Denali Nominees Pty Ltd v Banyule City Council

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
VALUATION, COMPENSATION AND PLANNING LIST

S ECI 2024 04367

BETWEEN:

DENALI NOMINEES PTY LTD	Applicant
v
BANYULE CITY COUNCIL and others according the Schedule	Respondents

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JUDGE:	Finanzio J
WHERE HELD:	Melbourne
DATE OF HEARING:	21 August 2025
DATE OF JUDGMENT:	17 September 2025
CASE MAY BE CITED AS:	Denali Nominees Pty Ltd v Banyule City Council
MEDIUM NEUTRAL CITATION:	[2025] VSC 579

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ADMINISTRATIVE LAW – Judicial Review – Appeal from Victorian Civil and Administrative Tribunal – Whether there was an error of law in statutory construction – Town planning – Repeat appeal - Decision to refuse to grant a permit – Non-residential use in residential zone – Wrong question or wrong test applied – Neighbourhood Residential Zone Schedule 3 (NRZ3) – Banyule Planning Scheme.

Victorian Civil and Administrative Tribunal Act 1998 (Vic), s 148;
Planning and Environment Act 1987 (Vic).

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr R Watters	Hall & Wilcox
For the Fifth Respondent	Mr D Robinson	Jackson Lane Legal

HIS HONOUR:

