The Rozens applied for permission to develop four dwellings on a 72 hectare site in the Lake Eppalock catchment in the Shire of Macedon Ranges. Their application was initially granted by VCAT, but that decision was overturned on appeal to the Supreme Court. The Supreme Court held that VCAT had misunderstood the precautionary principle as it applied to water quality and returned the matter to VCAT for a rehearing.

On rehearing, VCAT rejected the Rozens' application. It held that, given the importance of the preservation of potable water in Australia and applying the precautionary principle, the cumulative risk that four dwellings would pose to the local water supply was too great to be allowed. It then considered whether any smaller number of dwellings should be permitted, but decided that even two dwellings would be too many, as it would fragment land that could otherwise be used for productive agricultural purposes.

In 2003, the Rozens applied to the Macedon Ranges Shire Council for approval to build four dwellings, each on an individual allotment, on a site in the Lake Eppaclock catchment. The application was refused and the Rozens lodged an application for review. Western Water objected to the application for review, arguing that if the development were approved, then the maximum dwelling density in an open portable water supply catchment, as specified by the Interim Guideline for planning permit applications in open, potable water supply catchment areas (Guidelines) would be exceeded.

The Tribunal granted the Rozens a permit for the dwellings in 2007. Western Water successfully appealed this decision in the Supreme Court in May 2009. In Western Water v Rozen, Justice Osborn ruled that the Tribunal had misinterpreted the precautionary principle and should have applied it to consider the cumulative risk of each dwelling’s septic system in accordance with the Guidelines and the Macedon Ranges Planning Scheme (Planning Scheme). His Honour directed that the matter should be reheard by VCAT in accordance with the correct interpretation of the precautionary principle.

This decision is the result of the rehearing directed by the Supreme Court. Between the Supreme Court decision and the rehearing, the Government affirmed the principle of a dwelling density of 1:40 ha by formally adopting the Guidelines as the Guidelines: planning permit applications in open, potable water supply catchment areas. Furthermore, Western Water agreed that 2 dwellings would be acceptable, even though this would result in the maximum dwelling density being slightly exceeded.

The Tribunal ruled that only one dwelling is permitted on the site. In doing so, it endorsed what it called a 'multi barrier' approach to water contamination, where the planning scheme works side-by-side with other water quality protection measures to restrict as far as possible contamination of water supplies.

In reach its decision, the Tribunal discussed a number of issues, each of which is outlined below.

The State Environment Protection Policy (Waters of Victoria) requires the application of the precautionary principle where ‘threats of serious or irreversible environmental damage’ exist.

The Tribunal applied the precautionary principle in accordance with Justice Osborn’s direction. His Honour held that the precautionary principle applies both where a risk of ‘irreversible environmental harm’ exists and where a risk of ‘serious environmental harm’ exists. Justice Osborn also held that the kind of harms encompassed by the precautionary principle depended on the context in which it was to be applied. In the context of potable water, a risk of serious human harm was a risk of serious environmental damage.

The Tribunal noted the importance of the distinction between 'serious' and 'irreversible' damage to the environment when assessing impacts on water quality in an open potable water catchment. In this case, although there was no risk of irreversible environmental damage, there was a serious risk of human harm. As such, the precautionary principle applied.

The Tribunal also considered a number of aspects of the Planning Scheme that pointed to the protection of catchments and water quality as major objectives, including the zoning of the site, the Environmental Significance Overlay that applied to the site, the State Planning Policy Framework and the Local Planning Policy Framework. The Tribunal also agreed with the Panel who reviewed Amendment C21 to the Macedon Ranges Planning Scheme in that the Shire’s primary planning consideration is that the ‘protection of water quality should be the primary planning consideration of the Shire’s water catchments…’

The Tribunal noted that Western Water was under a statutory duty, imposed by the Safe Drinking Water Act 2003 and the Safe Drinking Water Regulations 2005, 'to develop and maintain risk management plans in protecting drinking water quality'. Western Water did so in accordance with the Australian Drinking Water Guidelines (Drinking Water Guidelines), which recommended a 'multi barrier' approach to preventing contamination of drinking water. The Tribunal noted that the Drinking Water Guidelines stated that prevention of contamination was safer than treatment and stated '[w]here catchment management is beyond the jurisdiction of drinking water suppliers, the planning and implementation of preventive measures will require a coordinated approach with relevant agencies such as planning authorities'.

