lot sizes are sufficient to maintain a viable and economic use of the land and thus meet the intent of the Small Lot Subdivision Policy.

The subdivision will not prejudice the productive agricultural potential of the site or the surrounding properties.

The proposal will not undermine the orderly use or development of the area.

The land has an area of approximately 32.7 hectares and is rectangular in shape. A single storey brick dwelling is located in the southwestern corner. Most of the land has been cleared for grazing, but there is a pocket of remnant vegetation in the northeastern corner. Several dams are located on the watercourse which runs through the middle of the land from west to east.

The land is in the Rural zone. It is also partly included in an area subject to an Environmental Significance Overlay, which covers the eastern edge of the property parallel to Middle Hut Road.

Mr Verhoeven applied to substitute an amended plan for the plans accompanying the permit application. The original plans showed proposed Lot 1 as having an area of 26.65 hectares and including a proposed dwelling and vineyard. Lot 2 was shown as having an area of 6.07 hectares and including the existing house on the land. The amended plans show Lot 2 as including the existing house, but reduced to 2 hectares. The purpose of this amendment, as explained by Mr Verhoeven, was to bring the size of the lot into accord with provisions of the Small Lot Subdivision Policy included at Clause 22.02 of the Nillumbik Planning Scheme. There being no objection from Mr Trafficante, I ordered substitution of the amended plan.

Mr Bowden also applied to amend the permit application to include the use of proposed Lot 2 for animal training (horse training) and intensive animal husbandry (horse husbandry) and the use of Lot 1 for a dwelling. Mr Trafficante did not oppose the amendments proposed, provided more details were made available in relation to the use of Lot 2. I ordered amendment of the permit application on condition that these details would be provided during the course of the hearing.

1. The salient features of Mr and Mrs Phyland's proposal are:

* Subdivision of the existing 32.7 hectare allotment into two lots.

* The small lot of 2 hectares containing the existing house is to be used for horse training and intensive horse husbandry.

* The large lot is to be used for growing vines and will have a house and winery established on it.

The proposed use of the small lot requires planning permission.

2. The use of the large lot for growing vines does not require planning permission. Planning permission would be required to establish vines in the area for subject to the Environmental Significance Overlay. Planning permission would be required for a dwelling on the large lot and the provisions of Clause 35.01-2 must be met. The winery would need planning permission pursuant to Clause 35.01-3.

3. Mr Verhoeven explained that the Phylands purchased the property in 1990 for their stud cattle herd. However, they found that the property was too small for a viable stud cattle herd and so introduced sheep and fat lambs. But these animals were affected by dog attacks, which caused severe losses, so this use was also discontinued. In November 1998 the existing house and yards on the property were leased to Mr and Mrs Macleod to breed and train Shetland ponies. This use required only a small portion of the land and the lease was conditional upon the land being subdivided to excise a lot to accommodate the horse breeding and training use. However, the Macleods moved from the property in March 2001.

4. The vineyard could be established without the subdivision of the land. However, as Mr Verhoeven submitted, the Phylands wish to subdivide off the small lot as proposed and sell it to raise capital to assist in the establishment of the vineyard. While they seek a permit which would allow the use of this lot for the purposes of animal training (horse training) and intensive animal husbandry (horse husbandry) it is clear that they themselves do not intend to establish such a use and so would be relying on some other person or persons to establish this use, presumably after they sell it. There was no information or evidence put to me that any person or persons are interested at this time in either purchasing Lot 1 or establishing the proposed use. Mr Verhoeven tendered an undated letter from Mr M Calaz, President, Diamond Valley Horse Racing Association, which stated that he (Mr Calaz) had in the past utilised the area around the existing house on the subject land for horse agistment and horse breeding. The letter pointed to the existence of "very good working yards and a Multi use crush together with a five stable shed and tackroom. Approximately 1.6 hectares of fenced paddocks are available and we used the area adjacent to the stables as a menage". The letter concluded by expressing the opinion that 10 horses or ponies could be bred and trained on the 2 hectare property.

