With respect to Permit 696/2005/P, the Responsible Authority's decision to grant a permit is varied.

A permit is granted for a three lot subdivision at 170 Stringers Road, Eagle Point generally in accordance with the endorsed plans and subject to the conditions contained in Permit 696/2005/P issued on 23 February 2006 and amended on 20 April 2006, except that Condition 3(a) must be modified to state:

Lots 1 and 2 must not be further subdivided to create any additional lots.

The Responsible Authority is ordered to issue a modified permit in accordance with this determination pursuant to section 85(1)(e) of the Planning and Environment Act 1987.

1 This is an application to review a condition imposed by East Gippsland Shire Council ('the Council') in a planning permit for a three lot subdivision of rural land at 170 Stringers Road, Eagle Point.

2 Mr Sadler advised his client has owned and operated a farm on the review site since 1950. The site comprises three lots, which were created as a result of Planning Permit 95/BNS/026 issued in 1995 by the former Bairnsdale Shire Council. Existing Allotment 1 has an area of 2.59 hectares, existing Allotment 2 has an area of 2.371 hectares and the balance lot (Lot 3) has an area of 108.9 hectares.

3 This proposal was lodged with the Council on 28 October 2005 for a realignment/re-subdivision of the existing title boundaries so that Lot 1 would have an area of 6.924 hectares, Lot 2 would have an area of 6.975 hectares and the balance lot (Lot 3) would have an area of 99.92 hectares. The permit was issued for the proposed three lot subdivision on 23 February 2006 subject to a number of conditions.

4 At the commencement of the hearing, Mr Sadler submitted the Council had made an error in amending the planning permit pursuant to section 71 of the Planning and Environment Act 1987.

5 When the permit was issued on 23 February 2006 it contained a Condition 3 requiring the submission of amended plans to be approved by the responsible authority which showed Lots 1, 2 and 3 must not be further subdivided to create any additional allotments. On 19 April 2006 Mr Sadler lodged this application to review Condition 3 stating the condition was unreasonable, unjustified, onerous, unfair and contrary to the discretion that exists in the Rural Zone for further subdivision of the review site.

6 On the following day (20 April 2006), an amended planning permit was issued by the Council modifying Condition 3 in accordance with Section 71 of the Planning and Environment Act 1987. This section relates to the correction of mistakes and allows the responsible authority to correct a permit if a permit contains:

(a) A clerical mistake or an error arising from an accidental slip or omission.

7 The amended permit contained a new Condition 3 requiring the owner of the land to enter in a Section 173 Agreement that Lots 1, 2 and 3 must not be further subdivided to create any additional lots.

8 Mr Sadler submitted there had been no mistake or error arising from an accidental slip or omission and the Council had unfairly modified the planning permit as a result of these proceedings being commenced at VCAT. Mr James stated the Council's Delegate Report dated 22 February 2006 stated a Section 173 Agreement would be placed on the permit requesting no further subdivision of the lots to comply with the purpose and objectives of the Rural Zone and the suggested condition included Condition 3 requiring a Section 173 Agreement to be entered into. Therefore, Mr James advised the permit was amended to correct an error and to ensure it matched the suggested conditions in the Council's Delegate Report. Mr Sadler advised he had not seen the Delegate Report and, whilst this is unfortunate, I am satisfied the Council correctly fixed a mistake arising from the permit not being in accordance with the delegated decision as contained in the Delegate Report. I ruled the correction of the mistake in accordance with section 71 of the Planning and Environment Act 1987 was correct.

9 The review site is located south-east of Paynesville and Newlands Arm, and it has extensive frontage to a section of Lake Victoria. The site and surrounding land is generally rural/farming land, although Mr Sadler pointed out the headland immediately to the south-east (Point Turner) has a number of small allotments and is used for a number of months during the year as a camping destination for a variety of school groups.

10 The farm supports the grazing of sheep with an average of 1,500 to 2,000 head of sheep, and this is generally occurring on the balance lot (Lot 3). Lot 3 also contains an existing dwelling whilst Lots 1 and 2 are vacant and contain some existing vegetation. Mr Sadler advised his client's family own and operates a farming business on land to the immediate north of the review site, and long term plans include developing part of the balance lot with a new dwelling for another family member who will be involved in the farm operation.

