1. The decision of the responsible authority in relation to permit application no. PA2011209 is affirmed. No permit is granted.

Mr Neil Haydon, solicitor and town planner, Beveridge Williams and Co Pty Ltd

Mr Satyen Kopthari and Mr Robert Fillisch, town planning officers

To subdivide land with an area of 4,942 square metres into 2 lots. Lot 1 would have an area of 1,194 square metres and lot 2 would have an area of 3,748 square metres. The subdivision would have a "battleaxe" configuration. Both lots would have access to Holts Lane.

Application under section 77 of the Planning and Environment Act 1987

Clauses 10.04, 11.05, 15.01, 21.03, 21.07, 56 and 65

The review site is located on the north side of Holts Lane, approximately 70 metres east of Hallets Way. The site is irregular in shape, with a frontage of 30 metres, a depth from 107.5 metres to 115 metres and an area of 4,942 square metres.

The site is occupied by a single detached dwelling located at the front of the land. The land is affected by a covenant on title and a s173 Agreement. It is also affected by easements.

The land is located in an area with lots consistent in size to the proposed lots.

Wade v Yarra Ranges SC [2005] VCAT 111

Dukovski v Banyule CC [2003] VCAT 190

Gubby v Mornington SC [2002] VCAT 1344

1. Mr Samson resides on the review site in a dwelling located close to Holts Lane. He operates a photography business from a purpose built studio/office located at the rear of the review site. The photography studio/office has a floor area of 135 square metres. The building was granted building approval in December 2009 and was completed shortly thereafter. No planning approval has been granted to use the land for home occupation. He now proposes to subdivide the land into two lots. The larger lot would contain the photography studio and the smaller lot would contain the existing dwelling. Mr Samson intends to build a new dwelling on the newly created larger lot, closer to the studio/office.
2. In February 2012, Moorabool Shire Council determined to refuse to grant a planning permit to subdivide the review site into two lots.
3. At the Hearing held on 20 June 2012, the responsible authority submitted as a preliminary matter that the proposed subdivision should be refused as it would be unlawful. It submitted that the proposed subdivision would be inconsistent with a restrictive covenant on the land. It would also create a prohibited use on a newly created lot in a Residential 1 zone.
4. The responsible authority was directed by the Tribunal to obtain legal advice on the effect of the restrictive covenant. The written legal advice was circulated to the permit applicant prior to the second hearing. That legal advice generally supported the submissions from the responsible authority.
5. The permit applicant submitted that the restrictive covenant did not prevent the subdivision of the land and the home occupation was lawful. It proposed that a permit could be granted for subdivision. The permit should include conditions that would require the restrictive covenant to be removed and/or the home occupation to be made lawful prior to the issue of a Statement of Compliance for the subdivision.
6. The key issues that I must determine in this matter are:
   1. What does the restrictive covenant mean?
   2. Would the proposal be contrary to the restrictive covenant?
   3. If not, would the grant of a permit in these circumstances be consistent with orderly and proper planning?
7. The permit applicant requested that the Tribunal provide a legal opinion on the effect of the restrictive covenant. A legal opinion has been provided by Senior Member M Wright QC and is attached at Appendix A.
8. I must decide whether a permit should be granted and, if so, what conditions should be applied. Having considered the legal opinion and both submissions presented with regard to the applicable policies and provisions of the Moorabool Planning Scheme, I have decided to affirm the decision of the responsible authority and direct that no permit be granted. My reasons follow.

1. The review site is identified in the Certificate of Title Volume 09542 Folio 804 known as 114 Holts Lane, Darley. The site is also known as lot 30 on Plan of Subdivision 144117.
2. Covenant L361850N was attached to the title when it was created in 1984. The covenant states amongst other things that:

The Transferees (of the property) their heirs, executors, administrators and transferees shall not at any time erect construct or build or cause to be erected constructed or built on the said lot hereby transferred or any part or parts thereof any building other than a private dwelling house having an area of not less than 110 square metres excluding carport, garage or verandah.