Introduction

Denali Nominees Pty Ltd (‘Applicant’) seeks leave to appeal, and if leave is granted, appeals the decision of the Victorian Civil and Administrative Tribunal (‘Tribunal’) pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (‘VCAT Act’) in Denali Nominees Pty Ltd v Banyule CC.[1]
[1][2024] VCAT 699.
The Applicant is the owner of the land at 287 Lower Heidelberg Road, Ivanhoe East (‘land’). The land is located within the municipal district of Banyule City Council (‘Council’). The Applicant is the operator of an established veterinary clinic that is located in the Ivanhoe East commercial area. The Applicant wants to relocate the existing clinic to the land.
The Fifth Respondent, SaveIvanhoeEast.org.au Incorporated, (‘Respondent’) appeared and opposed the application and the appeal. The remaining respondents either made no appearance or indicated that they would abide the decision of the Court.
Lower Heidelberg Road is a main road. The land is improved with a single storey dwelling. The land is at the edge of an existing residential area which adjoins (to the immediate south-west along Lower Heidelberg Road) the Ivanhoe East commercial area. The land is separated from the commercial area by a laneway. Residentially zoned land developed by dwellings is located to the northeast (along Lower Heidelberg Road), and to the rear of the land.
On 24 September 2020, the Applicant applied to the Council for a planning permit to use and develop the land for the purposes of a veterinary centre (’2020 Application’). The use and development of the land is regulated by the provisions of the Banyule Planning Scheme (‘planning scheme’) which is approved under the provisions of the Planning and Environment Act 1987 (Vic) (‘PE Act’).
The land is located within the Neighbourhood Residential Zone (‘NRZ3’ or ‘the zone’), and subject to the provisions of clause 32.09 (and Schedule 3) of the planning scheme. The stated purpose of all zones in the planning scheme is to implement the Municipal Planning Strategy (‘MPS’) and the Planning Policy Framework (‘PPF’). The zone purposes specific to the NRZ3 are as follows:
To recognise areas of predominantly single and double storey residential development.
To manage and ensure that development respects the identified neighbourhood character, heritage, environmental or landscape characteristics.
To allow educational, recreational, religious, community and a limited range of other non-residential uses to serve local community needs in appropriate locations.
Self-evidently, the first two purposes are directed to the built form within the zone. The first purpose is directed to recognising areas of existing development of single and double storey. The second purpose is directed to ensuring future development within the zone respects the identified character of the physical characteristics of the area.
The third zone purpose deals explicitly with land use, expressly contemplating non-residential uses that serve local community need in appropriate locations. The operative provisions of the zone relating to use of land describe three categories of use — those which can commence without a planning permit, those which require a permit and those which are prohibited. The corresponding zone purpose exposes the rationale for the operative provisions of the zone. Where the zone purpose uses is ‘to allow’ uses, it is to be read permissively, signifying that a purpose of the zone is to encourage the establishment of non-residential uses within the zone which meet the stated criteria. The provisions of the zone reinforce that purpose. There are specified non-residential uses that do not require a permit. These uses can be established anywhere in the NRZ3. It must be assumed, given the purpose of the zone, that these uses are regarded as appropriately located wherever they are established. Where a planning permit is required, the decision guidelines contained within the zone trigger consideration of matters directed to ascertaining the existence of need and an assessment of the appropriateness of the location.
Clause 32.09-14 of the planning scheme[2] sets out the decision guidelines for non-residential use and development, which the planning decision maker is required to consider as follows:
[2]Clause 32.09-14 is common to all planning schemes in Victoria where the NRZ is applied.
In the local neighbourhood context:
·Whether the use or development is compatible with residential use.
·Whether the use generally serves local community needs.
·The scale and intensity of the use and development.
·The design, height, setback and appearance of the proposed buildings and works.
·The proposed landscaping.
·The provision of car and bicycle parking and associated accessways.
·Any proposed loading and refuse collection facilities.
·The safety, efficiency and amenity effects of traffic to be generated by the proposal.
The planning scheme also contains policy guidance which further refines and guides consideration of applications for non-residential uses within Banyule. Clause 13.07-1L provides as follows:
Policy application
This policy applies to applications for a non-residential use and any associated development in the Residential Growth Zone, General Residential Zone, Neighbourhood Residential Zone and Low Density Residential Zone.
Location strategies
Locate non-residential uses:
·Where there is a demonstrable local community need for the proposed facility or service.
·On a corner lot.
·Fronting a road in a Road Zone.
·With convenient access to public transport, such as within the Principal Public Transport Network Area, to minimise traffic impacts on local streets.
Locate office uses, including multi-practitioner medical centres, in or adjacent to activity or other commercial centres.
Locate recreational, religious and community uses, and single-practitioner medical centres, in or adjacent to activity centres, unless they predominantly serve local community needs.
Avoid locating non-residential uses in a manner that isolates existing dwellings from the surrounding residential area.
Siting and design strategies
Encourage the re-use of existing non-residential buildings for new non-residential uses.
Encourage the use of existing dwellings in preference to developing purpose-built non-residential buildings.
Design buildings for non-residential uses that are sympathetic to neighbouring dwellings in terms of siting, density, scale, form and style.