11 The existing Lot 3 was affected by a Section 173 Agreement dated 3 September 1996 which came about as the result of Condition 5 on Planning Permit 95/BNS/026, which required the owner to enter into a Section 173 Agreement that must not allow the area of Lot 3 to be used to obtain any further entitlements for subdivision under the provisions of Clause 60-2.2 of the former Bairnsdale Planning Scheme. The agreement states that it will end:

... upon amendment to the Scheme which allows further subdivision of the said land.

12 Clause 60-2.2 of the former Bairnsdale Planning Scheme stated a permit may be granted for a subdivision which creates a lot less than 100 hectares if particular circumstances apply including that the lot will provide a site for a dwelling if the lot be excised is not less than 2 hectares and not more than 3 hectares. The clause goes on to state that the responsible authority must require the owner to enter into an agreement to ensure that density of small lots does not exceed two lots per 100 hectares. The existing 3 lots of the review site accord with these requirements.

13 The Bairnsdale Planning Scheme no longer exists and has been replaced with the East Gippsland Planning Scheme, which allows the subdivision of land to a minimum size of 40 hectares or smaller subject to particular provisions with the grant of a planning permit. What this means is the Planning Scheme that affects the review site has been amended and does allow further subdivision of the site; therefore the Section 173 Agreement has ended.

14 The review site is contained within a Rural Zone under the East Gippsland Planning Scheme ('the Planning Scheme'). A permit is required to subdivide land and each lot must be at least 40 hectares; however a permit may be granted to create smaller lots if the subdivision is the resubdivision of existing lots.

15 The surrounding land is generally zoned Rural as well; however some land immediately to the south and the land at Point Turner headland is zoned Environmental Rural Schedule 3, which has a minimum lot size of 100 hectares.

16 The road frontage of the review site is affected by an Environmental Significance Overlay Schedule 43, and part of this same frontage is affected by Vegetation Protection Overlay Schedule 1. Sections of the site adjacent to Lake Victoria are affected by the Land Subject to Inundation Overlay and the Erosion Management Overlay.

17 The State planning policies include a strategy to control development in rural areas to protect agriculture and avoid inappropriate rural residential development[1]. The objective of the Agriculture State planning policy is to ensure the State's agricultural base is protected from the unplanned loss of productive agricultural land due to permanent changes of land use and this is to be implemented by, amongst other matters, ensuring the subdivision of productive agricultural land does not detract from the long term productivity capacity of the land.

18 The Municipal Strategic Statement ('the MSS') acknowledges that subdivisions between 1990 and 1996 have been concentrated in Bairnsdale and its immediate surrounds including in proximity to Paynesville; and 30% of these lots are large residential lots of up to 3 hectares. The MSS comments that the subdivisions approved have the potential to provide a total of 2,446 new lots. There is recognition about opportunities for additional land to be used for rural residential development, particularly in lower density residential areas and rural living areas. However the MSS states that subdivision for rural residential style development will be strongly discouraged in areas of prime or high quality agricultural land[2]. In regard to coastal planning and development, the MSS states small lot subdivision along river frontages and lake shorelines will also generally be strongly discouraged.

19 The Small Lot Subdivisions in Rural Zones local planning policy at clause 22.08 acknowledges the Rural Zone provides an opportunity for a permit to be granted to create a lot smaller than the minimum lot size specified in the zone, and it acknowledges there are many situations when smaller lots may be preferable to dividing a property into the minimum lots specified for the zone. The objectives of the policy, however, are quite clear in regard to the Council's expectations for small lot subdivisions:

•

To ensure that, where lots smaller than the minimum specified for the zone are approved in rural areas, they are in accessible locations, will not have an adverse effect on agricultural productivity, are located on land physically and environmentally capable of sustaining development, and can be serviced effectively and economically.

•

To ensure high quality agricultural land is protected from inappropriate development that may be a consequence of subdivision.

