2 In application P3016/2004 a permit is granted for a two lot subdivision at 9 Amalia Close, Yarra Glen generally in accordance with the endorsed plans and subject to the following conditions:

1

The layout and site dimensions of the proposed subdivision as shown on the endorsed plan(s) must not be altered or modified unless agreed to by the responsible authority.

2

This permit will expire if the Plan of Subdivision is not certified, pursuant to the provisions of the Subdivision Act 1988, within two (2) years of the date of issue.

3

Before the Statement of Compliance is issued under the Subdivision Act 1988, the owner must remove or vary the restrictive covenant (X180844V) affecting the land in the subdivision so that a single dwelling may be constructed on each lot created by the subdivision.

4

The owner of the land must enter into agreements with the relevant authorities for the provision of water supply, drainage, sewerage facilities, electricity, gas and telecommunication services to each lot shown on the endorsed plan in accordance with the authority's requirements and relevant legislation at the time.

5

All existing and proposed easements and sites for existing or required utility services and roads on the land must be set aside in the plan of subdivision submitted for certification in favour of the relevant authority for which the easement or site is to be created.

6

The plan of subdivision submitted for certification under the Subdivision Act 1988 must be referred to the relevant authority in accordance with Section 8 of that Act.

7

All existing and proposed easements and sites for existing or required utility services and roads on the land must be set aside in the plan of subdivision submitted for certification in favour of the relevant authority for which the easement or site is to be created.

8

Prior to the commencement of road and/or drainage works as required by this permit, civil engineering construction plans and an estimate for the works shown on these plans must be submitted together with a checking fee to the value of 0.75% of the estimated cost of these works, for formal approval.

9

The construction of the driveways and drainage within the site is to be inspected and approved by a suitably qualified or experienced civil engineer. Prior to a Statement of Compliance being issued the engineer must certify the construction of these works, to the satisfaction of the responsible authority.

10

The applicant must enter into an agreement with SPI Electricity Pty Ltd for the extension, upgrading or rearrangement of the electricity supply to lots on the plan of subdivision as required by SPI Electricity Pty Ltd. A payment to cover the cost of such work will be required and easements internal and external to the subdivision and provision of sites for substations may also be required.

11

Prior to the issue of a Statement of Compliance, the Owner shall enter into and comply with an agreement with Melbourne Water Corporation under Section 269A of the Melbourne & Metropolitan Board of Works Act 1958, for the provision of drainage works and the acceptance of surface and stormwater from the subject land directly or indirectly into Melbourne Water's drainage system.

12

No polluted and/or sediment laden runoff is to be discharged directly or indirectly into Melbourne Water's drains or watercourses.

13

Prior to Certification, the Plan of Subdivision must be referred to Melbourne Water, in accordance with Section 8 of the Subdivision Act 1988.

The responsible authority is directed to issue a permit in accordance with this order under the provisions of section 85(1)(b) of the Planning and Environment Act 1987.

1

These applications concern the proposed two lot subdivision of the subject land, which is subject to a single dwelling covenant (X 180844V). The issue is whether the subdivision should be allowed before the covenant has been removed or varied to allow a dwelling on both lots that will be created by the subdivision.

2

Application P2785/2004 was made by the responsible authority and sought a declaration that the issue of a permit for subdivision into two lots will not breach the covenant and will allow each lot to have entitlement to be developed with one detached dwelling on each lot.

3

Application P3016/2004 is made by the permit applicant in respect of the failure by the responsible authority to grant a planning permit for the two lot subdivision.

4

The responsible authority has no concerns about the planning merits of the proposed subdivision but is concerned that it is precluded by section 61(4) of the Planning and Environment Act 1987 from issuing a permit. It would prefer to consider the subdivision once the restrictive covenant affecting the land has been varied or removed so as to allow more than one dwelling on the land.