Encourage the preparation of a master plan to guide the development or expansion of larger non-residential uses.
Locate car parking associated with a non-residential use at the side or rear of the site to avoid it dominating the development or street frontage.
Minimise the number of additional crossovers in the street.
Landscaping and amenity strategies
Landscape the front setbacks of buildings used for non-residential purposes to enhance the appearance of the site and the locality.
Provide landscape buffers between non-residential uses and neighbouring residential properties to mitigate visual, noise and other adverse amenity impacts.
Minimise any adverse impacts on the amenity of the neighbourhood by way of noise, traffic, parking, lighting, odours, or hours of operation.
The 2020 Application proposed alterations to the existing dwelling which included the addition of a double storey extension at the rear, removal of vegetation and works including a carpark at the rear accessed from the adjoining laneway. The Council supported the application for a planning permit and issued a Notice of Decision to Grant a Planning Permit. Objectors to the grant of the permit commenced proceedings in the Tribunal seeking review of the Council’s decision.
On 10 January 2022, the Tribunal set aside the Council’s decision and directed that no permit be issued, publishing written reasons for its decision (‘Gonopoulos’).[3] In reaching its decision to refuse the 2020 Application the Tribunal said:
[3]Gonopoulos v Banyule City Council [2022] VCAT 13 (‘Gonopoulos’).
[13] For the reasons which follow, I am not persuaded that the proposal is an acceptable planning outcome. Despite the site being proximate to the East Ivanhoe activity centre, it represents the first intrusion of a non-residential use into a low-scale and intact residential area located within a NRZ3.
[14] As I also explain, I am also concerned about the height and extent of built form, the car park layout, and the very limited space available for landscaping along the boundaries with the two adjoining residential properties.
[15] The site is adjacent to, but physically separated from the commercial properties in the East Ivanhoe Neighbourhood Activity Centre by the laneway running along the south-western boundary of the site. Somewhat unusually, non-residential uses have not ‘bled’ into the adjoining residential areas and there is a clear demarcation between commercial and residential uses. As it affects this edge of the activity centre, the boundary is formed by the laneway and the public car park off Burton Crescent.[4]
…
[31] Firstly, given the proposal involves the relocation of an existing veterinary practice located within the activity centre, I accept Mr Haydon’s submission that the Respondent has already established a need for veterinary services within this location to service the local community. Because the proposal involves a relocation of the existing clinic, I do not agree with Mr Buckmaster’s comments about the Respondent being required to provide evidence of a need. I may have had a different response if it was an entirely new clinic rather than a relocation.
[32] Secondly, the site is adjacent to a commercial centre, is on road in a Road Zone, does not isolate the dwelling from surrounding residential areas and is within easy walking distance to public transport. However, I am not convinced that being close to public transport has much relevance when animals are being taken to and from a veterinary clinic.
[33] Thirdly, it is difficult to assess whether there are suitable sites in the commercial centre since that will vary over time depending on whole host of factors including size and configuration of any floor space available, ownership/rental arrangements, vacancies, and cost.
[34] It is my conclusion that the proposal in large measure meets these primary and specific locational criteria and, on that basis, could be deemed acceptable. However, the proposal must also be assessed against the neighbourhood character, design, and amenity related criteria which I now discuss.[5]
[Emphasis added]
[4]Ibid [13]–[15].
[5]Ibid [30]–[34].
The Tribunal went on to explain:[6]
[63] Based on my assessment of the proposal, I have not been persuaded that it is an acceptable response to the site context. Whilst I acknowledge that there is a community benefit in allowing for the expansion of an existing business in the same locality, that does not outweigh the negative impacts arising from allowing a non-residential use to establish in a NRZ. There is a clearly defined boundary along the laneway which separates the commercial area from the adjoining residential area.
[64] Nor am I persuaded that the site layout and off-site impacts are acceptable. The location and layout of the car park, the inadequate rear and side boundary setbacks and space for screening vegetation, and hence the inability to screen or filter views from residential properties of the built form rear extension, are not responsive to the residential site context.
[65] Put simply, the proposal results in excessive built form at the rear of the site which is at the expense of the amenity of the neighbouring properties. I consider it is overreach and that an acceptable and respectful balance of competing outcomes has not been achieved.
[Emphasis added]
[6]Ibid [63]–[65].
On 30 November 2022, the Applicant made a second application which sought to respond to the criticisms of the Tribunal by reducing the size of the building, providing larger setbacks and increased vegetation (‘second application’).
On 18 September 2023, the Council reversed its earlier decision to support the application, and decided instead to refuse the second application, despite the reduction in built form, improved landscaping and other changes. The Council stated the following grounds of refusal:
1.The site is considered inappropriate for the non-residential use in a residential area and is contrary to the Environmental Risks and amenity at Clause 02.03-3 of the Banyule Planning Scheme.
2.The proposal is not consistent with Clause 13.07-1L (Non- Residential Uses in Residential Areas) of the Banyule Planning Scheme as the non-residential use is inappropriately located.
3.The proposed development will have an adverse impact upon local residential amenity contrary to Clauses 02.03-2-Environmental and landscape values, 15.01-1S and 15.01-1R — Urban Design of the Banyule Planning Scheme.
4.The proposal is contrary to the order and proper planning of the area.

