Land and Environment Court of New South Wales CITATION : Ratsep v Bathurst Regional Council [2007] NSWLEC 115 This decision has been amended. Please see the end of the judgment for a list of the amendments. APPLICANT Margus Alexander Ratsep PARTIES : RESPONDENT Bathurst Regional Council FILE NUMBER(S) : 11085 of 2006 CORAM: Hussey C KEY ISSUES: Development Application :- Rural subdivision, minimum 100 ha area requirement, compliance with zone objective for viability, precedence LEGISLATION CITED: Environmental Planning and Assessment Act Bathurst Regional (Interim) Local Environment Plan 2005 Stockland Development Pty Ltd v Manly Council [2004] NSWLEC 472; CASES CITED: Emmott v Ku-ring-gai Municipal Council [1954] LGRA 177; Goldin & Anor v Minister for Transport Administering the Ports Corporation and Waterways Management Act 1995 [2002] NSWLEC 75 DATES OF HEARING: 27-28 February 2007 DATE OF JUDGMENT: 9 March 2007 APPLICANT Ms M Carpenter, barrister SOLICITORS McPhee Kelshaw LEGAL REPRESENTATIVES: RESPONDENT Mr I Woodward, solicitor SOLICITORS Storey & Gough JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Hussey C Date : 9 March 2007 11085 of 2006 Margus Alexander Ratsep v Bathurst Regional Council JUDGMENT Background 1 This appeal was lodged against council's refusal of a development application for the consolidation and re-subdivision of 7 small rural lots at Duramana to create 2 new allotments. 2 The 7 lots comprise: * Lot 8; 15.25 ha, * Lot 18; 17.4 ha, * Lot 19; 21.04 ha, * Lot 20; 15.18 ha, * Lot 56; 10.12 ha, * Lot 98; 71.31 ha, * Lot 145; 50.18 ha. Total area 200.48 ha. 3 These lots are situated on the eastern side of Turondale Road and are known as "Winburndale" and Lot 98 contains an existing dwelling and associated outbuildings. 4 On the opposite side of Turondale Road is a separate rural holding known as "Travellers Rest", which has an area of approximately 324 ha and is in the same ownership as Winburndale. 5 The council identified the following issues for the appeal: (i). Whether approval should be granted because the proposed lots would not comply with the provisions of the LEP, particularly the objectives for the Outer Rural Zone. (ii). Whether approval should be granted as the proposed development would jeopardise the economic viability of the rural holding known as "Travellers Rest". (iii). Precedent. The proposal. 6 The proposed new lots comprise: o Lot 1; which contains an existing dwelling and is to have an area of 100.35 ha. o Lot 2; which is currently vacant and is to have an area of 100.13 ha. Access to this lot is to be provided from Rivulet Road. Planning controls. i) Bathurst Regional (Interim) LEP 2005. Under this LEP the land is zoned 1(e) Outer Rural. Clause 6 provides: (3) Consent must not be granted to the carrying out of development within a particular zone, unless the consent authority has taken the objects of the zone into account and: (a) is satisfied that the proposed development is consistent with one or more of those objects, or (b) if the proposed development is development of the kind that is identified by this plan and as usually not consistent with those objects - is satisfied that, in particular circumstances of the case, it is appropriate that the proposed development be carried out. The objectives of the zone are: (a) to support and maintain the continued viability of agricultural development in rural lands located in the outer rural areas of the local government area of Bathurst Regional, (b) to enable the carrying out of development that is appropriate for broad acre productive land use for grazing and cropping… 7 Clause 27 (1) deals with subdivision and provides that the consent authority must not grant consent for subdivision in Zone No. 1(e) unless each of the new lots has a minimum area of 100 ha. 8 Clause 27 also provides: (4) Despite subclause (1), the consent authority may grant consent to an application for consent to subdivide land, so as to create one or more lots in Zone No 1 (a), 1 (d) or 1 (e) of less than the relevant minimum area specified in subclause (1) (but not less than 20 hectares) if the consent authority is satisfied that each such proposed lot is intended for use for the purpose of intensive agriculture. (5) The consent authority must not grant consent to an application referred to in subclause (4), unless the consent authority has considered a property development plan that will enable the consent authority to fully consider the impact of the subdivision on the agricultural output of the land, and consent is to be is satisfied that: a) the land will be used the purpose of intensive agriculture, and b) the subdivision will not significantly reduce the agricultural viability of the land from which the proposed lots are to be excised, and c) the subdivision will permit proper soil conservation management practices that will ensure the long-term suitability of any intensive agricultural pursuit. 