IN THE SUPREME COURT OF VICTORIA	Not Restricted	
AT MELBOURNE
COMMON LAW DIVISION
VALUATION, COMPENSATION & PLANNING LIST
No. 5658 of 2006

MELBOURNE CITY COUNCIL	Appellant	
		
v		
		
POPULAR PASTIMES PTY LTD 	First Respondent	
		
and		
		
NORTH & WEST MELBOURNE ASSOCIATION INC	Second Respondent	

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JUDGE:	GILLARD J	
WHERE HELD:	Melbourne	
DATE OF HEARING:	20 September 2006	
DATE OF JUDGMENT:	27 September 2006	
CASE MAY BE CITED AS:	Melbourne City Council v Popular Pastimes Pty Ltd & Anor	
MEDIUM NEUTRAL CITATION:	[2006] VSC 355		

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PLANNING APPEAL from orders made by the Victorian and Civil Administrative Tribunal – Effect of s.74(1) of the Prostitution Control Act 1994 on an application for planning permit made by existing brothel owner – Section 74(1) prohibited the Responsible Authority from granting permit – Brothel prior to 1984 was a permitted massage parlour - Later permitted use was brothel - VCAT held s.74(1) did not apply to a massage parlour now a brothel or to an existing brothel – Section 74(1) applies to present brothel - appeal allowed.  

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APPEARANCES:
	Counsel	Solicitors	
For the Appellant	Mr A.J. Finanzio	Maddocks	
			
For the First Respondent	Mr M.A. Dreyfus Q.C.	R.J. Lewis	
			
For the Second Respondent	No appearance		

TABLE OF CONTENTS

Parties to the appeal	1
Right to operate a brothel	1
Application for leave	4
Appeal to this Court	4
The Responsible Authority’s decision	4
Reasoning of VCAT	6
Interpretation of s.74(1) of the Act	9
Issues on appeal	12
Conclusion	21

HIS HONOUR:
1	This is an appeal from orders made by the Victorian Civil and Administrative Tribunal (“VCAT”), which resulted in an application for a planning permit that had been refused by a responsible authority being set aside, and the responsible authority being ordered to grant a permit.  Leave to appeal against the orders was granted by this Court on 26 May 2006, pursuant to s.148(1) of the Victorian Civil and Administrative Tribunal Act 1998.  (“VCAT Act”).  
Parties to the appeal
2	The appellant, Melbourne City Council (“the Authority”), is the responsible planning authority for the City of Melbourne.  The first respondent, Popular Pastimes Pty Ltd (“Popular Pastimes”), is the operator of a brothel situated at 58 Dudley Street, West Melbourne (“the premises”), known as “The Main Course” brothel.  The brothel is situated on the northern side of Dudley Street, between King and William Streets, and is opposite the Flagstaff Gardens.  The second respondent, North and West Melbourne Association Inc (the “Association”), is a body which objected to the grant of a permit to Popular Pastimes.  The Association did not appear on the appeal, and the Court was informed by counsel for the Authority that it did not propose to take part in the appeal.
Right to operate a brothel
3	On 24 March 1977, the Authority issued two permits under the relevant planning schemes permitting the occupier of the premises to operate a massage parlour at the premises.  The endorsed plan at the time showed three massage rooms and various facilities, such as a lounge, billiards room, kitchen and bathrooms.
4	On 14 November 1984, an amendment to the Melbourne Metropolitan Planning Scheme (“M.M.P. Scheme”) was gazetted and it introduced a new sub-clause 25(a)(A), which provided -
 “Notwithstanding anything to the contrary in this ordinance, land  … which was on the second day of July 1984 lawfully used for the purpose of Massage Parlour pursuant to a permit under the Planning Scheme may … be used for the purpose of a Brothel.”
5	Clause 15-4 of the Melbourne Metropolitan Planning Scheme provided:
“Land used for a massage parlour under a permit on 2 July 1984 may after that date be used for a brothel.”