Tribunal Decision

On 24 July 2024, the Tribunal decided to affirm the decision of the Council and again directed that no permit should be issued (‘Decision’). The same division of the Tribunal that refused the 2020 Application heard and determined the second application. The Tribunal published its reasons for decision (‘Reasons’). It is the Decision in respect of the second application with which these proceedings are concerned.
The Reasons record that in assessing the second application the Tribunal had regard to the so called ‘repeat appeal’ principles.[7] In its review jurisdiction in planning cases, the Tribunal generally gives significant weight to earlier decisions of the Tribunal which concern the same land and the same or similar proposal unless a different approach is warranted by a change in the circumstances of the land, the proposal or the underlying planning controls and policy. The approach recognises: the importance of the review process; and the commitment of resources of both the parties and the Tribunal in determining a review proceeding. It also manifests an appropriate degree of caution in reversing earlier decisions of the Tribunal, and discourages a multiplicity of applications directed at achieving a different result by forum shopping.
[7]Denali Nominees Pty Ltd v Banyule CC [2024] VCAT 699, [12] (‘Reasons’).
The Tribunal’s approach to the present case is consistent with longstanding practice,[8] and was reflected in the way in which the parties approached the hearing. It was common ground that there had been no material change in the relevant planning controls or policies, nor the circumstances of the land. Before the Tribunal, the Applicant directed its attention to attempting to demonstrate that the second application had addressed the concerns of the Tribunal in relation to the 2020 Application which led to its refusal.
[8]Amoco Australia Ltd v Berwick CC (1983) 1 PABR 166, 169.
The Tribunal accepted that the planning regulation and policy setting in which it made its decision in Gonopoulos was largely identical to that which applied to a consideration of the second application.[9] The Tribunal observed that there had been no change to the planning policy framework from the time of its decision on the 2020 Application and the second application.[10]
[9]Reasons [81].
[10]Ibid [31].
In overall terms, the Tribunal concluded:[11]
I consider that this latest application has genuinely sought to address the concerns raised by me in 2022 in relation to built form and amenity impacts to adjoining properties.
[11]Ibid [17].
Notwithstanding this observation the Tribunal went on to conclude that a permit should not be granted, saying: [12]
I consider a veterinary centre in this particular location is not an acceptable outcome when assessed against the full suite of relevant provisions of the Banyule Planning Scheme.
[12]Ibid [93].
In addressing itself on the features of the second application which responded to what the Tribunal described as ‘the concerns’ raised by it in 2022, the Tribunal observed that:
(a)In relation to built form:
In relation to built form, I agree with Mr O’Connor that the built form is not unlike what might be expected in any future residential development. Indeed, the setbacks and landscaping may be well more than could be expected if this were a residential development.[13]
[13] Ibid [48].
…
Whilst there was criticism by parties about some of the detailed design aspects of the building, in general terms I consider the use of materials, colours, pitched roofs, eaves, window openings and screening elements to be acceptable.[14]
(b)In relation to landscaping:
I consider that the proposed landscaping towards the rear of the site is a significant improvement over that proposed in 2022;[15]
…
[I]n principle, I consider that the growth characteristics of the vegetation chosen would have assisted in filtering views of the building from the adjoining residential properties and created an effective landscape setting along the side boundary and at the front and rear of the development.[16]
(c)In relation to odour and noise the Tribunal found that it was confident that the proposed use could achieve compliance with appropriately drafted conditions such that there is ‘no loss of amenity to neighbouring properties’.[17]
[14]Ibid [50].
[15]Ibid [52].
[16]Ibid [57].
[17] Ibid [74]–[75].
The Tribunal identified a physical disconnection in the proposal between the location for waste storage and the collection of waste in the rear of the property,[18] but did not treat the issue as a basis for its refusal.
[18]Ibid [77].
The Tribunal found that the proposed carparking was acceptable.[19] The layout of carparking was a point of contention at the hearing in relation to the 2020 Application, where the Tribunal found that the arrangements demonstrated that the proposal was not acceptable.[20] The Tribunal again found that the parking layout would not be acceptable without significant modification to the buildings, which might have warranted a further process of notification.[21] The Tribunal lamented the fact that the shortcomings in the access arrangements discussed in the earlier decision had not been fully overcome, but stopped short of describing those shortcomings as demonstrative of the proposal’s unacceptability. A fair reading of the Tribunal’s reasons is that it regarded the shortcomings in relation to access as capable of resolution with changes, or at the very least, not the reason for its decision to refuse the grant of a permit.
[19]Ibid [65].
[20]Ibid [68].
[21]Ibid [70].