9 Clause 28 allows the erection of a dwelling house in the 1(e) zone, providing the lot has a minimum area of 100ha. ii) Development Control Plan – Rural Lands. This DCP came into effect on 20 April 2005 and contains a number of aims and objectives in clause 1.3, of which the following were identified as relevant: (a) to support and maintain the continued viability of agriculture development in the Bathurst Region; (b) to protect the economic viability of rural and agricultural enterprises, (c) To ensure that the social, environmental and economic impact of a development proposal are considered; … 10 The DCP identifies various land classes in terms of their agricultural suitability. In this case, the two proposed allotments are a mix of Class III and Class IV land. 11 Part 3 deals with subdivision, wherein the objectives are: a) to ensure that development within the Rural Zone is appropriate; and b) to preserve land with an Agricultural Suitability of Class I, II or III and land within a Land Capability of Class I, II, III, IV or V as identified on Map 1 and Map 2 to this DCP. 12 The DCP is concerned that fragmentation of rural land can lead to future land-use conflicts and reduction in the lands productive capacity. Also that fragmentation of the land can result in the need to provide extra services and infrastructure, such as provision/maintenance of roads. It therefore requires the submission of a Property Development Plan (PDP), in accordance with Part 11. Such PDP is required in the following circumstances: a) subdivision of land for intensive agricultural purposes; and b) subdivision of a holding greater than the minimum required under the Bathurst Regional (Interim) LEP 2005 into allotments that meet the minimum allotment and area (i.e. in the 1(e) zone 100 ha). 13 Accordingly, the relevant objectives for the preparation of a PDP include: The objectives of the preparation of a PDP is to demonstrate that: a) Any proposed land use is reasonable and justifiable in terms of the objectives of the relevant zones. b) That the subject property is capable of economic sustainability through the proposed land use. (Note: farm income is not be considered in determining 'sustainability' of the proposal). c) That the proposed land use is compatible with the site and surrounding rural area … The DCP states that the true test of sustainability is whether a 'farm' can be bought and sold in perpetuity at market value therefore true and full cost must be considered, so that the commercial integrity of the proposal can be realistically assessed… The Evidence 14 Detailed evidence on behalf Council was presented by: o Mr M Ryan; Agricultural consultant (Exhibit. 5), o Mr D Shaw; Councils Director Environment/Planning, o Ms M Kovav; Resource Management Officer, with Department of `Primary Industry. 15 For the applicant detailed evidence was presented by: o Mr N Kennan; Consulting planner, o Mr J Dymock; Agronomist, o Ms K Robinson, Part owner of the property. 16 With regard to the planning issue (i), the planners conferred and agreed that: "it is generally the case that when a Council prepares a Local Environmental Plan which contains aims and objectives of the plan and a particular zone, that any development standards contained within the Local Environmental Plan, e.g. the 100ha minimum lot size as contained in the Bathurst Regional (Interim) Local Environmental Plan 2005, should have been prepared by the Council to fulfil the relevant aims and objectives of both the planning instrument and the particular zone to which the development standard relates". 17 As the development proposal complies with the development standard and therefore presumably satisfies the objective, Mr Kennan supports its approval, although he defers to the agriculture experts on any associated issues concerning the viability of the agricultural land. 18 Against this, Mr Shaw does not support the application because he says greater weight should be given to the zone objectives, whereby the approval of the development would fragment the land and therefore it is contrary to the objectives. In his evidence he provided a detailed history of the minimum area standards. 19 In summary, this history includes: o On 24 May 2004 Bathurst City Council and the majority of Evans Shire Council amalgamated to form Bathurst Regional Council… o The subject land was located within the former Evans Shire area and subject to its IDO 1(gazetted on 22 August 1980), under which it was zoned 1(a) Rural. The relevant objectives for this 1(a) zone included: a) to preserve land within a Land Capability Class of Class I, II, III, IV or V; b) to protect the economic viability of rural and agricultural enterprises; c) to ensure that subdivisions are compatible in size with the surrounding holdings; o Clause 15(4) of IDO No. 1 allowed subdivision subject to the criteria in Schedule 7 on the following basis: a) an area of not less than 1or more than 20 hectares, if i. the allotment consists of land that is not of Land Capability Class I, II, III, IV or V; or ii. the allotment consists of land of any Capability that is adjacent to an existing village area; or b) an area of not less than 100 hectares. o Clause 15 (10) of IDO No 1 limited the number of allotments that could be created under cl. 15(4) to 35. As this caused difficulties in distributing the 35 allotments within the amalgamated areas, approval was sought from the Director General to reduce the lot yield to 0 pending the preparation of a Rural Strategy and new comprehensive LEP. o The interim LEP was largely administrative in nature and did