5. Mr Verhoeven indicated his client's willingness to accept a condition, should I approve the proposal, limiting the number of horses on the 2 hectare lot to 10. It may well be that limiting the number of hoses to 10 is a reasonable condition, but I cannot be sure of that. The Phylands clearly do not intend to use the lot for horse training and horse husbandry, so their acceptance of the condition does not mean a great deal. Mr Calaz was not called as a witness and so was not available for cross-examination and his letter must be viewed in that context. But let us assume that Mr Calaz has appropriate expertise and knowledge of the property and we accept his opinion that limiting the number of horses to 10, rather than to some lower or higher figure, would be reasonable. Will in fact the 2 hectare lot proposed be used for horse training and horse husbandry? I cannot answer that question. There was no evidence put to me of the demand for such facilities, or that arrangements or agreements had been put in place with any person or persons to conduct this use on the land. In the absence of such evidence I can only conclude that it is just as likely, and perhaps even more likely, that this lot would be use for rural residential purposes and, if that were so, that the land would not be used for either animal husbandry, or grazing, or crop growing in a commercial sense It is also possible that it could be used, with planning permission as required, for intensive forms of farming.

6. At Clause 35.01-6 the Nillumbik Planning Scheme sets out the matters the responsible authority (and this Tribunal standing in the responsible authority's shoes) must have regard to before deciding on an application to subdivide land, construct a building or construct or carry out works in the Rural zone. These matters include the decision guidelines in Clause 65, which in turn include "the existing use and possible future development of the land and nearby land". They also include at 35.01-6 under the heading of General Issues, "The capability of the land to accommodate the proposed use or development, addressing site quality attributes including soil type, soil fertility, soil structure, soil permeability, aspect, contour and drainage patterns".

7. These specific matters give me some concern in relation to the use of the proposed 2 hectare lot in the sense that if it is not used for the activities proposed, would it be appropriate in terms of its size, for example, for other uses which might be proposed? The answer is that I don't know, because I do not have the information before me upon which I could come to a reasoned conclusion. This has not been a major factor in my decision, but it is a matter I have taken into account. I am not so concerned about the proposed use of the proposed larger lot for growing vines. Its size plus the reports prepared by Pivotest and by Enological Services (Vic) Pty Ltd and tendered by Mr Verhoeven are sufficient to satisfy me that the lot propoosed is large enough to establish a commercially viable vineyard.

8. Nor am I concerned about the prospect of subsequent subdivision of either of the lots if I grant a permit to subdivide, or about allowing the use of the larger lot to include a dwelling. Mr Verhoeven informed me that should I grant a permit, his clients would have no objection to a condition requiring a Section 173 agreement which would have the effect of prohibiting further subdivision of either lot. In other words, I am satisfied that the Phylands' proposal to establish a vineyard and dwelling, and then over time establish a winery, is a bona fide one with which they intend to proceed. Therefore the critical issue is whether or not they should be allowed to subdivide off and sell part of the existing property to provide capital to finance the establishment of the vineyard. On balance I have decided that, given the purposes of the Rural zone, the provisions of Clause 35.01-4 and the relevant policies in the Local Planning Policy Framework of the Nillumbik Planning Scheme, they should not be so allowed.