In refusing the application, the Tribunal concluded as follows:[22]
It is often the case that in refusing an application, I can give pointers as to what refinements, redesign or scaling back would make a development acceptable. However, I am not able to do that in this case because I consider a veterinary centre in this particular location is not an acceptable outcome when assessed against the full suite of relevant provisions of the Banyule Planning Scheme.
[22]Ibid [93].
This conclusory statement warrants consideration given the finding of the Tribunal in relation to the 2020 Application. In Gonopoulos, the Tribunal refused to grant a planning permit for a larger (two storey) version of the same proposed use. In refusing the application, the Tribunal in Gonopoulos observed that the proposal largely met the locational criteria for a non-residential use in a residential area, but refused that application on neighbourhood character and design issues, and amenity related matters. The Tribunal recorded that there had not been any intrusion of non-residential uses into the residentially zoned area beyond the lane, but did not say that intrusion of a non-residential use could not be permitted. A fair reading of the decision in Gonopoulos gives the impression that a non-residential use of the kind proposed could obtain approval on the land, but that the proposal before the Tribunal required a reduction of built form, scale and intensity to properly respond to the neighbourhood context. Taken as whole those statements cannot be read as a rejection of the proposed use in this location per se, particularly in light of the Tribunal’s conclusion that, in large measure, the proposal met the primary and specific locational criteria.
In determining the second application, the Tribunal concluded that the modified (and physically smaller) development should not be approved because the proposed use of the land for a veterinary clinic was inappropriate. This finding was central to the Tribunal’s decision to refuse the application. That it was central is reinforced by the Tribunal’s conclusion that in built form terms, the physical form of the building and the landscaping aspects of the proposal would be not unlike what might be expected in a residential development.[23] The Tribunal went on to say:[24]
On the other hand, the intensity of use and level of activity (i.e. coming and going of people, animals and cars) is not what would be expected with a residential development.
[Emphasis added]
[23]Ibid [48].
[24]Ibid [49].
The Tribunal went on:[25]
[T]he discussion about the appearance of the building misses the point that a non-residential development would introduce an intensity of activity, through the movement of cars, people and animals at the rear of the site closest to the adjoining residential properties in Burton Crescent and at No 291 Lower Heidelberg Road, which would not occur with a dwelling or dwellings on the site.
[Emphasis added]
[25]Ibid [51].
The Tribunal concluded:[26]
As in 2022, it remains the case today that non-residential uses have not intruded into the adjoining residential areas and there is a clear demarcation between commercial and residential uses. As it affects this edge of the activity centre, the boundary is formed by the laneway and the public car park off Burton Crescent.
The NRZ3 is the most restrictive of all the residential zones and its purposes include to recognise areas of predominantly single and double storey residential development and to manage and ensure that development respects the identified neighbourhood character, heritage, environmental or landscape characteristics. Whilst non-residential uses serving the local community can be contemplated in the NRZ3, approval of such uses can also impact on the character and amenity of those areas and undermine the role of the Ivanhoe East NAC.
I am also not persuaded that the intensity of the proposed use and activity is consistent with residential amenity given the number of staff and the number and turnover of animals on site at any one time.
In my opinion, this creates a level or intensity of activity which will adversely affect the character of this residential area. Whilst agreeing with Mr O’Connor that the built form is not unlike what might be expected in any future residential development, the intensity of activity is well beyond what could be reasonably expected in a residential development approved in accordance with the NRZ3 provisions for such development.
[Emphasis added]
[26] Ibid [89]–[92].

Grounds of appeal

The Applicant submits that the passages cited at [26], [27] and [28] above disclose error of law. It advances the following four grounds of appeal:
(a)Ground one (Error of Law): The Tribunal erred by holding that the grant of a permit for a non-residential use on land in a residential area was by itself unacceptable in circumstances where the Act and the Scheme specifically contemplates that non-residential uses could be established on the land.
(b)Ground two (Wrong Test): The Tribunal erred by imposing a requirement that the intensity of any non-residential use not exceed the intensity of use associated with a dwelling or dwellings.
(c)Ground three (Inadequate Reasons): The Tribunal’s Reasons were inadequate because they failed to make findings in respect of material questions of fact, namely, the level of intensity of use that the Tribunal considered was likely to occur on the Land and how the establishment of a non-residential use in the NRZ3 would erode the character of the area.
(d)Ground four (Irrationality and Arbitrariness): The Tribunal’s decision was irrational and arbitrary in that it was not made by reference to findings based on clear facts referrable to relevant statutory criteria.
The Applicant need only succeed on one of the four grounds of appeal in order to establish error of law sufficient to set aside the decision of the Tribunal.
For the reasons that follow ground two is made out and, as a consequence, leave will be granted and the appeal allowed.
In the interests of completeness and brevity the remaining grounds are addressed briefly.