The Tribunal endorsed Principle 1 of the Drinking Water Guidelines, which states that 'The greatest risk to consumers of drinking water are pathogenic micro organisms. Protection of water sources and treatment are of paramount importance and must never be compromised.'

The Tribunal placed significant weight on the Guidelines. Guideline 1, Density of Dwellings, restricted development to one dwelling per 40 hectares except in specified circumstances. They noted that other guidelines, which focused on different aspects of particular developments (e.g. septic tank systems), imposed additional requirements and did not displace the 1 dwelling per 40 hectares principle.

The decision contains an interesting discussion of the issue of cumulative risk. The Tribunal stated:

No issue was taken by any party with Mr Williams’ evidence that if the waste water treatment system was installed, operated and maintained as recommended by Mr Williams, it would function satisfactorily, meet statutory requirements and would not result in a risk of contamination to surface or ground waters.

However, we consider the real issues are the risks associated with waste water treatment systems that do not function as designed (for various reasons) and the increased presence of people generally within the catchment.

Ideally, potable water supply catchments would all be closed. The quality of Melbourne’s drinking water is a product of its closed catchments. But it is not an ideal world and there are many open potable water supply catchments that must be managed.

The draft Macedon Ranges Shire Water Quality Risk Assessment identifies a range of potential hazards which would affect water quality, including:

• Road/creek crossings on sealed and unsealed roads
• Houses
• Farm buildings
• High risk land uses, such as: intensive animal production, irrigated horticulture, cropping and cereals, and grazing modified pastures.
• Steep slopes
• High density housing
• Inadequate riparian buffers
• Change in agricultural practices

Implicit in this list of hazards is people. For example, higher density housing associated with rural lifestyle use involves not just additional septic tank/waste water treatment systems, but more horses and domestic pets, more use of chemicals, pesticides and sprays, and more direct water contact by people and animals. Perhaps if the risks posed by the presence of people within catchments were articulated more explicitly, as detailed by Dr Deere in his evidence, there might be a better understanding of the notion of cumulative risk rather than the current focus just on the risks presented by each individual septic tank/waste water treatment system.

There is a fundamental conflict between the evidence of Dr Deere and Dr van der Graaff regarding this issue of cumulative risk. At its simplest, the conflict can be characterised as faith in science versus a recognition of human fallibility and Murphy’s law (i.e. if anything can go wrong, it will).

The Tribunal went on to conclude:

We consider that every time an additional dwelling is permitted in the catchment, an additional, albeit unquantifiable, risk, is created of potential contamination to the quality of water. Individually, the risk from each dwelling may be minimal but the cumulative effect of these incremental risks, coupled with all the other risks which exist, mean that dwelling density in open potable water supply catchments must be curtailed.

The Rozens argued that permits had been granted for subdivision and development that were inconsistent with the Guidelines and the Local Planning Policy Framework. This, it was said, strengthened the case for them to be granted a permit. The Tribunal rejected this argument, stating 'We do not consider that past poor decisions should justify another round of poor decisions that will undermine the integrity of the catchment, good land management practice and retention of the land for productive agriculture.'

The Tribunal found that a proposal for four dwellings on the site was unacceptable. It asked whether any lesser number would be acceptable. It concluded that two dwellings on the site could improve the landscape if appropriate landscaping plans were implemented and was therefore not contrary to the objectives of the Rural Conservation Zone purposes.

However, the Tribunal also noted that zoning of the land as a Rural Conservation Zone and the contents of the Local Planning Policy Framework were intended to maintain the use of land for productive agricultural purposes. Allowing the construction of multiple dwellings on the site would fragment it and prevent its use for agricultural purposes. On this basis, the Tribunal held that only one dwelling should be allowed.

It is probably too early to speak of an emerging environmental jurisprudence at the Tribunal. Between this decision and that of the Tribunal in Gippsland Coastal Board v South Gippsland SC & Ors (No 2) [2008] VCAT 1545, however, the Tribunal is moving in an interesting and encouraging direction, particularly in its application of the precautionary principle.

• The full decision is available on Austlii