6	It was not in dispute that the premises were used for a massage parlour under the permits issued in 1977, and that on 2 July 1984, they were so used.  Consequently, by reason of the amendment to the M.M.P. Scheme, the subject land was being lawfully used as a massage parlour and was permitted to be used thereafter as a brothel.  It was used as a brothel.  The right applies to the whole of the land upon which the existing building is located.  
7	The premises comprise a double storey terrace house.  
8	In 1993, minor alterations and works, involving demolition of a rear section, were performed at the premises without seeking planning permission, which resulted in steps being taken by the Authority, and ultimately, the parties consented to retrospective authority for the alterations.  On 8 August 2002, Popular Pastimes made application to the Authority for a permit for works comprising a second storey addition at the rear of the building, together with a store room.  On 29 January 2003, a permit was issued for the construction of the store room.
9	On 23 July 2004, an application was lodged by Popular Pastimes with the Authority for permission to construct and perform buildings and works.  The proposed works are substantial.  The works involve substantial rearrangement of rooms on the existing ground and first floors, and a substantial extension of the existing attic floor, being the second floor.  The application noted that the existing use of the land was “Brothel” and that the estimated cost of the development was in the sum of $150,000.  The existing building was described as a double storey Victorian terrace with a 5.6 metre frontage to the north side of Dudley Street.  
10	The premises are located within a Mixed Use Zone, and are also within a Heritage Overlay and a Design and Development Overlay Schedule 32.  A brothel is a s.3 prohibited use in the Mixed Use Zone.  Existing use rights for the brothel attach to the premises, so there was a need for a permit in respect of the proposed building works, by reason of clauses 43.01-1, 43.02-2 and 63.05 of the Melbourne Planning Scheme.  The Association lodged an objection to the grant of the permit.  
11	On 12 May 2005, the Authority received a report from its planning officer recommending the refusal of the application because the proposed development was prohibited by s.74(1) of the Prostitution Control Act 1994 (“the Act”), and, further, that the proposal was an intensification of a prohibited use in the Mixed Used Zone.  The Authority resolved to refuse a permit and by letter dated 26 May 2006, the decision was conveyed to Popular Pastimes.  
12	On 27 June 2005, an application for review of the refusal was filed with VCAT.  On 4 August 2005, an order was made by VCAT that a preliminary legal issue be decided, namely, whether s.74(1) of the Act applied to the application for a permit.  The matter was heard by a senior member of VCAT, Mr R J Ball, in the Planning and Environment List on 12 September 2005.  Mr Ball reserved his decision.  On 10 October 2005, he delivered his decision and made an order to the effect that the proposed development was not prohibited by s.74(1) of the Prostitution Control Act 1994.  Mr Ball then gave directions for the hearing of the review.  
13	On 25 November 2005, application was made to this Court for leave to appeal against the order made by Mr Ball, but leave was refused on the basis that the application was premature.  
14	On 30 January 2006, a hearing into the merits of the application was heard by two members of VCAT, who reserved their decision.  On 15 March 2006, the members published their reasons.  Orders were made that the decision of the Authority refusing the application be set aside, and that a permit be granted, which would allow part demolition of the building on the subject land, the construction of buildings and works, and a reduction in the provision of car parking generally, in accordance with the endorsed plans and subject to certain specified conditions.
Application for leave
15	On 7 April 2006, the Authority filed an originating motion in this Court seeking leave to appeal, and on 26 May 2006, Osborn J granted leave to appeal both orders.  On 30 May 2006, the Authority filed a notice of appeal.  
Appeal to this Court
16	The appeal is against the orders made by Mr R J Ball on 10 October 2005 and the orders made on 15 March 2006.  However, it is clear from the questions of law and the grounds of appeal, that the appeal is against the order made by Mr Ball to the effect that the proposed development was not prohibited by s.74(1) of the Act.  In my opinion, the real question on the appeal is, what is the proper interpretation of s.74(1) of the Act?  