1. The covenant also limits the materials that may be used in the construction of a dwelling, and requires any dwelling to be located more than 12 metres from the road alignment.
2. The meaning of the covenant was reviewed by Senior Member M Wright. He finds that the covenant limits development on the land to a dwelling. A dwelling comprises a building used for a residence and includes outbuildings usually associated with a dwelling. Senior Member Wright concludes that more than one dwelling may be developed on the land as the term "a dwellinghouse" cannot be taken to mean only one dwellinghouse. In his view if the restrictive covenant had meant to restrict the number of dwellinghouses to no more than one, it would have been specific and used the term "one".
3. The restrictive covenant prevents the construction of any building other than a dwellinghouse. This includes outbuildings usually associated with the dwellinghouse such as a carport, garage and sheds used to store materials and equipment associated with the dwelling and the maintenance of the land. The photography studio is not an outbuilding that is usually associated with a dwelling. Senior Member Wright concludes that due to its size and function, it is inconsistent with the normal parlance of an outbuilding, it is a use separate from the dwelling and it is in his view contrary to the restrictive covenant.
4. It is his view that:

The studio and office building is breach of the restrictive covenant. It is not an "outbuilding" associated with the dwelling house but rather an additional and separate use of the land.

1. In the event of a permit being granted for the two lot subdivision the existing breaches of the planning scheme and the restrictive covenant could be remedied by converting the studio/office building to a dwelling house provided the requirements for home occupation can be satisfied. However, the studio cannot remain a separate building without continuing to breach the covenant.

Would the subdivision be contrary to the restrictive covenant?

1. Senior Member Wright finds that the proposed subdivision does not breach the restrictive covenant. This is for three reasons. Firstly, whilst the photography studio breaches the restrictive covenant, this breach already occurs and does not arise from the grant of a permit for the proposed subdivision. Secondly, the grant of a permit for the subdivision does not purport to authorise the use or development of the land for home occupation, and hence does not offend section 61(4) of the Planning and Environment Act 1987. Finally, the grant of a permit for subdivision in these circumstances would be consistent with other decisions of the Tribunal regarding land affected by a restrictive covenant with similar wording.
2. I am satisfied that the restrictive covenant does not prevent the grant of a permit for the subdivision of the land.

Would the grant of a permit be consistent with orderly and proper planning?

1. Senior Member Wright finds that the photography studio is contrary to the restrictive covenant as the studio is not an outbuilding typical of those associated with a dwelling. He also finds that the said building is contrary to Clause 52.11 of the Moorabool Planning Scheme as it has a floor area that exceeds the allowable maximum. Senior Member Wright finds that the use is unlawful.
2. The subdivision of the land would sever the relationship between the dwelling and the photography studio. The studio would then be a standalone use on a separate title. It would not be a home occupation associated with a dwelling on the same land. I accept the submissions from the responsible authority, not contested by the permit applicant that it has no existing use rights.
3. Hence, whilst the proposed subdivision is not prevented by the restrictive covenant, I must consider whether the proposal would be consistent with orderly and proper planning[2].
4. Section 4(1) of the Planning and Environment Act 1987 sets out the objectives of planning in Victoria. These include

To provide for the fair, orderly, economic and sustainable use and development of land.

1. Clause 65 of the planning schemes provides that when considering an application, the responsible authority must consider as appropriate:
   • The orderly planning of the area.
2. The permit applicant proposed that a permit could be granted to subdivide the land provided that it contains condition(s) that would require the non-compliance(s) to be rectified prior to the issue of a Statement of Compliance. The conditions could include variation or removal of the covenant from the title and planning approval for the home occupation. It was submitted that the Tribunal itself has adopted this approach in cases involving the subdivision of land affected by a covenant that limits development to only one dwelling.
3. Whilst the permit applicant's proposal is a possible way forward, I am not persuaded that this would be an appropriate course of action to remedy the current problems and it would be likely to contribute to further problems. The Tribunal found that it would be contrary to the principles of orderly and proper planning to create a separate lot in a Residential 1 zone when no dwelling can be constructed because of a restrictive covenant (see Wade v Yarra Ranges SC [2005] VCAT 111. The principle applied is that the exercise of planning discretion should not make more difficult the prevailing circumstances or lead to unrealistic expectations regarding the future use and development of land.
4. In this case, there are a number of contraventions of law that should be addressed. Senior Member Wright and the legal advice provided by the Responsible Authority concur that the present contraventions can be remedied, subject to planning approvals. This is not certain and would be determined by the merits assessed under the prevailing policies of the Planning Scheme.
5. I think this application is premature in these circumstances. It is my view that orderly planning requires the current problems to be rectified before further approvals are granted. It is not obvious or inevitable that the existing problems can be rectified. The beneficiaries of the covenant may not support its removal. A permit may not be granted for the home occupation. Relying on conditions in a permit for subdivision that may not be completed only further complicates the current circumstances and requires the parties to invest further time and monies pursuing outcomes that may not be successful. I think this approach would further compound the existing difficulties leaving the responsible authority and Mr Samson with further delays, costs and uncertainty.
6. It is my view that it is preferable that the permit applicant identify a strategy(s) to resolve the present contraventions and seek the appropriate planning approvals. The subdivision of the land could comprise part of these approvals, or be a sequential step if a planning permit application is successful.
7. A difficult planning situation is not usually resolved by making it more complex. A simpler and more direct approach is required.