5

Both parties now acknowledge that the restrictive covenant would preclude more than one dwelling on the whole of the subject land even if the land is subdivided into two lots. The issue of whether the grant of a permit would breach the covenant is the central issue in the failure application (P3016/2004). There is therefore no need for the Tribunal now to make any declaration as the matters of concern to the Council which led to application P 2785/2004 will now be addressed in the context of application P 3016/2004.

6

The subject land is included in a Residential 1 Zone under the Yarra Ranges Planning Scheme. A planning permit is required for subdivision. Under clause 53 of the planning scheme a permit would be required for development of a dwelling. The areas of the proposed lots are 520 and 620m2 respectively. The site is currently vacant. It is within a preferred medium density residential area under the local planning policy in clause 22.01 and complies with the objectives and policy set out in the Residential Areas Policy.

7

I find there are no reasons based on the size, layout or design of the subdivision why a permit should not be granted. The sole issue is whether a permit should be granted for subdivision before the restrictive covenant affecting the land is removed or varied.

8

Section 61(4) of the Planning and Environment Act 1987 provides as follows:

(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.

9

It has been held in a number of Tribunal decisions that section 61(4) will only prevent the grant of a permit if it is the grant of a permit itself that will authorise the breach of covenant. If a further permit is required to authorise the thing that would result in the breach of the covenant then that does not preclude the grant of a permit by reason of Section 61 (4). For example, Deputy President Horsfall said in Dukovski v Banyule City Council [2003] VCAT 190:

[22] It is well established that where a covenant places restrictions on construction on an allotment, eg. A single dwelling covenant, a permit to subdivide the land does not result in a breach of the covenant. Whilst the subdivision may be a pre-requisite or part of the process for ultimate sale of a ... dwelling, the subdivision itself does not result in the breach. The breach is created by the relevant construction.

10

Thus for section 61(4) to preclude the grant of a permit, the permit must be for the thing that would directly result in a breach of the restrictive covenant. It is not sufficient that the grant of the permit will simply create a set of circumstances where a breach of the covenant may occur in the future.

11

The subdivision of the subject land is not prevented by the restrictive covenant which affects it. Rather, the covenant prohibits the construction of a second dwelling on any part of the existing lot. Therefore, section 61(4) of the Act does not prevent the grant of a permit for a two lot subdivision because it is not the subdivision that will result in a breach of the restrictive covenant.

12

However, in considering any application for a permit for subdivision, clause 65.02 of the planning scheme requires consideration of, inter alia:

•

The existing use and possible future development of the land and nearby land.

13

The responsible authority argued that the land should not be subdivided and new lots created when there is no certainty that they can be developed with a dwelling. It was submitted that:

"The purpose of inserting s.61(4) was to avoid a waste of time and money of Council's VCAT and developers obtaining planing permits which because of a covenant could not be acted upon. In the present case the situation or outcome is arguably worse as this subdivision which effectively presumes future development contains lots which are likely to be sold to unsuspecting purchasers with the future difficulties left in the hands of those purchasers, Council and VCAT to sort out.

It is trite to say that those purchasers can obtain their own legal advice at the time of purchasing and should be left to their own devices in that respect. The prospect of creating this problem goes against the very purpose of which s.61(4) was created and it would be bad planning to allow the situation to be created."

14

On the other hand, it was submitted by the permit applicant that a permit for the two lot subdivision should be granted. There is nothing that would prevent the grant of a planning permit at least for a house on one of the lots before the covenant is varied or removed. It is only when it comes to the issue of a planning permit for a dwelling on the second lot that the Council would need to consider if this would result in a breach of the covenant. Mr Wade advised it was his intention to lodge an application to vary or remove the covenant either in the Supreme Court by way of planning permit once he gets his subdivision. He submitted that it should be the prerogative of the landowner to decide the timing of his course of action and that if the covenant does not preclude subdivision, then it should be permitted.