not seek to alter the minimum area for subdivision within the rural zones that existed within the preceding planning instruments. The result being that the minimum area contained in the former planning instruments were carried forward to the BLEP 2005. o The need to address the minimum area for subdivision and dwelling houses was however foreshadowed by the Department of Primary Industries as part of the Section 62 consultation process. The Departments advice in relation to the draft Interim LEP was as follows: "It is expected that Council will use the impending comprehensive strategic planning to identify a framework of policies and development control provision supportive of sustainable agriculture. Provisions that would set realistic minimum subdivision areas for dwellings should be based on commercial and sustainable progress and support agriculture. Consequently, dwellings in rural areas should only be permitted if they are ancillary to genuine agriculture. Dwellings the lifestyle purposes should occur in locations that are planned and appropriate. + The BLEP 2005 did however rationalise the objectives of the zone and sought to provide greater emphasis on the need to provide for sustainability of subdivisions within the rural areas. This process was however undermined to a degree by Council's desire to retain, as much as possible, the preceding planning provisions. This is illustrated in that the zone objectives within the 1(a) and 1(e) zones are the same save for an objective within the 1(a) relating to a range of compatible land uses which is absent in the 1(e) zone. It is noted however that general minimum areas in the 1(a) Inner Rural Zone (200 ha) and the 1(e) Outer Rural Zones (100 ha) differ. There is no underlying reason for this difference in the minimum areas provided for in the rural areas other than that they have been historically been at that level through the respective preceding planning instruments. + The 100 hectares development standard has therefore been in existence since 1980 without having been reviewed. Its appropriateness as a minimum area for subdivision for agricultural purposes is therefore doubtful given the changes that have occurred within the rural sector since adoption. 20 The viability/sustainability issue arising from the zone objectives and DCP provisions was assessed by Mr Dymock and Mr Ryan. Mr Dymock prepared a property development plan (PDP) as suggested in the DCP and assessed the natural features of the subject property, together its past operations as a sheep farm, which under normal conditions would carry 4.5 dse/ha (dry sheep equivalent). Although he says that in good seasonal conditions possibly 8 – 10 dse/ha could be achieved. 21 Insofar as no definition of viability is contained within the controls, Mr Dymock says that this raises a number of different issues and can be assessed by considering the following five factors: 1. The farms cash flow is important to cover running costs of whatever rural enterprise is being conducted. In drought times this is reduced to negative figures but a long-term budget needs to incorporate allowances for drought years. 2. The operator's equity in the business. Overheads needing to be serviced reduce cash surpluses. Low equity levels reduce an enterprise's ability to attract investment funds for expansion or development. 3. The operator's management skills. These are provided by the owners or purchased by employing qualified contractors. 4. Outside factors such as commodity price changes and drought. 5. Environmental factors such as salinity, corrosion, acidity and conflict. 22 Accordingly, he says that agriculture as a whole is a dynamic industry involving frequent changes to enterprises and emphasis. Viability can be influenced by the objectives of the owner operator. Furthermore, he considers that off farm income is essential for the survival of agriculture as presently conducted in the Central Tablelands of NSW. This is based on ABARE estimates that for the years 1999 to 2003, 79 % of agricultural businesses with a net farm income of $100,000 or less had off farm earnings, which provide 91% of their annual income. 23 Mr Dymock's conclusions are summarised as follows: o The proposed consolidation of the existing seven lots within the "Winburndale" parcel into two lots of 100 ha is a positive initiative. These lots, one as small as 10.12 ha, all having separate titles, could be sold off separately or in combination and used for agriculture. Following consolidation, a minimum area of allotments on "Winburndale" will be approximately 100 ha. o The continued use of these two proposed allotments as is currently the case in association with "Travellers Rest", will maintain existing farm viability. o If in the future one or either of the proposed allotments were sold, they could be used as part of another holding by a different owner, as was the case prior to the purchase of " Winburndale" in 1983. o The allotments could also be used as stand alone holdings, depending on the wishes of the owner operator. The exceptional water resources of these two allotments would provide an essential natural resource for agriculture to be conducted. o This proposed consolidation supports 5(a)(1) of the Act, which is to encourage the proper management, development and conservation, among many other things such as agricultural land and natural areas. This proposal is certainly orderly and will provide the opportunity for economic use and development of the land. 24 Mr Ryan undertook a detailed assessment of the property, together with a review of Mr Dymock's PDP. He generally concurs with the natural resource assessment for the proposed Lots 1 and 2 and with Mr Dymock's assertion that with adequate management proficiency, a sheep enterprise would not detract from the sustainability of the natural resources on the holding. 