Australia: Supreme Court Rules Permit Condition Does Not Provide Sufficient Certainty Of Outcome

The Supreme Court decision of Maroondah City Council v J&J Scott [2008] VSC 42 by Justice Osborn was an appeal on a question of law from a VCAT decision on a planning permit to subdivide land. The judgment deals with the situation where the wording of a permit condition imposed by the Tribunal is inconsistent with the reasons given by the Tribunal for the decision. In particular, a condition providing that the Council must provide its consent to a further subdivision in an effort to curb further subdivision, did not have the effect of making further subdivision 'unlikely'.

The Tribunal decision involved an appeal against conditions on a permit issued by the Maroondah City Council (Council) for the subdivision of land.

The Council imposed a condition requiring a 5% contribution for the provision of public open space under Clause 52.01 of the Maroondah Planning Scheme. The permit applicants sought a review of that condition and contended that an exemption applied. Under Clause 52.01, a subdivision is exempt from a public open space requirement in accordance with section 18(8) of the Subdivision Act 1988 (Vic) if it subdivides land into two lots and the Council considers it unlikely that each lot will be further subdivided. The permit applicants advised they had no intention of seeking a further subdivision of the land and were content to accept a condition requiring them to enter into an agreement preventing the land from being further subdivided.

The Tribunal held that in the circumstances of the case, having regard to the size and configuration of the lots, the requirement to enter into an agreement under section 173 of the Planning and Environment Act 1987 (Vic) (P&E Act) preventing the land from being further subdivided is sufficient to ensure the exemption under Clause 52.01 is met. Member Hewet directed that a new condition be included in the permit requiring the permit applicants to enter into a section 173 agreement preventing the land from being further subdivided, unless the Council provided its consent.

APPEAL TO SUPREME COURT

The Council appealed to the Supreme Court of Victoria pursuant to section 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) on questions of law. The Council raised two questions of law:

• In the circumstances of the application, was the imposition of a condition purporting to preclude or limit the possibility of further subdivision of the land by a requirement to enter into an agreement pursuant to section 173 of the P&E Act a valid planning condition?

• Even if the condition was valid, was it reasonably open to the Tribunal to conclude that the terms of the condition were suffi cient either alone or with other factors to make the further subdivision of the land 'unlikely'?

The Court stated that in relation to the validity of the planning condition, the underlying test of validity is whether the relevant condition relates to the implementation of planning policy when the scope of that policy is ascertained from the relevant planning legislation and planning scheme.

Justice Osborn concluded that the purpose for which the condition was imposed was a valid one, and it was for the Tribunal to decide whether it was effective, considering the fundamental notions of sustainable development and net community benefit in all the circumstances of the case including relevant planning policy.

The second question of law required an examination of the condition's wording, which included the phrase 'except with the written consent of the responsible authority'. The capacity for consent was of particular concern to the Council. The Council submitted that if an application were made for consent to further subdivision, consent would most likely be granted on the planning merits. This is because while 'good planning' desires the provision of an open space contribution, it alone does not prevent further subdivision.

The Court recognised that the Tribunal based its decision on the terms of the exemption considering the size and configuration of lots and on its capacity to impose a condition requiring a section 173 agreement that 'prevents' the land from being further subdivided. However, Justice Osborn noted that although the Tribunal decided the matter on the basis that it would impose a condition preventing the land from being further subdivided, the condition it in fact imposed did not do that in the ordinary sense of the term 'prevent'.

SUPREME COURT DECISION

Justice Osborn held that the Tribunal has erred in law on the basis that:

• The condition it imposed did not in fact require a section 173 agreement preventing the land from being further subdivided.

• The Tribunal did not address the question whether the requirement for consent under a section 173 agreement in the terms it proposed, would in fact render future subdivision of the land unlikely.

• Unless the required section 173 agreement in truth 'prevented' further subdivision, it could not necessarily be regarded as determinative of the future likelihood of subdivision.

• A requirement for further consent does not of itself render further subdivision unlikely. The Council (and VCAT on appeal) would not be bound to refuse to provide its consent, having regard to relevant planning considerations.

Justice Osborn noted that the conclusion of this matter is not one of merits, but rather 'turns on a fundamental and unexplained inconsistency between the Tribunal's reasons and the condition it imposed'.

The Court set aside the decision of the Tribunal and remitted the matter for a further hearing in accordance with law.

IMPLICATIONS

The case highlights the importance of drafting permit conditions and section 173 agreements carefully. A permit condition without a section 173 agreement is ineffective, as a permit holder can apply to amend the permit. Further, if a section 173 agreement permits a Council to provide its further consent, then a permit holder has a right to appeal to VCAT against the Council's refusal to provide its consent. So, if a Council wishes to ensure that a certain event should happen, it should enter into a section 173 agreement, and the agreement should not allow a Council to provide its consent to the event occurring. Conversely, permit holders should seek to allow for the Council to provide its consent to allow flexibility.

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