The Responsible Authority’s decision
17	The Authority took the view that it was not permitted to grant a permit by reason of the provisions of s.74(1) of the Act.  It is necessary to set out the section in full.  It provides –
“74	Restriction on grant of permit
(1)	The responsible authority must refuse to grant a permit for a use or development of land for the purposes of the operation of a brothel if-
(a)	the land is within an area that is zoned by a planning scheme as being primarily for residential use;  or
(b)	the land is within 100 metres or, in the case of land within the area of the City of Melbourne bounded by Spring, Flinders, Spencer and LaTrobe Streets, 50 metres of a dwelling other than a caretaker's house;  or
(c)	except in the case of land within the area of the City of Melbourne bounded by Spring, Flinders, Spencer and LaTrobe Streets, the land is within 200 metres of a place of worship, hospital, school, kindergarten, children's services centre or of any other facility or place regularly frequented by children for recreational or cultural activities;  or 
(d)	unless there exists special circumstances as set out in guidelines issued by the Minister administering the Planning and Environment Act 1987, more than 6 rooms in the proposed brothel are to be used for prostitution.
(2)	For the purposes of sub-section (1) distances are to be measured according to any route which reasonably may be used in travelling.
(3)	Despite section 71, in this section "development" does not include-
(a)	the exterior alteration or exterior decoration of a building;  and 
(b)	the demolition or removal of a building or works.”
18	It is common ground between the parties that there is a dwelling within 100 metres of the premises.  Accordingly, if the section applies, then sub-section 1(b) prohibits the grant of a permit.  It is noted that the paragraphs to sub‑section 1, being (a)-(d) (inclusive), are all expressed to be in the alternative.  Secondly, it is noted that s.74(1)(d) refers to “the proposed brothel”, which suggests that the paragraph is dealing with a brothel to be established.  
19	Section 71 is concerned with definitions and it provides –
“71	Definitions
Words and expressions used in this part have the same meaning as they have in the Planning and Environment Act 1987.”
20	It is the contention of the Authority that s.74(1)(b) prohibits the grant of a permit because the proposed building works constitute development of land for the purposes of the operation of a brothel.  Popular Pastimes contends that s.74 does not apply for two reasons.  First, the permitted use of the land is as a massage parlour with a non conforming use as a brothel, and s.74(1) is concerned with a permitted use of brothel.  Secondly, s.74 is concerned with the establishment of a new brothel and does not apply to a development of premises in respect of an existing brothel.
Reasoning of VCAT
21	Mr Ball noted that the alterations to the existing building would result in the development of the site from its present configuration of a ground floor, small first floor and attic, and small open space at the rear of the site, to three floors of generally the same size occupying the whole site.  No change was proposed to the façade of the building on the frontage.  I interpolate to observe that there is no doubt that the works involved a major development on the site, substantially changing the existing building.
22	In his reasons, Mr Ball set out an extract from the written submissions of counsel for Popular Pastimes.  He observed that it set out the background and history of the application, and of the planning status of the current use, and that it put forward the arguments on behalf of Popular Pastimes in a succinct fashion.  He then referred to the arguments put by counsel on behalf of the Authority, and stated the following –
“Having carefully considered the matter the tribunal accepts and adopts the submission put forward by Mr Dreyfus (counsel for Popular Pastimes) that the permit sought by the applicant is not properly characterised as ‘a permit for the use and development of land for the purposes of the operation of a brothel’ but rather should be characterised as a permit for works associated with a non conforming massage parlour use.”
23	He then observed that the tribunal accepted the second submission put forward, namely, that “Parliament was concerned with and referring to a permit being granted, whether for use or development, to allow the establishment of a brothel.  As the permit application in this case was in respect of an already established brothel section 74 has no application”.  Mr Ball observed that to accept the interpretation put forward by the Authority, would involve an interpretation which “would be a nonsense in that no development permit for any existing brothel could ever be granted for works of any nature which for a variety of reasons should or would otherwise be permitted or allowed”.  (Emphasis added).