20 The policy discourages smaller lots in areas of prime or high quality agricultural land and states consideration will be given to the availability of undeveloped lots of the proposed size range in the relevant area as well as any need for additional lots as a consequence of new or innovative agricultural or pastoral development, or proposed tourism enterprises or rural service businesses. There was dispute between the Council and the applicant as to whether the review site is located in an area of prime or high quality agricultural land based on the area shown on Map 6 in the MSS; however I do not think the content of Map 6 is an important determinative factor in deciding the merits of this case. Mr Sadler did not suggest the review site is unproductive agricultural land; in fact, he made mention of the land having been farmed since 1950 and its capacity to accommodate between 1,500 and 2,000 sheep. Therefore I am satisfied the review site is currently being used (particularly Lot 3) for a productive agricultural use.

21 The Council determined minor variations to the boundaries of the lots previously approved in 1996 was appropriate as the revised subdivision would allow adequate land for each lot, including the ongoing operation of the farm on the balance lot. The Council submitted the retention of Condition 3 is important to preserve the principles and objectives of the Planning Scheme and, further, the agreement is no different to the previous Section 173 Agreement on the 1996 permit that was agreed to by the owner of the land. Mr Sadler disputed this pointing out that the previous planning controls of the former Bairnsdale Planning Scheme required a Section 173 Agreement to be entered into in order to obtain the subdivision of the two smaller lots. Having reviewed the provisions of the former Bairnsdale Planning Scheme, I agree with Mr Sadler's submission that a Section 173 Agreement was a prerequisite to the grant of a permit for smaller lots.

22 The Council submitted the nature of the planning controls have not changed dramatically since the original subdivision was approved in 1996. However, this is not an accurate statement as the minimum lot size has been reduced from 100 hectares under the former Bairnsdale Planning Scheme to 40 hectares under the existing Rural Zone. This proposal is to maintain a large balance lot of approximately 99 hectares whilst increasing the size of the two smaller lots from about 2.3 hectares to 6.9 hectares each.

23 The Agriculture State planning policy requires the following factors to be considered as part of a proposal to subdivide agricultural land:

•

The desirability and impacts of removing the land from primary production, given it agricultural productivity.

•

The impacts of the proposed subdivision or development on the continuation of primary production on adjacent land, with particular regard to land values and the viability of infrastructure for such production.

•

The compatibility between the proposed or likely development and the existing uses of the surrounding land.

•

Assessment of the land capability.

24 The Agriculture State planning policy goes on to state that priority should be given to restructuring inappropriate subdivisions where they exist on productivity agricultural land. It is arguable that the two existing small lots are an example of an inappropriate subdivision of existing productive agricultural land. Certainly, the small size of the lots as they currently exist places distinct limitations on the possibility that they may be used for productive agricultural purposes.

25 I am of the opinion the Council's decision to grant a permit for two lots of about 6.9 hectares which in turn reduces the size of the balance lot is a good planning outcome. The new lot sizes for Lots 1 and 2 are a better planning outcome for land that is zoned Rural and provides opportunities for some agricultural related uses on the land, as well as ensuring that the balance lot can continue to be used for productive agricultural purposes. However it is not considered appropriate for either of these lots to be further subdivided in the future, for example by way of a house lot excision. Therefore, I agree with the Council that a Section 173 Agreement should be required for Lots 1 and 2 stating these lots must not be further subdivided to create any additional allotments.

26 The balance lot (Lot 3) is 99 hectares and, under the current provisions of the Rural Zone, a planning permit may be sought to subdivide this land into lots of a minimum size of 40 hectares. The inclusion of a Section 173 Agreement on this lot would remove the current discretion that is available under the Planning Scheme to seek lots of this minimum size. The Council submitted that separate and disconnected subdivision applications should be discouraged and the inclusion of a condition placing such a restriction on Lot 3 merely reflects the current planning controls and policies. I do not agree.

27 As I have already stated, the Rural Zone allows for a permit to be sought to subdivide rural land into lots of a minimum size of 40 hectares and the balance lot (Lot 3) has the opportunity under the current zone provisions to seek such a permit. There are no other planning controls that state the balance lot cannot be subdivided; rather, the relevant zone and overlay controls specify a range of decision guidelines that must be considered in determining whether or not a permit should be granted. In addition, the State and Local planning policies do not prohibit the subdivision of rural land. The Small Lot Subdivisions in Rural Zones local planning policy actually acknowledges that there are many situations in which the creation of a range of lot sizes may be preferable, which suggests to me that the current planning controls and policies recognise the existing opportunities for subdivision that exist in the Planning Scheme and emphasise the necessity for each subdivision application to be considered on its merits.