25 However, he says that there is no evidence available to support the claim of economic sustainability of the proposed subdivision, as required in cl 27 Subdivision – Rural Zones from the LEP. Accordingly, he identified a number of factors that he considers define a sustainable business. These include; debt levels, management skills, personal needs, family circumstances, resource constraints and stages in the terms of trade cycle. 26 Mr Ryan says that it is best business practice for (agricultural) businesses to be expected to produce commercially attractive returns. In order to assess commercial returns a common technique used is EBIT yield. This is the acronym for "Earnings Before Interest and Tax". EBIT yield is a debt free profit divided by the gross value of all assets employed by the business. 27 By applying this methodology, Mr Ryan presented the following Scenario B (Table 6), which summarises the profit and loss scenarios for a range of model farm sizes of 100 ha, 200 ha, 350 ha and 550 ha to represent the current situation of the lands capability on the subject site. That is: - 100 ha is the individual size of each of proposed Lots 1 & 2. - 200 ha is the combined area of proposed Lots 1 & 2. - 350 ha is the approximate area of "Travellers Rest" which would comprise the residual rural holding if the DA was approved. - 550 ha is the approximate combined area of proposed Lots 1 & 2 and "Travellers Rest". TABLE 6 – SCENARIO B – PROFIT AND LOSS AREA (HA) 100 200 350 550 TOTAL DSE 600 1,200 2,100 3,300 TOTAL Enterprise GM $K 13.3 26.6 46.6 73.2 Variable Unallocated $K 6.0 6.8 7.6 9.2 Overheads $K 15.0 15.7 16.4 17.8 Finance $K 1.2 1.2 1.2 1.2 Salary $K 0.0 0.0 40.0 40.0 Capital Renewal $K 0 9.8 9.8 9.8 EBIT $K -8.9 -6.8 -28.3 -4.7 28 Based on current capital renewal allowances of 15% and assumed DSE rating of at least 10,000, this can be managed by one FTE (Full Time Equivalent). But noticeably, no positive EBIT is achieved at any farm size in this range. 29 However, Mr Ryan says that a 350 ha farm running approximately 2000 wethers would be considered viable if the owner had access to FTE off-farm income. The ability of farms less than 700 ha in size to generate a surplus, which can be invested in environmental stewardship (amongst many things) is questionable. Farms which are struggling financially, may not be able to practise good resource management even if the desire exists. This may lead to environmental degradation over time. 30 Consequently, the application of this methodology indicates that in the Duramana locality, there is a strong correlation between increasing farm size and EBIT yield, which corresponds with a "breakeven" point of 625 ha. Furthermore, the point at which a desirable target EBIT yield of 3% is achieved is not met unless there is a land holding of approximately 1600 ha. 31 The proposal was also referred to the Department of Primary Industries. Ms Kovacs provided a general policy response based the departments involvement in local government planning through the: * Policy for Sustainable Agriculture in NSW 1998 (NSW Government, 1998), * Policy for the Protection of Agricultural Land (NSW DPI, 2004). 32 Ms Kovacs says that the major issue in these policies concerns settlement and housing densities in agricultural areas and that a report on the Implementation of the Policy for Sustainable Agriculture in NSW (2002) was previously endorsed. 33 However, there have been no changes to the relevant planning controls and accordingly, Ms Kovacs says: "The current 100 hectare minimum lot size that attracts a dwelling entitlement under the current Bathurst Regional Council Interim Local Environmental Plan is inadequate to achieve policy outcomes associated with protection of agriculture. The objectives of lands zoned 1(e) are linked to the policy outcomes that the Department supports so the 100 hectare minimum and the objective to protect land for agriculture from fragmentation are contradictory when the 100 hectare minimum that attracts a dwelling entitlement is applied. It only has promoted the fragmentation of land and its conversion to lifestyle purposes in the area thus contradicting the objectives of the zone. Previous strategic work that was started by the former Evan Shire Council (which now forms part of the Bathurst Regional Council…) in 2003 indicated that the minimum lot size should be much higher to achieve policy outcomes and protect the agricultural land resource. At the time it was my view that it should be much higher at 800 hectares but this was not progressed as result of the amalgamation process at the time. The recent strategic work with Bathurst Regional Council has determined that a 600 hectare minimum that attracts a dwelling entitlement will satisfy policy outcomes across the amalgamated areas. In my view this would achieve protection lands for agriculture "... 