24	In my opinion, the member’s latter observations are incorrect.  Section 74 does not preclude a development which involves the exterior alteration or exterior decoration of a building and/or the demolition or removal of a building or works.  See s.74(3).  Further, the word “development” is to have the same meaning as defined in the Planning and Environment Act 1987.  The word “development” is defined as including certain defined matters, but clearly does not represent an all embracing exclusive definition.  And although the words “works” is defined, in my view, it is not correct to assert that “no development permit … could ever be granted for works of any nature”.  
25	As the member adopted and accepted the submissions put forward by Popular Pastimes, his reasoning can be summarised as follows –
•	Despite the effect of the provisions of the various planning schemes, which recognise that a massage parlour on 2 July 1984 could be used thereafter as a brothel, the permit for the use is “massage parlour”.  
•	Reliance was placed upon the decision of O’Bryan J in the proceeding of Killeen v Clair, in which his Honour observed that the amendment did no more than make lawful for the purpose of a brothel land permitted for use of a massage parlour, but did not change the nature of the permit from one of being a massage parlour to that of being a brothel.
•	The application was necessary for the works pursuant to clause 63.05 of the Planning Scheme.
•	Mr Ball made reference to the provisions of s.74(1), and to s.71, which is the definition provision incorporating the meanings in the Planning and Environment Act 1987, and noticed the definition of brothel.  
•	The first submission was that the application could not be properly characterised as a permit for the use or development of land for the purposes of operation of a brothel, because the permitted use was that of a massage parlour.
•	The second argument was that s.74(1) was concerned with the development of land for the purposes of the establishment of a brothel.  
•	The phrase “development of land for the purposes of the operation of a brothel” was capable of ambiguity, for example, it might refer to the construction of a building or it might refer to the development of the land to facilitate the operation of a brothel.
•	The expression “the operation of a brothel” was an odd expression and that the more usual phrase should have been “a permit for the use or development of a brothel” or a “permit for the purposes of a brothel”.  Reference was made to provisions in the Planning Scheme clause 19.04-2 and expressions in the Town and Country Planning Act 1961.  See 27(A)1 and 2, 49(1A)(b), 49(C), 49(D)(a) and 49(E)(a).  However, it was noted that these sections were referring to the use of land.  
•	The phrase “the operation of a brothel” must be given a consistent interpretation in ss.72, 73 and 74 of the Act.  It was noted that s.73(j) and (k) were referring to a situation which was concerned with the establishment of a brothel.  
•	The Second Reading Speech of the Attorney-General on 21 October 1994 supported the submission that the legislation was directed to restricting the establishment of new brothels.  
•	An interpretation that s.74(1) applied would mean that work such as constructing bollards in relation to parking or the removal of a tree could never be carried out because s.74(1) would not permit that.
•	Reference was made to s.34 of the Interpretation of Legislation Act relating to promoting the purpose or object underlying the Act, and reference was made to the main purpose of the Act, which was “to seek to control prostitution in Victoria” – see s.1 of the Act.
•	The purpose was not achieved by prohibiting the grant of a permit for development which might occur on land used for the purposes of a brothel, where that development has no bearing on the existence of prostitution on the land.
•	Reference was made to how the drafter of the planning scheme had understood the position, as demonstrated by the opening two sentences of clause 19.04-2.  
•	There was a presumption that legislation is presumed not to interfere with vested proprietary interests.  Authorities were referred to.  
•	The present application is in no sense the carrying out of works allowing the establishment of a brothel.