28 This proposal is a resubdivision of three lots. The merits of the proposal are that the resubdivision creates larger small lots whilst maintaining a large balance lot. Mr Sadler referred to a permit granted by the Council for the subdivision of the land immediately to the north (owned by members of the same family) and, again, I note this subdivision was a resubdivision of three existing lots that resulted in a better planning outcome than the existing lot boundaries and sizes.

29 I am of the opinion it is unfair to remove the right of the review site to be able to apply for a planning permit to subdivide the balance lot under the current planning controls and policies of the Planning Scheme. This means it is not appropriate to include a condition requiring a Section 173 Agreement on the balance lot (Lot 3) that it cannot be further subdivided. It is arguable that such a condition could be considered invalid because it denies an opportunity to undertake development that can be permitted under the Planning Scheme.

30 I wish to make it clear to the parties that my findings do not mean any further subdivision of the balance lot will receive planning approval. Each planning application must be considered on its merits and must be considered in light of the planning controls and policies that exist at that time. I am aware a further application for planning permit has been lodged by Crowther & Sadler Pty Ltd which proposes to create another small lot of approximately 5.1 hectares. The appropriateness of this subdivision must be considered in light of the zone provisions and the planning policies, and the merits of this proposal in my opinion will be quite different to the merits of this three lot re-subdivision permit.

31 Mr Sadler mentioned the personal desires of his client in regard to the future development and subdivision of their farm. The personal and financial reasons for a subdivision of rural land are not matters that can be given any significant weight in making a decision on the planning merits. The site is in a Rural Zone and the purpose of this zone essentially encourages its provision for agricultural and related uses. It does not seek to facilitate the subdivision of such land unless it will assist in enhancing its agricultural role. The continued subdivision of rural land will result in fragmentation and this may in turn impact upon the viability of surrounding agricultural land and the likelihood of further subdivision applications occurring. I adopt the following observations of Senior Member Byard in Parkworth Pty Ltd and Anor v Casey CC [2000] VCAT 1594:

Rural planning policy recognises that farming land is a very important economic asset of the state, quite apart from its value to the individual owners. However, its value for farming purposes can be compromised or lost if it is fragmented into small pieces that are not useful for farming purposes. The demand for rural houses and rural subdivisions comes from people wanting to exploit the residential value, as opposed to the farming value, of such land. There is a demand from people who like to live in the country on rural residential lots or hobby farms. Such use is essentially residential, rather than farming, in nature. Fragmentation into small holdings makes the land unuseful for genuine farming. It also inflates the per hectare value by endowing it with a residential rather than a farming value. The land value so inflated often means that farming activities cannot justify farming investment in it.

32 Mr Sadler acknowledged the personal circumstances of the review site and the desires of his client cannot be relied upon in considering the planning merits of any application for subdivision. As I have already stated, the merits of increasing the size of the two existing small lots in a rural area warrants approval subject to a Section 173 Agreement restricting further subdivision of these larger small lots. The balance lot is large and remains capable of supporting productive agricultural activities, and the balance lot can seek planning approval for further subdivision, particularly in accordance with the minimum lot size of 40 hectares. I see no reason why this opportunity should be denied by imposing a Section 173 Agreement. However, any further planning applications for the subdivision of the land will need to be considered on their merits. I remind the parties of the opening remark at Clause 65 of the Planning Scheme which states:

Because a permit can be granted does not imply that a permit should or will be granted. The responsible authority must decide whether the proposal will produce acceptable outcomes in terms of the decision guidelines of this clause.

For the above reasons, the decision of the Responsible Authority to grant a permit is varied. It is ordered that a permit be issued subject to conditions.

[1] Clause 12.03-2 of the State Planning Policy Framework

[2] Clause 21.05 page 21 of 29 of the Municipal Strategic Statement