34 In addition to this expert agricultural evidence, I have also considered Ms Robinsons evidence regarding her families history in the ownership and farming of the subject land. Since first purchasing rural land in Evans Shire in 1969, various neighbouring lots have being acquired, disposed of and farmed by the late Prof. Robinson. This has ultimately resulted in the neighbouring properties of "Winburndale " and "Travellers Rest" having the principal activity of sheep breeding and wool production. Ms Robinson said that her parents did not rely on the income from the agricultural activities and that all monies earned from the sale of wool, livestock etc were invested back into the land and the livestock. This ensured that there was money available for improvements to the land, including ongoing pasture improvement, weed and pest management, maintenance of infrastructure and significant soil and water conservation works. 35 As these allotments are part of the late Prof. Robinsons estate, the three family beneficiaries want to maintain their interests in the family property, on a proportional basis facilitated by the proposed subdivision. This will then enable the sheep farming enterprises to continue. Conclusions 36 Having considered the evidence, the submissions and undertaken a view, I consider this application merits conditional consent for the following reasons. 37 The first issue concerns the proposals compliance with the provisions of the LEP and DCP. In this regard the LEP permits subdivision into lots with a minimum area of 100 ha in the subject 1(e) Outer Rural Zone. It also allows a dwelling house to be erected on such allotment. 38 The subdivision proposal complies with this minimum development standard as both the proposed new allotments 1 & 2, marginally exceed the 100 ha standard. 39 However in this case, the associated issue concerns the proposals degree of compliance/non-compliance with the zone and DCP objectives (a) and (b), which requires any development to support and maintain the continued viability of agricultural development in rural lands located in the outer areas of Bathurst Regional. From the evidence presented, the assessment of rural land viability in terms of the zone objectives relies significantly on various assumptions and subjective opinions, particularly as viability is not defined in the local planning instruments. 40 Notwithstanding this, the planners have agreed that the usual planning practice is that where objectives are stated, then the associated development standards are usually imposed, which are consistent with achieving these objectives. On this basis, one could expect that compliance with the 100ha standard satisfies the objectives and therefore allows the subdivision to be approved. 41 The evidence concerning the objectives and viability/sustainability assessment confirmed an obvious inconsistency in the minimum 100 ha lot area. It is apparent from the evidence that a farming enterprise on a 100ha lot is unlikely to be viable or self-sustaining. In fact, there is general agreement between the agricultural experts that a minimum area of 600ha would be required to achieve the objective of economic sustainability in the subject locality. 42 Taking then Mr Ryan's EBIT approach, neither the individual lots 1 and 2, or the combined lots 1 and 2, or lots 1 and 2 with " Travellers Rest" gives a desirable yield of approximately 3%. Nevertheless, Mr Dymock's says that this consolidation/subdivision of 7 existing lots into 2 will not result in degradation of resources, conflicts with non sympathetic land use or any obvious reason why the land holding would no longer be economically viable and accordingly the proposal represents orderly development of agricultural land, whereby the 2 new lots can be farmed or traded with other larger holdings. 43 I also accept his concern that if the land remains with its current fragmented title arrangements, then these individual allotments (varying in size from 10ha to 71 ha), could be traded separately and result in fragmented ownership, which may cause problems with property maintenance, weed control etc, that is not uncommon with small rural holdings. 44 It seems to me that the real issue concerns the dwelling entitlement allowed for a 100 ha lot. This entitlement is likely to increase the land value, thereby making it more difficult to consolidate. However to activate this dwelling entitlement, it is necessary to gain development consent, whereby the merits of the proposal are considered. However in the subject case, there is no application for a dwelling on the new Lot 2 and any such application would be dealt with on its merits, subject to the development controls at the time. 45 In resolving the competing positions, I particularly note that these development standards have been in place for a considerable time, i.e. since the early 1980's. Apparently, there have been a number of reviews, including when the council amalgamations took place around 1995. But these development standards have been consistently maintained, presumably on the basis they achieve an acceptable community outcome. 