26	It will be necessary to specifically refer to some of these submissions.  
Interpretation of s.74(1) of the Act
27	The object of statutory interpretation is to determine what Parliament intended.  The primary source of the intention is the words used, construed in their normal and natural meaning, in context and after considering the statute as a whole.  Statute requires a Court to promote the purpose or object underlying the Act, in preference to a construction that would not promote that purpose or object.  In Project Blue Sky Inc v ABA, four members of the High Court said: 
“However, the duty of a Court is to give the words of the statutory provision the meaning that the legislature is taken to have intended them to have.  Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision.  But not always.  The context of the words, the consequences of a literal or grammatical construction, the purpose of a statute or the canons of construction may require the words of the legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.”
28	What their Honours said encapsulates the principles to have guided the Courts in statutory interpretation for hundreds of years.  In 1824, Sir John Leach VC, in Hume v Rundell, had this to say at p.177 –
“In the construction of all instruments it is the duty of the Court not to confine itself to the force of the particular expression, but to collect the intention from the whole instrument taken together.  But a Court is not authorised to deviate from the force of a particular expression, unless it finds, in other parts of the instrument, expressions which manifest that the author of the instrument could not have the intention which the literal force of a particular expression would impute to him.  However capricious may be the intention which it clearly and unequivocally expressed, every Court is bound by it, unless it be plainly controlled by other parts of the instrument.”
29	What his Lordship said was quoted with approval by Barton J in Lorimer v Smail.  The statement emphasises two things, namely, that an intention which is clearly and unequivocally expressed must be upheld, and, secondly, that such an expression must give way where the wording is controlled by other parts of the instrument.  The other parts of the instrument, of course, would include the context, the definition sections, if any, and the purpose of the statute.  So the first question is, what is the literal or grammatical meaning of the words used in their normal and everyday meaning?  But in considering that question, it is not appropriate to divide up the provision into segments.  It is necessary to consider the disputed provision as a whole and, of course, in the context of the Act.  Kirby J in Malika Holdings v Stretton summarised the approach as follows –
“In my view, the task is to be informed by an endeavour to uphold the purpose of a legislation, derived from a search that goes beyond the study of its word viewed in isolation from matters of policy and object.  People, including lawyers, do not ordinarily communicate with each other by segmented words and phrases.  There is no reason for judges to impose such an approach on statutory construction.  The usual unit of communication in the English language is the sentence.  But even a sentence must be understood in the context of surrounding sentences, the subject matter of discussion and any shared understandings of those in communication. …  It (construing legislation) is one that is only reached when all applicable provisions have been viewed in their totality and a conclusion derived as to the meaning that best achieves the imputed object of the legislation.”
30	Reference to the history of legislation may reveal the intention of Parliament, and indicate the mischief that was sought to be met and remedied by the legislation.  The history would include previous legislation and any decisions of a court on the interpretation of the legislation.  
31	Section 35 of the Interpretation of Legislation Act 1984 requires a Court to give a construction that would promote the purpose or object underlying the Act, in preference to a construction that would not promote that purpose or object.  See s.35(a).  However, in addition, the section also entitles the Court to consider any matter or document that is relevant to the interpretation.  Section 35(b) does give examples, but it does not purport to be an exhaustive statement of the matters or documents that may be considered.  Amongst them is any proceeding in a House of the Parliament.  Sometimes, reference to the Second Reading Speech given when a Bill is introduced, may provide some evidence of the intention of Parliament and the purpose or object of the legislation.  
32	I have set out s.74 above.  The parties agreed that the issue on the appeal concerned the development of land and the application made to the Authority was not in respect to the use of the land.   In those circumstances, s.74(1) can be relevantly expressed as follows –
“The responsible authority must refuse 
	to grant a permit 
	for development of land
	for the purposes of the operation of a brothel.”
33	The word “development” is defined in the Planning and Environment Act 1987 and that definition must be taken into account.  See s.71 of the Act.  As I have stated, the definition is not exhaustive.  However, it includes “the construction or carrying out of works”.  See definition (c).  “Works” is also defined, and although it is not an exhaustive definition, it includes “any change to … the existing condition … of land”.
