The decision is that of Kevak Hotels Pty Ltd v Darebin CC [2022] VCAT 318 (Kevak), a case where declarations were sought by a hotel operator to declare that the hotel in question had existing use rights for the purpose of a hotel and, by reason of those rights, a planning permit was not required under clause 52.27 of the Darebin Planning Scheme to extend the hours within which liquor may be sold or consumed at the hotel.

The Tribunal, per Member Shpigel, made the declarations sought. The end result being that the hotel can extend the hours of trading allowed under a liquor licence without the need for a planning permit.

The decision has wide ranging and significant implications on the future application and operation of clause 52.27 where the subject land has existing use rights for a land use which includes the selling and consumption of liquor. This is not only with respect to hotels and not only with respect to the extension of trading hours. If the decision is applied by other divisions of the Tribunal, it would presumably apply to other land uses which include the selling and/or consumption of liquor such as restaurants and restricted places of assembly (clubs). It would apply also to exclude other activities sought to be regulated by clause 52.27, including the increase in the number of patrons and the area in which liquor is allowed to be consumed.

The only prerequisite being that the land use in question has the benefit of unconditional and unrestricted existing use rights stemming in particular from being in existence prior to the coming in to operation of the VPP planning schemes in circa 1999 and 2000.

The facts

The hotel at the centre of this decision is the Olympic Hotel. It was described by the Tribunal (and was common ground) as having been “established on the subject land in or around 1955 to cater for athletes staying in the nearby Olympic Village for the 1956 Olympic Games in Melbourne“, with some evidence that “the building was constructed on the subject land on 9 February 1953, prior to the introduction of planning controls in 1955”.

It was common ground that the hotel has been in continuous use as a hotel prior to the commencement of the planning scheme and “that ... the use of the subject land as a hotel has not been held to be unlawful and the Council has not given a written direction for the use to cease”. It was also common ground that the subject land thereby had the benefit of existing use rights through clause 63.11 and those rights are not subject to any restriction or condition.

The hotel operator initially applied for a planning permit to extend the hours of trading under its liquor licence. This is not uncontroversial as clause 52.27 of the planning scheme stipulates that a “permit is required to use land to sell or consume liquor if… (relevantly) … The hours of trading under a licence are to be extended”.

Applicant’s argument

The Applicant argued that extending the trading hours of the hotel does not change its activities such as to amount to a change of use from a hotel use. Hotels are places where liquor is sold and consumed. The argument was that extending the hours is an increase in the intensity of the use but that the intensity of the activities within the use can increase within the protection given by existing use rights provided the increase in intensity does not change the use to another use.

The Applicant argued that to the extent that clause 52.27 required a planning permit to increase the trading hours of the hotel, together with the possibility that such permit may be refused, meant that clause 52.27 amounted to an unpermitted fettering of the existing use rights. It argued that clause 52.27 could not apply to regulate the sale and consumption of liquor as to do so would offend section 6(3) of the Planning and Environment Act.

Council’s argument

The Tribunal’s reasons described the Council’s argument as:

“The Council argued that clause 52.27 does not prevent the continuation of an existing land use, but instead regulates the sale and consumption of liquor when changes are contemplated to a liquor licence. In the Council’s view, clause 52.27 is not a land use control because it regulates the activity of selling and consuming liquor and is applicable even when an existing use right is established. The Council relies on Kazer Pty Ltd v Port Phillip CC, Barjen v Port Phillip CC and Bomvic Pty Ltd v Yarra CC.” [footnotes omitted].

Tribunal’s reasons for making the declarations sought

21 I am not persuaded by the Council’s submission, and I do not agree that a planning permit is required to vary the trading hours of the Olympic Hotel. The establishment of existing use rights not only protects the use of the subject land for the purpose of a hotel but also allows the uses and activities that comprise that use to intensify over time. The Supreme Court in in the City of Nunawading v Harrington said the use and the activities on the land –
… may change, increase or decrease, so long as the same purpose is served

22 I consider the changes to the hotel’s operating hours to be an intensification of the existing hotel use, and not a use for a new or different purpose. In Wellington v Surf Coast Shire Council & Ors, Deputy President Dwyer stated:

Moreover, cases such as Norman v Gosford Shire Council make it clear that a use may be intensified over time, even with a change in activities within the use, without changing the purpose of use. The use to which land may be put and the activity on it may change, increase or decrease, so long as the same purpose is served. There may even be greater amenity impacts created through the intensification of the use, without the purpose of the use changing.

23 The approach advanced by the Council and the cases it relied upon reflect an outdated and potentially erroneous view that clause 52.27 does not prevent the continuation of an existing use right, provided the uses and activities remain “unchanged”. If this approach were adopted, the scope of existing use rights would be materially constrained. It is also contrary to the established principle that existing use rights may be intensified provided the underlying purpose of the use does not change.

24 Applying these principles, I consider that the proposed change to the Hotel’s ground floor trading hours, from 7.00am − 3.00am to 9.00am − 5.00am on weekdays and Saturdays, will not change the activities conducted on the subject land or the use for the purpose of a hotel. I am satisfied that despite any changes to the trading hours permitted by the liquor licence, the subject land will continue to be used for the purpose of a hotel.

25 I also consider clause 52.27 to be a use control, as it imposes a permit requirement on the use of land to sell and consume liquor in circumstances where those activities are components of a protected existing use. I agree with Deputy President Dwyer’s comments in McKinnon Hotels Pty Ltd v Glen Eira CC 24 that a permit could conceivably be refused and the permit requirement in clause 52.27 would impose a fetter on the Olympic Hotel’s existing use rights. [footnotes omitted]

Implications of the decision

It is not clear why the Tribunal described the Council’s argument as “an outdated and potentially erroneous view” of clause 52.27. If it is a 'view', it is supported by the three Tribunal decisions which were referred to and relied on by the Council. Apart from not being 'persuaded' by Council’s argument and preferring the Applicant’s argument, the Tribunal did not explain why it was departing from previous Tribunal decisions.

The Tribunal was clearly influenced by a previous Tribunal’s decision regarding the McKinnon Hotel, which is possibly understandable, except the Tribunal in McKinnon was dealing with clause 52.28, not clause 52.27.

Regardless, the decision now stands for, and will be presumably relied on by future operators of licensed premises, who will argue that clause 52.27 does not operate to regulate the sale or consumption of liquor where that sale or consumption occurs on land which has the benefit of existing use rights for a use which ordinarily includes the sale or consumption of liquor (and provided the change in the activity does not result in a change of use).

If this is correct, the same principle will presumably apply to all matters sought to be regulated by clause 52.27. For example, an increase in the number of patrons and changes to the area where liquor is allowed to be supplied or consumed. It will apply to all uses in which the sale or consumption of liquor is part of that use, such as restaurants and restricted places of assembly.

The Tribunal did go on to say: “However, the extension of hours may still require regulatory approval under other legislation such as the Liquor Control Reform Act 1998”. So much is true and some Councils may embrace the decision as potentially reducing their workload regarding the operation of clause 52.27.

The question, though, is whether this is the outcome sought by the planning scheme with respect to regulating of the sale and consumption of liquor within licensed premises. There is also a question as to whether a Council will be required to undertake an assessment of the history of the subject land in every application which is made for a planning permit to assess whether the land has the benefit of existing use rights and/or to assess every application where a claim to existing use rights is made.