46 In so far as other inquiries into these planning controls are to be made, no evidence of imminence or certainty of changes to these development standards was presented to the Court. Under these circumstances, when all competing factors are considered, it is possible that these development standards may be retained, as was the case in 1995. On this basis then, I give significant weight to this proposals compliance with the minimum lot size development standard. 47 The current controls are contained in the LEP, wherein the cl 6 (1) (a) objective for the zone requires any proposal to "support and maintain the continued viability of agricultural development…". In the general context, viability refers to being practicable and workable and I am satisfied to accept Ms Carpenter's submission that the viability of agricultural development is not coincident with the economic viability of agricultural enterprise. 48 After the boundary adjustments, it is proposed to maintain and continue with the existing farming operation, which should achieve the desired zone outcome, according to Mr Dymock's evidence on which I rely. 49 Therefore, I do not consider it reasonable to reject this numerically complying development application on the basis of its non-compliance with the zone objectives. It seems that the effective consolidation of the 7 smaller allotments into 2 larger lots facilitates the orderly development of these agricultural lots for separate development, or consolidation with other larger farm holdings. 50 In regard to this issue, I also give considerable weight to Ms Carpenter's submission that cl 1.3 (b) of the DCP is simply neither applicable nor relevant in the circumstances of the case, where clause 27(1) of the LEP is met. The authority for this submission is Stockland Development Pty Ltd v Manly Council [2004] NSWLEC 472, where McClellan CJ summarised the principles relevant consideration of development control plans as follows: A development control plan is a detailed planning document, which reflects a council's expectations for parts of its area, which may be a large area or confined to an individual site. The provisions of a development control plan must be consistent with the provisions of any relevant local environmental plan. However, a development control plan may operate to confine intensity of development otherwise permitted by a local environmental plan. 51 The submission from this is that cl 1.3 (b) in the DCP follows this line in relation to cl 27 (4), (5) of the LEP. The use of the word "economic" in DCP cl 1.3 (b) means that the objective is drawn in more onerous terms than the relevant objectives for the 1 (e) zone in the LEP. So that if an applicant does not meet the minimum lot area requirement, the development application may be considered to but only in such circumstances where the economic sustainability of the agricultural undertaking to be pursued on the land can be demonstrated, as required by cll 27 (4), (5) and (6) of the LEP. 52 Accordingly, I give diminished weight to the provisions of the DCP, requiring demonstration of economic sustainability and instead give determining weight to the proposals compliance with the minimum lot size development standard and its general compliance with the Zone No 1(e) Outer Rural Zone objective (1) (a), on the basis that the subdivision will facilitate the continuation of a practical and workable sheep farm. 53 The second issue concerns the viability impacts on the neighbouring property "Travellers Rest", by allowing such development. In this regard, I note Ms Carpenters' submissions that it would be wrong for the Court to consider any impact on this property, because it does not form part of development application. 54 Ms Carpenter's submission is that neither the LEP nor the DCP require consideration of a "holding". What is required is to support and maintain the continued viability of agricultural development (LEP & DCP) and, where applicable (and not in the present case), to protect the economic viability of rural and agricultural enterprises. Therefore it is the "activity", with which the planning instruments are concerned. This argument can be tested as follows: "if an activity is conducted over many holdings, so long as the activity is supported and maintained, one cannot take into consideration the individual holdings on which it is conducted. One holding may be removed from the equation but the activity continues. It is the activity remaining viable that should concern the Court - there is no relevant reference to "holding" or any consideration such in the LEP and DCP." 55 The effects of fragmentation are then described in the DCP as follows: Fragmentation of rural land can lead to future land-use conflicts and reduction in the lands productive capacity. Fragmentation of the land can also result in the to provide extra services and infrastructure eg: provisions/maintenance of roads, garbage services etc. 56 As there is no substantive evidence to confirm any of these effects, then the consolidation of the 7 lots and thereafter subdivision into 2 lots will be beneficial, because this will eliminate the possibility that one of more of the existing 7 small lots could be sold as individual parcels. 