34	In my opinion, works such as the works contemplated by Popular Pastimes are a development of the land, and clearly are for the purposes of the operation of a brothel.  There is no doubt that a brothel is carried out on the premises.  That was common ground.  “Brothel” is defined, as is the word “prostitution”, and the phrase “sexual services”.  In my opinion, the words are clear.  Effect must be given to them unless, of course, the literal and grammatical meaning must give way to another meaning.  I have no difficulty in understanding the words, and although Mr Dreyfus said that the expression was an awkward one and capable of ambiguity, I do not accept that submission.  Development of land includes construction works, and the construction works are for the purposes of the operation of the business carried on there, namely, the provision of sexual services in return for payment or reward.  On a literal interpretation, s.74(1) applies to the application made by Popular Pastimes.  Giving effect to s.74(1)(b), the Authority was bound to refuse it.  
35	The next question, then, is whether the balance of s.74 does affect the literal meaning.  It is noted that the subject matters detailed in each of paragraphs (a)-(d) (inclusive) are disjunctive and, accordingly, it does not follow that because the subject matter of (d) makes reference to something that may occur in the future, s.74(1) is confined to the establishment of a new brothel.  The provision which applies in the present application is that found in (b), and it has a present application and does not in any way depend upon the past or the future.  I do not accept that s.74(1)(d) requires an interpretation that s.74(1) is dealing with a future, and not an existing, brothel.  I accept, however, that that is not the end of the exercise.  Other provisions were relied upon by Popular Pastimes.  
Issues on appeal
36	I now turn to the submissions put on behalf of Popular Pastimes, which were upheld by Mr Ball and which were repeated on appeal.  
37	The first submission put was that the permitted use of land is a non conforming use.  It was asserted that, by reason of a combination of the original permit and the amendment to the M.M.P. Scheme, a brothel may be conducted on the premises, but the true nature of the permission is a massage parlour.  The argument was then put that the development proposed, that is, the construction works, is not for the purposes of the operation of a brothel, but for the purposes of the operation of a massage parlour.  This submission must be considered and determined on the assumption that s.74(1) applies to a present brothel.  
38	I must say at the outset that I have considerable difficulty with this reasoning.  It defies the obvious and the reality of what is happening.  Of course, the original permit was for a massage parlour, but by reason of the amendment, the occupier was permitted to conduct a brothel.  What is proposed in the present application to the Authority is development of the premises for the purposes of the operation of that brothel.  The submission has an air of unreality about it.  The words in s.74(1) are concerned with the construction of premises which are used for the operation of a brothel.  That is precisely what is envisaged.  The premises are used for the operation of a brothel.
39	The argument is based upon a decision of O’Bryan J in Alan John Killeen v Shirley Clarris. It is necessary to consider that decision.  In that case, his Honour was dealing with the return of two orders nisi to review decisions made by the Magistrates’ Court at Dandenong.  The Magistrate had dismissed charges against the defendants and the informants obtained an order nisi to review each case.  Each defendant had been charged with an offence that she did at Dandenong at the same time have an interest in more than one permit granted by the Authority for use of land for the purposes of a brothel, contrary to s.49C of the Town and Country Planning Act 1961.  At the conclusion of the case for the informants, the Magistrate upheld the submission of no case to answer and dismissed each information.  The facts were not in dispute.  In 1979 and 1983, responsible authorities granted permits to the defendants to conduct massage parlours at two different premises.  In June 1985, another responsible authority granted the defendants a permit to conduct a brothel at a third premises, so at the date of the prosecutions, the defendants had two permits for massage parlours and a permit for a brothel.  On 2 July 1984, the Planning (Brothels) Act 1984 came into operation and it inserted a new provision into the Town and Country Planning Act.  In substance, s.49C provided that a person who had an interest in more than one permit granted by an authority for the use of land for the purpose of the operation of a brothel would be guilty of an offence.  