15

Having regard to the requirement of clause 65.02 to consider the possible future development of the land, I am not persuaded that it is good planning to allow the creation of lots by way of subdivision where there is real uncertainty about the ability to use and develop them for their primary purpose as contemplated by the planning scheme, namely for residential purposes. It is true that a planning permit may be granted for a dwelling on one of the lots before the restrictive covenant is varied or removed without breaching it. However, that would leave the second lot without any development rights until the covenant was dealt with. I agree with the Council that allowing this type of situation to be created is contrary to the spirit of section 61(4) of the Act if not the letter. Whilst it is not necessarily Mr Wade's intention to dispose of the second lot before the restrictive covenant is varied or removed, there needs to be some guarantee of this so that a lot which cannot be developed is not created and disposed of, perhaps to an unsuspecting purchaser.

16

The Tribunal has tended to adopt a cautious approach when considering permits for subdivision where future development of the land may breach a restrictive covenant even though the subdivision itself does not breach the covenant. In Chester v Banyule City Council [2003] VCAT 167, which involved the subdivision of land affected by a restrictive covenant, it was held that the subdivision would not breach the covenant, per se, but that in effect the desired future uses of the land would be a breach of that covenant. On this point Member Eccles said:

[19] Given the provisions of the covenant, to all intents and purposes the subdivision, if approved, would result in the creation of a lot which was incapable of being developed. In determining this application to subdivide I am required to consider pursuant to Clause 32.01-2, inter alia, the decision guidelines at Clause 65 of the Banyule Planning Scheme. Clause 65. The matters set out in Clause 65.02 include "The existing use and possible future development of the land and nearby land". That the proposed new lot would be, to all intents and purposes incapable of being developed without breaching the covenant is therefore a relevant consideration. It would not be orderly and proper planning to create such a lot. I have therefore not allowed Application for Review P1802/2002.

17

The case of Carmrer Pty Ltd v Port Phillip City Council [2003] VCAT 1319 also involved a two lot subdivision. In that case Member Monk distinguished the application from Chester's case because redevelopment following subdivision would not necessarily result in breach of the covenant, nevertheless "redevelopment following subdivision is significantly constrained." The Tribunal, in addressing the requirement of clause 65.02 that when deciding whether to grant a permit to subdivide land "the existing use and possible future development of the land and nearby land" must be considered, reached the conclusion that a permit should not be granted:

[26] ... put simply, I find that I was provided with insufficient evidence to demonstrate that this proposed subdivisional layout could indeed enable an appropriate redevelopment outcome. That is to say, an outcome that would not unduly compromise the liveability and cultural significance of the existing dwelling and at the same time not breach the covenant.

18

In the case of Trevanion v Maroondah City Council [2004] VCAT 2480 the Tribunal was dealing with a two lot subdivision of land which already had an existing dwelling but was subject to a single dwelling restrictive covenant. The Council granted a permit but attached a note to the permit as follows:

Council advises that a restrictive covenant exists on title, and prior to the construction of any dwelling on the subject land, a variation of the restrictive covenant to allow the construction of a dwelling on the land would be required.

19

The case involved an application for review of conditions and this note pursuant to section 80 of the Act. The Tribunal supported the Council's position and considered "there is a good case that some form of warning should be given in the permit regarding the implications of the restrictive covenant." However, the Tribunal decided that rather than include a note on the permit, it should be replaced by a more comprehensive and better drafted permit condition.

20

The facts in Trevanion's case are somewhat different to the current case, where there is no existing dwelling, and I do not consider that a condition of the type imposed in Trevanion is appropriate here.

21

In my view a preferable outcome would be to grant a permit for the two lot subdivision but include a condition that a statement of compliance must not be issued unless and until the restrictive covenant is removed or varied to allow construction of a dwelling on each of the lots created by the subdivision. This course of action will provide certainty to the permit applicant on the one hand that the subdivision can proceed provided the restrictive covenant is dealt with and will also provide certainty for any prospective owners of the lots by ensuring that lots are not created that may not be capable of obtaining a permit for a dwelling.

22

For these reasons I will grant a permit on the draft conditions proposed by Council with an additional condition requiring removal or variation of the restrictive covenant before a statement of compliance is issued.