9. Clause 35.01-4 of the Planning Scheme provides that the minimum lot size in the Rural zone is 40 hectares unless otherwise specified in a schedule to the zone. No other minimum lot size is specified in a schedule in this case. Notwithstanding the 40 hectare minimum lot size, a permit may be granted to create smaller lots if any of a number of specified circumstances apply. The relevant circumstance in this case is "The subdivision is to create a lot for an existing dwelling. Only one additional lot which does not contain a dwelling may be created in that subdivision. Each lot must be at least 0.4 hectare". Subsequent to a lot being created which does not contain a dwelling, a permit may be granted for a dwelling because it is a section 2 use in the zone. The requirements which must be satisfied before a permit may be granted for a dwelling are set out in Clause 35.01-2. These requirements do not include a minimum lot size_._

10. The fact that Clauses 35.01-4 and 3501.2 provide that a permit may be granted for subdivide off land which includes a dwelling, and a permit may be granted for a dwelling on the balance of the land which does not already contain a dwelling, does not imply that such permits should or must be granted. The underlying philosophy of the VPP based planning schemes is that policies contained in the State Planning Policy Framework and the Local Planning Policy Framework are to drive decision making and the exercise of discretion. The purpose of every zone and overlay in these Schemes commences with the following:

To implement the State Planning Policy Framework and the Local Planning Policy Framework, including the Municipal Strategic Statement and local planning policies.

11. I note the use of the word "implement". The responsible authority and this Tribunal are to do more than just consider the State Planning Policy Framework and the Local Planning Policy Framework. They are to consider and give effect to (my emphasis) the policies in these Frameworks, unless there are compelling reasons why they should not be given effect to in the particular circumstances which apply. Every zone and the great majority of the overlay controls in these schemes are accompanied by decision guidelines. These decision guidelines all commence as follows:

Before deciding on an application... ..., in addition to the decision guidelines in Clause 65, the responsible authority must consider as appropriate:

The State Planning Policy Framework and the Local Planning Policy Framework, including the Municipal Strategic Statement and local planning policies.

12. As I will expand upon below, it is my view that the provisions of the Rural zone and of the Local Planning Policy Framework of the Nillumbik Planning Scheme dealing with the subdivision of rural land set out a strong and relatively systematic policy direction against the subdivision of land in the Rural zone. I am directed by the Scheme to not only consider, but also give effect to those polices, unless there are compelling reasons in the particular circumstances which apply in this case why these policies should not be given effect to. I do not consider that there are any particular circumstances which apply in this case to justify not giving effect to these polices. That the Phylands wish to subdivide so that they can sell off the smaller lot and therefore raise capital to invest in the vineyard proposed for the other lot does not justify not giving effect to these policies. If it were sufficient justification, then any owner of land who wished to subdivide off a parcel and then sell it to provide additional finance for activities on the balance of the property would receive permission to do so and this would make a nonsense of having any minimum allotment size in the Rural zone and result in fragmentation of rural land, the very thing that policies in the State Planning Policy Framework and the Local Planning Policy Framework are aimed at preventing.

13. Clause 17.05 in the State Planning Policy Framework sets out in broad terms the State planning policy in relation to agriculture as:

"To ensure that the State's agricultural base is protected from the unplanned loss of high quality productive agricultural land due to permanent changes of landuse and to enable protection of productive farmland which is of high quality and strategic significance in the local or regional context."

This is reinforced by the purpose of the Rural zone, which includes "To provide for the sustainable use of land for Extensive animal husbandry (jncluding dairying and grazing) and Crop raising (including Horticulture and Timber production)."

14. Clause 21 of the Nillumbik Planning Scheme sets out the Municipal Strategic Statement for the Shire. It identifies the area in which the subject land is located as that part of the Shire (the north-west) where broadscale agriculture enterprises are concentrated and where such enterprises run on larger land holdings. At Clause 21.03-2 appears the following in relation to Rural Landuse:

With respect to rural landuse issues in the Shire of Nillumbik, the following influences must be considered

and then are set out 6 dot points. It is not necessary for me to reproduce these points. But I do note that the second dot point states that high quality land should be protected for both its productive potential and environmental value, that high quality agricultural land should be retained for soil based agricultural production, and sustainable use of the land is to be encouraged for that purpose. It concludes by stating "Farm scale, particularly the broad acre farming areas in the north-west of the Shire, should be maintained." I also note that the fourth dot point contains the statement that "subdivision should not challenge the integrity of the natural environment or the productiveness of agricultural land".