40	It was the informants’ case that the defendants were in breach of s.49C(1) because, as a result of the amendment to the M.M.P. Scheme in 1984, the defendants were permitted to use their massage parlours as brothels.
41	His Honour set out the amendment that inserted clause 25(5A) into the M.M.P. Scheme, which I have set out above.
42	His Honour then stated –
“In my opinion, this amendment did no more than make lawful for the purpose Brothel for use of land permitted for the purpose Massage Parlour.  The sub-clause did not change the nature of the permit granted for the use of land from one for the purpose of Massage Parlour to one for the purpose of Brothel.”
43	Basing his argument on that statement, Mr Dreyfus submitted that the present proposal was not dealing with the operation of a brothel, but was dealing with the operation of a massage parlour.  
44	It must be noted that O’Bryan J was dealing with the application of a provision in another Act in respect to an alleged criminal offence.  The relevant words of the provision were “has an interest in more than one Permit granted by a responsible authority for the use of land for the purpose of the operation of a brothel”.  His Honour held that the word “Permit” was a permit granted by the Authority for the purpose of a massage parlour.  When so construed, I have no difficulty with his Honour’s reasoning.  However, in my opinion, his reasoning does not provide support for the proposition that s.74(1) does not deal with the proposed development of the premises.  There is no reference in s.74(1) to the original permit.  What the responsible authority is bound to do, is refuse to grant a permit, that is, a present permit for the development, if the development of the land is for the purpose of the operation of a brothel within a certain distance of a dwelling.  In my opinion, the case has no application to the present matter and does not provide an answer to the prohibition in s.74(1) on the proposed development.  In my opinion, the reasoning of the learned member was wrong.  
45	I now turn to the second submission put by Mr Dreyfus which was upheld by the member, namely, that on a proper interpretation of s.74 in context, it is dealing with the establishment of a future brothel and has no application to an existing brothel.  Mr Dreyfus relied upon a number of matters to support that submission.  At the outset, I observe that there is nothing in s.74(1) that states that it is referring to a newly established brothel.  The subject matter of paragraph (d) is arguably dealing with a new brothel, but that, in my view, does not control the whole sub-section.  Further, I think that it is arguable that the phrase “proposed brothel” covers an existing brothel which, by reason of a development, has a different number of rooms. In those circumstances, it is the proposed brothel after the development.  
46	Mr Dreyfus referred to what he described as an ambiguity in the sub-section, and said that it might mean the development of land for the purpose of enabling a brothel to operate, or facilitating the operation of a brothel, whether existing or proposed.  He referred to the provisions in the Town and Country Planning Act 1968 by way of comparison, where the phrase was “for the use of land for the purposes of the operation of a brothel”.  See, for example, s.49C.  All of the provisions that he identified refer to “the use of land for the purposes of the operation of a brothel”.  Whilst I note what he said, I do not see how that argument has any bearing upon the interpretation of s.74(1).  
47	Mr Dreyfus relied upon the provisions of s.72 and s.73 of the Act.  There are parts of s.73 which may be referable to the establishment of a new brothel.  He submitted that the provisions must be given a consistent interpretation, so that the phrase “for a use or development of land for the purposes of the operation of a brothel” is construed in the same way in s.72 and s.73 as in s.74.  He then drew attention to s.73(j) and (k).  Section 73 specifies matters that must be considered by an Authority where an application is made “for a permit for a use or development of land for the purposes of the operation of a brothel.”  Paragraphs (j) and (k) read as follows:
“(j)	the proposed size of a brothel and the number of people that it is proposed will be working in it;  
 (k)	the proposed method and hours of operation of the brothel.”