57 In this regard, I consider that due weight should also be given to the stated purpose of the circumstances of this development. I rely on Ms Robinson's evidence that the main purpose is to facilitate the orderly finalisation of the estate, whereby the development enables each of the family beneficiaries to maintain a proportional interest in the family property. This will enable the sheep farm to continue its existing operations. 58 If the DCP provisions requiring demonstration of economic sustainability was significant in this case, reference to Mr Ryan's EBIT calculations in Table 6, shows that no combination of the subject lots, including farming the total area of 524 ha, generates a satisfactory theoretical sustainability result. Therefore, the DCP requirement to not consider off farm income in assessing sustainability has little application in this case. 59 Nevertheless, the past farming operations have apparently resulted in well-run sheep farming enterprise over 38 years (including the introduction of innovative controlled breeding of sheep), albeit supported with off farm income. It seems that this is not an abnormal situation in this area, where Mr Dymock's unchallenged evidence is that according to the ABARE estimates for the years 1999 to 2003, 79 % of agricultural businesses with a net farm income of $100,000 or less had off farm earnings which provide 91% of their annual income. 60 Taking into account the purpose of this development, which is to facilitate its continuing sheep farming operation and the fact that it complies with the relevant development standard for subdivision and represents orderly development of the land, I consider its approval is reasonable and the proposal does not warrant refusal on the basis of some possible economic impact on a separate property holding. 61 In addition to these foregoing issues, the issue of precedence was also raised and reference made to the authority established in Emmott v Ku-ring-gai Municipal Council [1954] LGRA 177 where Sugerman J stated: Applications must be considered on their own merits, and it would appear to be unduly onerous to refuse an application, unobjectionable on its individual merits, on the mere chance of probability that there may be later applications sufficient, if approved, to produce in their totality some undesirable condition. In such a case as the present, if what originally appeared to be a mere possibility or chance turned out later to become a distinct possibility, there would be no reason why the council should not at that it stage call a halt, if it should then appear proper to do so. Justice is not offended in the circumstances by the refusal of further applications calculated to lead to objectionable conditions after the granting of one or more earlier application unobjectionable in themselves . 62 Following this in Goldin & Anor v Minister for Transport Administering the Ports Corporation and Waterways Management Act 1995 [2002] NSWLEC 75, Lloyd J said: As I understand the decision, if the Court is entertained with an application for a proposed development, which is no objectionable in itself and where there is a sufficient probability that there will be further applications of a like kind then, then the fact that a consent would operate as a precedent may be taken into consideration. 63 However, I do not find this development objectionable, because I give greater weight to its compliance with the minimum subdivision lot size of 100 ha. Furthermore, no substantive evidence was presented to the Court regarding other similar subdivision applications. Therefore, I give little weight to this issue and would not refuse it on this basis. 64 In summary then, this proposal satisfies the prevailing development standards for subdivision and according to the evidence of Mr Dymock, does not compromise the intentions of the LEP or DCP by the creation of 2 new allotments arising from the consolidation of 7 smaller allotments. I accept his opinion that in the subject circumstances, the proposed creation of the 2 new allotments will have little, or no impact on the viability of the two properties, which currently allow various farming options and/or sale and consolidation arrangements and has the potential for greater fragmentation than the proposal. 65 In the ultimate, I am satisfied that the proposal complies with the minimum subdivision lot size development standard and demonstrates reasonable compliance with the associated zone 1(a) objective to merit conditional consent. If, however, there is a major concern with a dwelling entitlement presumably appropriate policy decisions can be made to address this. Court Orders 1. The appeal is upheld. 2. Development consent is granted to DA No. 2006/0657 for the consolidation of 7 existing allotments and subdivision into 2 allotments, Lot 1 and 2 at 946 Turondale Road, Duramana, subject to the conditions in Annexure A. 3. The Exhibits may be returned except for 1, 4, 5, 6, 12, A and D. ___________________ R Hussey Commissioner of the Court Ljr/rjs/ljr 09/03/2007 - Applicant and Respondent's representatives were swapped by mistake. The Coversheet has been amended - Paragraph(s) coversheet DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.