Ground Two — Wrong Test

A decision maker can fall into jurisdictional error by asking themselves a ‘wrong question’, by identifying a ‘wrong issue’, or by applying the ‘wrong test’.[27]
[27]Kirk v Industrial Court of NSW (2010) 239 CLR 531, [67], citing Craig v South Australia (1995) 184 CLR 163, 179; Yusuf v Minister for Immigration and Multicultural Affairs (2001) 206 CLR 323, [41].
The Applicant says the Tribunal erred by:
(a)Asking itself the question whether what was proposed would generate a level of activity ‘beyond what could reasonably be expected in a residential development approved in accordance with the NRZ3 provisions’; and
(b)treating its negative answer to that question as a basis to refuse to grant a permit.
The submission gives rise to three questions:
(a)Did the Tribunal, in fact and/or in substance, pose this question to itself?
(b)If yes, was the approach of the Tribunal wrong?
(c)If yes, was the error of the Tribunal material to the outcome of the proceeding?
For the reasons which follow, the answer to each question is: yes.
The test the Tribunal posed
The Tribunal’s reasons describe the intensity of the land use impacts of the proposal as ‘well beyond what could be reasonably expected in a residential development approved in accordance with the NRZ3 provisions for such development’. This statement establishes a comparison between the land use characteristics of the proposal and a notional residential development in compliance with the NRZ3 provisions — whatever that might entail.
The Tribunal approached its assessment on the basis that the NRZ3 is one of the most restrictive zones.[28] That is true, but not without qualification. The most stringent restrictions are in relation to residential built form. The purposes of the zone stipulate that the built form is intended to respect the existing scale and character of the area and the zone imposes mandatory restrictions on building scale and minimum garden area which are intended to give effect to those objectives. At the same time, the zone allows the establishment of non-residential uses that serve local community needs in appropriate locations. Unlike residential development within the NRZ3, non-residential uses are not subject to mandatory building requirements. The zone contains no prescriptive standards in relation to the level of amenity impact.
[28]Reasons [90].
The land in this case was a candidate for a range of non-residential land uses. It was adjacent to commercially zoned land on a main road, and adjacent to a commercial carpark. The non-residential land uses that were possible as of right, at least theoretically, were capable of generating activities different from those which might be generated by a zone compliant residential land use. The Tribunal adopted the premise that the acceptability of the level of activity generated by a non-residential land is to be measured against, and compared with, a notionally compliant residential development of the land.
The Respondent frames the Tribunal’s approach as merely considering the amenity in this particular location for the purpose of assessing the appropriate level of activity which could be acceptable. The Respondent submits that the Tribunal was not applying a test or posing a question of principle but rather making a finding of fact as to the level of impact the proposal would have on the amenity of the area. The Respondent says that, having found that the area had not changed significantly (no intrusion of non-residential uses beyond the laneway), and that the surrounding residential context was sensitive to change, the Tribunal was doing no more than expressing its disapproval of the impact of this particular use in this location on the amenity of this particular location. The Respondent says that the reasons should not be read too closely, with an eye attuned to error,[29] but rather in the broader context of the findings that the Tribunal was making. I accept that this is the proper approach to the assessment of the reasons of the Tribunal. In the end, the language of the Tribunal’s reasons must be assessed objectively. The meaning attributed by the Respondent to the Tribunal’s reasons does not sit comfortably with either the language deployed by the Tribunal or a ‘contextual’ analysis of the reasons as a whole.
[29]Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259, 272.
By its reasoning the Tribunal found that there was a clear line of separation between the commercial land and that beyond the laneway. The Tribunal formed the view that beyond the laneway, there had not been any intrusion of non-residential uses into the residential and because of that there should not be any such intrusion unless the level of activity was comparable to what a notionally zone compliant residential use of the land might be — without specifying the precise nature (form and content) of the notional residential comparator. Reading the reasons as they are expressed, the Tribunal contemplates the measurement of amenity impact on the adjoining residential area against a notional residential comparator, and treats that comparator as a benchmark of acceptability. To conclude otherwise, and agree with the Respondent’s approach, would involve reading the Decision in a way which ignores the plain language used by the Tribunal.
Was the approach of the Tribunal wrong?
It is not possible to discern from the Tribunal’s reasons that it undertook the kind of analysis which the planning scheme contemplates.
Both the decision guidelines of the NRZ3 and the relevant policy provisions describe the attributes of a potentially acceptable location for non-residential uses. The guidance given by the planning scheme is applicable to any proposal for a land use which requires a planning permit in the zone. The decision guidelines and policy give additional detail about what is regarded as appropriate when considering the zone purpose, which allows non-residential uses in ‘appropriate locations’.
Taken together, the table of uses for which a permit might be granted in the zone, the decision guidelines and the statement of policy recognise the possibility that the land use characteristics of non-residential uses could be, and in all likelihood will be, different to the land use characteristics of residential development.
In approaching the construction of the legislative framework it is important that nowhere in the text of the planning scheme is it stated (or even suggested) that the acceptability of a proposed non-residential land use is to be measured against the impacts of a notional residential development of the land. To do so would impose a level of restriction in the assessment of non-residential uses which is not otherwise present in the policy or the zone.