15. The importance of protecting and maintaining rural land is reinforced at Clause 21.04 which sets out a strategic framework plan. The plan identifies the rural area in the north-west of the Shire, in which the subject site is located, as a broadscale farming area and then sets out a series of objectives and strategies for this area. These objectives include to promote sustainable agriculture and limit the fragmentation of land in rural areas. Strategies set out to achieve these objectives include to maintain a minimum subdivision size of 40 hectares for rural land, limit small lot subdivision of agricultural land to maintain farm scale, and apply minimum subdivision sizes of 40 hectares for rural land. There are other objectives and strategies which are relevant to this case and which are directed towards maintaining large lot farming and preventing small lot subdivision of rural land. There is clearly a strong and relatively systematic policy direction set out in the Local Planning Policy Framework against subdivision such as that proposed in this case, and that policy direction is consistent with that found in the State Planning Policy Framework.

16. At Clause 22.02 is set out the Small Lot Subdivision Policy, which applies to land in the Rural and Environmental Rural zones for proposals where the lot sizes are less than the minimum lot size prescribed for the zone (in this case, 40 hectares). The objectives of the policy are set out as follows:

* "To protect the agricultural potential of land so as to maintain farmland as a long term resource.

* To maintain farm scale and avoid constraints on rural landuse resulting from increasing development densities in rural areas.

* To provide a sustainable basis for consideration of proposals for small lot subdivision for an existing dwelling, as exceptional variations to the Rural zone minimum subdivision area provisions.

* To protect the agricultural, landscape and environmental values of the Shire."

These objectives are followed by guidelines which are policy in the Scheme. The guidelines for subdivision to create a small lot for an existing dwelling include, in summary:

the existing lot to be subdivided should be at least 40 hectares in size and that the lot to be created be no greater than two hectares. (I note that the subject land has an area of 32.7 hectares).

if the lot is less than the minimum lot size (40 hectares in this instance), the most appropriate circumstance supporting a small lot subdivision would be where the land already accommodated two dwellings or more at the approval date of the scheme and these dwellings are still habitable. (That does not apply in this case).

The guidelines for all small lot subdivisions include the creation of lots smaller than the minimum lot size (of 40 hectares in this instance) will only be considered where it can be demonstrated that the resulting lots maintain the productive agricultural potential of the land in accordance with land capability and would not prejudice the existing agricultural enterprises on adjoining property.

17. Mr Verhoeven has not established that the proposal before me is such that unusual or exceptional circumstances apply and that therefore these policies and the other policies outlined above should not apply and not be given effect. I have already stated that the fact that the Phylands wish to sell off the proposed small lot and use the money from the sale to establish the vineyard on the other lot does not constitute unusual or exceptional circumstances. Mr Verhoeven submitted that the proposal would not result in any diminution of the agricultural potential of the land in that both the allotments created in the proposed subdivision would be used productively for agricultural purposes. I don't agree with him for two reasons. Firstly, there is no guarantee that the small lot will be used for any agricultural purpose at all and it may well be that it will simply used for rural residential living, as I have stated in paragraph 5 above (I might add that there is no guarantee, either, that the Phylands would establish the vineyard on the other lot and use the money from the sale of the smaller lot to assist in doing that). Secondly, any reduction in the size of the current lot by virtue of that reduction will inevitably reduce the range of agricultural pursuits which could potentially be carried out on the land in a profitable manner. In my opinion there would inevitably be a diminution of productive agricultural potential, unless of course the small lot, or a significant proportion of the larger lot, contained very poor soils, was floodprone or was too steep to have any real productive potential. But that is not the case in this instance.

18. In my opinion, as I have outlined in paragraph 12 above, the proposal to subdivide would be counter to the purpose of the Rural zone and to the provisions of the Local Planning Policy Framework, to which I am required to give effect unless there are compelling reasons to the contrary. No such compelling reasons apply in this case.