1. It follows from the above reasons that it is my conclusion that the decision of the responsible authority should be affirmed and no permit is granted.

1. By Order dated 21 June 2012 the member hearing this matter has referred questions of law to a legally qualified member of the Tribunal. On 15 August 2012, I was nominated by Deputy President Gibson to determine those questions.
2. The questions arise out of an application for review which came before the Tribunal on 20 June 2012. The applicant is reviewing the refusal of the Moorabool Shire Council to grant a permit to subdivide land at 114 Holts Lane, Darley, into two allotments.
3. The land has an area of 4,942 square metres. Proposed Lot 1 would have an area of 3,748 square metres and would contain a building which is presently used as a studio and office associated with a photography business operated by the permit applicant. Proposed Lot 2 would have an area of 1,194 square metres and would contain the present dwelling and outbuildings.
4. The land is zoned Residential 1 under the Moorabool Planning Scheme. A permit for subdivision is required by cl.32.01-2 of the planning scheme.
5. The studio has a floor area of 135 square metres which exceeds the maximum 50 square metres permitted for home occupation under cl.52.11 of the planning scheme. A permit could be granted to increase the floor area of the building but only up to 100 square metres or one third of the gross floor area of the associated dwelling.
6. Therefore, on the face of it the existing studio building is not lawful. Moreover, upon approval of the proposed subdivision the studio on Lot 1 would be legally severed from the dwelling on the Lot 2 which would further disqualify the studio from being characterised as "home occupation" under the planning scheme.
7. However, if the subdivision was approved, and subject to compliance with the restrictive covenant discussed below, the conversion of the studio to a dwelling would bring it into conformity with the planning scheme. "Dwelling" is a use permitted as of right in the Residential 1 zone.
8. The land is subject to a restrictive covenant which provides as follows:

... the Transferees their heirs executors administrators and transferees shall not at any time erect construct or build or cause to be erected constructed or built on the said lot hereby transferred or any part or parts thereof any building other than a private dwelling house having an area of not less than 110 square metres excluding carport garage and verandah and to be erected not closer than 12 metres from the road alignment of such lot and the external walls of such dwelling house shall be constructed of a material or materials as approved by the Shire of Bacchus Marsh and the location on such lot of such dwelling house and all outbuildings shall be in such position or positions as is approved by the Shire Engineer of the said Shire of Bacchus Marsh.

1. In my view the existing studio and office associated with the photography business is in breach of the restrictive covenant. The covenant permits the erection of a private dwelling house and on its proper construction allows outbuildings normally appurtenant to a dwelling house. I consider that a structure of the size and function of the existing studio does not answer the description of a normal outbuilding as that description would be understood in common parlance. It is a separate and additional use of the land.
2. The current situation, therefore, is that the studio and office building is in breach of both the planning scheme and the restrictive covenant.
3. The first question that arises is whether the grant of a permit to subdivide the land into two lots is prohibited by section 61(4_) Planning and Environment Act_ 1987. The sub-section provides:

(4) If the grant of a permit would authorise anything which would result in a breach of a registered restrictive covenant, the Responsible Authority must refuse to grant the permit unless a permit has been issued, or a decision made to grant a permit, to allow the removal or variation of the covenant.