As a matter of construction, the zone could not be read as imposing a requirement that non-residential land uses must not generate significantly different levels of activity than a notionally zone compliant residential development. In implementing the zone purpose of allowing non-residential uses in appropriate locations, the zone itself allows land uses with different and potentially greater levels of activity than a residential development - without a permit. For example, the NRZ3 allows the following uses without a planning permit:
(a)Medical centre of 250 sqm within the existing house, and subject to the achievement of parking provisions;
(b)A place of worship of 250 sqm, not necessarily in the existing building and subject to the achievement of parking provisions.
Both these land uses could generate activity of a very different kind to that of a residential use of the land.
The decision guidelines and policies are relevant considerations in the exercise of discretion. The decision guidelines and policy framework inform the characteristics of an appropriate location for a non-residential use by articulating criteria where a permit is required. The stated locational criteria for non-residential uses describe the characteristics of suitable locations in a way which directs such uses to places where the amenity impacts of non-residential uses might be more readily absorbed by the existing residential amenity. For example, the locational criteria favour residentially zoned land on main roads or adjacent to an existing commercial area, or other locations where the experience of residing in those locations might already be influenced by the existence of activities which are not the same as those generated by residential use. These are locations where the existing residential amenity is already affected by the presence of non-residential activity or other features, by comparison to more homogenous residential areas.
The Respondent points to the fact that the policy and decision guidelines require consideration of the compatibility of the proposed non-residential activity with adjoining residential use. This is correct. It is said that in its reasoning the Tribunal is doing no more than making a finding that the proposed use is not compatible with the adjoining residential area. I accept that the Tribunal does find that the proposal is not compatible with the adjoining residential use, but it is in its reason for making that finding that the error lies. In doing so, the Tribunal deploys a notionally compliant residential development as a measure of compatibility. The planning scheme does not do that. The planning scheme permits non-residential uses without the need for a planning permit with land use characteristics different from residential use. The policy framework contemplates the approval (with a permit) of a wide variety of non-residential uses capable of generating land use activities which could be vastly different in character and intensity to that of residential use. Reading the zone provisions and the policies as a collection of considerations which might in some cases pull in different directions, the planning policy framework admits the possibility of an outcome where, in an appropriate case, the community need for a facility results in the approval of a land use (say a school or childcare centre) with amenity impacts which are vastly different to what might be generated by a notionally compliant residential development, but because the land is located on a main road, or next to an existing commercial area, the proposal is nonetheless regarded as acceptable.
In short, the test of compatibility as described in the planning policy is not a test of sameness or equivalence. Rather it is a test of acceptability.
The suggestion that the Tribunal’s reasons should be read as commentary upon the physical attributes of the specific locality relevant to its assessment of amenity, rather than as a guiding statement of principle adopted by it in reaching its decision, cannot be reconciled with the words used by the Tribunal.
The critical question on this appeal was whether in this location the particular land use characteristics of the proposal would have an unreasonable impact on the amenity of the surrounding area — and not whether those land use characteristics are equivalent to the impacts of a notionally zone compliant residential development. The legislative framework leaves for the planning decision maker a judgment as to whether in all the circumstances the impacts of the proposed use are acceptable in the proposed location. The reasons of the Tribunal cannot be read as consistent with the approach contemplated by the policy framework or the zone provisions.
Instead, the Tribunal’s reasons reveal that it was concerned with how the characteristics of the non-residential land use compared to a notionally zone compliant residential use of undefined parameters. The Tribunal regarded that inquiry as relevant and in turn, treated the residential comparator as a benchmark by which to measure acceptability.
There are a number of practical difficulties with this approach. First it is unclear what the features of the notionally compliant residential comparator were that the Tribunal had in mind. Second, if the approach were adopted as a tool, there is no guidance in the planning scheme as to how such a comparator should be devised or used. In the NRZ3 a notionally compliant residential development would be constrained by height limits that do not apply to non-residential development. It is unclear whether the comparator ought to be an apartment building or a single dwelling. Third, and most importantly, to use such a comparator would be inconsistent with the planning framework, because properly construed, that framework invites consideration of non-residential uses in the NRZ3, and in doing so contemplates that the characteristics of those non-residential land uses and activities will likely be different from residential land uses – both more and less intense in different ways.
Was the error material?
The Tribunal’s error was material to its decision in that it was an intrinsic feature of the reasoning which led to a refusal of the application. An error is ‘material’ where it contributes to the decision – such that in the absence of the error of law, there is a real possibility that the decision might have been different.[30]
[30]Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, 353; Samad v District Court (NSW) (2002) 209 CLR 140, 155 [44]; Wilson v County Court (Vic) [2006] VSC 322, [43].
A fair reading of the decision is that the principal, if not sole, reason for refusal of the application fell directly from the Tribunal’s impugned reasoning.
The Tribunal’s own finding that the land largely met the locational requirements for a non-residential use in the residential area, and that in built form terms the proposed development would have an equivalent impact to that of a conventional dwelling — together point to the conclusion that its findings about intensity of land use were central to its refusal.

It is true that the Tribunal raised concerns about the acceptability of access arrangements depicted in the plans, but it would be wrong to proceed upon the basis that these concerns alone would have been sufficient to justify refusal of the application. The Tribunal’s reasons suggest that, if the decision had been to allow the application, the access arrangements could have been addressed in some way.
For all of these reasons ground two is made out and it follows that leave will be granted and the appeal allowed on that basis.
Remaining Grounds
It is sometimes desirable for courts to deal with all issues in a proceeding, but there is no general rule to that effect. While the High Court in Kuru v New South Wales has expressed a preference for intermediate courts to deal with all grounds, in Boensch v Pascoe the Court said that ‘it is important to the efficiency of the system as a whole that intermediate courts of appeal should not feel compelled to treat determination of non-dispositive issues in appeals before them as the norm’.[31] In each case a balance must be struck in favour of delivering just outcomes in a timely way by dealing with the substance of the contest between the parties as comprehensively as the needs of the case demand. This is particularly so in judicial review cases and appeals on questions of law, where the various bases upon which a complaint as to the lawfulness of a decision is made might found multiple species of potential legal error. What might be a failure to take into account a relevant consideration, might also be misdirection as to the statutory framework, unreasonableness and inadequacy of reasons. In some cases it might be necessary to deal with each point comprehensively, in other cases it will not.
[31]Kuru v New South Wales (2008) 236 CLR 1, 6 [12]; Boensch v Pascoe (2019) 268 CLR 593, 600-601 [7]–[8].
Having decided that the decision of the Tribunal was affected by error of law in relation to ground two, it is unnecessary for me to deal comprehensively with the remaining grounds. In the present case a brief summary of my views on the remaining grounds of appeal is sufficient.
The Applicant says that it is open to read the Tribunal’s decision as saying that, in this location, there is no form of development which would be appropriate in land use terms other than a residential development in accordance with the various requirements of the NRZ3. The Applicant says that this is tantamount to saying that the Tribunal approached its task on the basis that non-residential uses are prohibited in the zone, notwithstanding that they are permissible. This is the substance of the Applicant’s first ground.
Ground one does not, in my view, capture what the Tribunal did or the error that it made. Rather it describes the consequence of the reasoning which the Tribunal adopted. A fair reading of the Tribunal’s decision is not that it started from the assumption that non-residential uses were prohibited in the zone or in this location. Instead, the Tribunal adopted a wrong measure of acceptability which led it to an erroneous conclusion. The error is in the measure adopted or the question posed.
Ground three is a complaint about the adequacy of the reasons for the decision. The submissions of the Applicant make clear that the complaint is directed to the failure of the Tribunal to give reasons explaining fundamental aspects of the Tribunal’s path of reasoning. Having decided that the Tribunal misdirected itself by asking itself a wrong question, these complaints fall away.
In relation to ground four the Applicant said:[32]
The Tribunal’s approach was arbitrary because it sought to impose under the clearly articulated criteria specified in the Scheme for the evaluation of proposal for non-residential uses in residential areas a series of additional criteria which are not identified in the Scheme and which have unclear and uncertain content.
[32]Applicant Submissions dated 14 February 2025 [72], at CB [1195].
Ground four is, in substance, a different way of describing the same error exposed by ground two.
Conclusion
Accordingly, and subject to hearing from the parties as to their final form, I will make orders that:
(a)Leave is granted;
(b)The appeal is allowed;
(c)The decision of the Tribunal in Denali Nominees Pty Ltd v Banyule CC [2024] VCAT 699 is set aside;
(d)The matter is remitted to the Tribunal for rehearing in accordance with law and before a differently constituted Tribunal; and
(e)Respondent pay the costs of the Appellant.
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SCHEDULE OF PARTIES

S ECI 2024 04367
BETWEEN:
DENALI NOMINEES PTY LTD	Applicant
- v -
BANYULE CITY COUNCIL	First Respondent
ANTHONY SCULLY	Second Respondent
PIPPA GRIFFITH	Third Respondent
ELISE BURCHSMITH	Fourth Respondent
SAVEIVANHOEEAST.ORG.AU INCORPORATED	Fifth Respondent
RICHARD HARRIS	Sixth Respondent
CON GONOPOULOS	Seventh Respondent
SHONAGH MARSHALL	Eighth Respondent

[2025] VSC 579

17 September 2025