1. In my view, the grant of a permit for a two lot subdivision would not of itself authorise anything which would result in a breach of the restrictive covenant. The breach of covenant already exists and therefore cannot be said to result from the grant of the permit. The effect of the permit is simply to divide the land into two freeholds parcel. This might have other consequences under the planning scheme if the present studio satisfied the requirements for "home occupation" because it would sever the necessary connection with the dwelling. However if as in this case it does not satisfy those requirements it is unlawful and cannot be made any more unlawful by the subdivision.
2. The situation would be different if the permit went further to purport to allow the construction or use of the studio. In these circumstances it could be said to be authorising a breach of covenant notwithstanding that the breach already exists. Such a permit, if not prohibited by a strict interpretation of section 61(4) of the Act, should be refused in the exercise of planning discretion. However, the application for permit does not make any approvals in relation to the studies.
3. The Tribunal has consistently held that section 61(4) of the Act does not preclude the grant of a permit for subdivision alone because subdivision does not of itself result in a breach of covenant. It is the construction of a second house or other building that is prohibited (Dukovski v Banyule City Council (2003) VCAT 190; Wade v Yarra Ranges Shire Council (2005) VCAT 111).
4. However, although the grant of a permit may be allowed as a matter of law the question arises as to how the Responsible Authority or the Tribunal should exercise its discretion in cases where the erection of a dwelling house on lots created by the subdivision may be in breach of a restrictive covenant.
5. In exercising its discretion whether or not to grant a permit for subdivision the Tribunal must under cl.65.02 of the planning scheme take into consideration the existing use and possible future development of the land. This requires an assessment to be made of the potential of proposed Lot 1 to be used for residential purposes. In Wade, supra, the Tribunal referred to the cautious approach that must be adopted when considering a permit for a subdivision which enables future development that may be in breach of a restrictive covenant, and referred to a number of decisions displaying that caution.
6. This then raises a second legal question, which is whether the covenant in this case prevents the erection of a second dwelling house on proposed Lot 1.
7. This depends upon the proper construction of the covenant. This is a task to be approached having regard to the normal and everyday meaning of the words used in the instrument of transfer creating the covenant. In this case, the covenant uses the indefinite article 'a' which in common parlance does not import numerical constraint. It does not preclude more than one although the context may give it that meaning (Natraine Nominees Pty Ltd v Patton (2000) VSC 303).
8. The wording of the covenant in this case is to be contrasted with the wording often found in convenants of this type which expressly prevent the erection of more than one dwelling house, or of any building other than one dwelling house. It is clear that a covenant so worded will prevent the construction of a second dwelling house on the burdened land. See for example Bevilacqua v Merakowski (2005) VSC 235; Cechin v Wyndham City Council (2006) VCAT_;_ and Haines v Monash City Council (2006) VCAT 2404. There is a compelling argument that if the covenantee had wished to prohibit more than one dwelling house on the land he could easily have said so.
9. In Tonks v Tonks [2003] VSC 195; (2003) 11 VR 124 the covenant before the Supreme Court provided:

... the registered proprietor (for the time being) will not erect or cause or permit to be erected on the land hereby transferred or any part thereof any building other than a dwelling house.

The question before the court was whether this covenant prevented the construction of more than one dwelling house on the land.

If the parties to the original covenant had wished to restrict the number of dwelling houses built on each of these lots they could have done so very simply and definitively by replacing the word "a" in the covenant with the word "one", or by making some similar simple amendment. The true construction of the covenant is that it prohibits the placing of any building on the land unless that building is a dwelling house. Provided that any dwelling constructed can be properly described as a dwelling house there will be no breach of covenant. The covenant says nothing in my opinion, as to the number of dwelling houses which might be built. To import a restriction as to the number of houses which might be built on lot 2 into the covenant would extend its effect beyond the words used by the parties without any warrant for doing so.

1. The covenant in this case is in similar terms to the covenant considered by the Supreme Court in Tonks, and there is nothing arising from the context that would justify a different construction.
2. There have been a number of cases in which the Tribunal has construed covenants which prevent the construction of a building other than a dwelling house, as distinct from covenants prohibiting the construction of more than one dwelling house, as allowing the construction of more than one dwelling house provided each building can be properly described as such. See Gubby v Mornington Peninsula Shire Council (2002) VCAT 1344; and Solomons v Mornington Peninsula Shire Council (2007) VCAT 153.

1. In summary I answer the questions of law arising in this matter as follows:

1. The studio and office building at the rear of the property does not satisfy the requirements for "home occupation" because the floor area is greater than permitted by cl.52.11 of the planning scheme. In the absence of separate planning approval the building is unlawful. 2. The building would remain unlawful post subdivision because of its excessive floor area and also because its connection with the dwelling on proposed Lot 2, which is necessary to satisfy the definition of "home occupation", would be severed.

1. The studio and office building is breach of the restrictive covenant. It is not an "outbuilding" associated with the dwelling house but rather an additional and separate use of the land.

1. The grant of a permit to subdivide the land into two lots would not of itself result in a breach of the restrictive covenant and therefore is not prohibited by section 61(4) of the Act. 2. The restrictive covenant allows the construction of an additional dwelling house on the land. The covenant is therefore not a factor which militates against the exercise of discretion to grant a permit.
2. In the event of a permit being granted for the two lot subdivision the existing breaches of the planning scheme and the restrictive covenant could be remedied by converting the studio/office building to a dwelling house provided the requirements for home occupation can be satisfied. However, the studio cannot remain a separate building without continuing to breach the covenant.

[1] I have considered all submissions presented by the parties although I do not recite all of the contents in these reasons.