48	Arguably, they refer to the establishment of a new brothel.  On the other hand, I can see an argument that they are not so confined.  The development may have an effect upon the size of a brothel and, consequently, the number of persons who may be working in it, and the same can be said about the method and hours of operation.  A development of an existing brothel may have an effect upon both of those matters.  I am by no means persuaded that the references in s.73 are confined to a future brothel.  But even if they are so confined, that does not, in my view, mean that the phrase is confined to a future brothel.  One can equally argue that the other provisions relate to a present brothel.  In my view, on a proper construction the provisions relate to both a present and a future brothel.  
49	Mr Dreyfus relied upon what the then Attorney-General said in the Second Reading Speech on 21 October 1994, when she introduced the Prostitution Control Bill.  Before referring to that speech, however, it is necessary to consider the history of the establishment of brothels in this State.  It is a history that has been marked by controversy.  There have been inquiries set up by government to consider and report on the question of brothels in this State.  As noted, in 1984 it was decided by the government of the day to regularise what had been an established practice, and to recognise that many massage parlours were a cover for brothels.  Hence, the passing of the amendment.  This led to the Prostitution Regulation Act 1986, but that was shrouded in controversy and was never fully proclaimed.  When the government attempted to enact the legislation, the opposition parties put forward amendments which were passed by both Houses, but the government of the day refused to proclaim much of the Act.  In her Second Reading Speech on 21 October 1994, the then Attorney-General, Mrs Wade, after noting the controversial history, said this –
“We have been left with piece-meal regulation of the prostitution industry in Victoria.”
50	One must bear in mind that the amendment to the M.M.P. Scheme permitted massage parlours to become brothels, and that this created some angst in the community.  Mrs Wade also observed that since 1986, escort agencies had multiplied so that most prostitutes in the State now worked through escort agencies.  In December 1992, Mrs Wade set up a working party to examine the effectiveness of the Prostitution Regulation Act 1986.  She observed in the Second Reading Speech –
“There was at that time a great deal of community concern over the location of brothels.”
51	She then noted that the government had responded to community concern by placing a moratorium on the granting of planning permits for brothels, and that the moratorium would be lifted when the new Act, that is the 1994 Act, was proclaimed.  It is noted that it was part of the history leading to that Act that there was a great deal of community concern over the location of brothels.  The present brothel is in a residential area, although it is a mixed area.  Having stated the problems associated with the legislation and community unrest, the Attorney said –
“The solution is a strict system of regulation.”
52	Mr Dreyfus referred to a passage in the Second Reading Speech which supported the submission that the legislation was directed at restricting the establishment of brothels.  It is necessary to go to the whole speech, which deals with a number of topics under headings.  It was delivered on 21 October 1994.  After making the preliminary observations, some of which I have stated, the Attorney dealt with offences, licensing, planning control, proscribing of brothels, health related provisions, advisory committee and community initiatives.  Mr Dreyfus has highlighted what the Attorney said under the heading “Planning Controls”.  The Attorney said –
“The planning controls on the location of brothels contained in the existing Act are inadequate.  In this bill the government is recognising community demands for strictly defined limitations on the location of brothels.”
53	It is clear that steps were to be taken limiting the establishment of new brothels.  But that does not for one moment mean that the Act is not dealing with present brothels.  Indeed, the community’s disquiet related to the piece‑meal approach which had been taken to legalising massage parlours as brothels, and to the establishment of brothels.  There is a fair point to be made that some of the massage parlour‑brothels were in inappropriate places and did create problems for the community.  Of course, the location of brothels and the proximity of brothels to children are matters of concern.  
54	The Attorney went on to note what the planning authorities were required to take into account in relation to location, and no doubt she was talking about future establishment.  But, in my view, that does not mean that the planning controls on brothels found in Part 4 of the Act were confined only to future brothels.  By way of example, s.75 is not concerned solely with future matters.  In my view, one has to consider the context of what the Minister said.  Importantly, when considering the purpose of an Act, whilst the Second Reading Speech may provide some assistance, in the end it is the Act itself, which deals with purpose, that is of importance.  According to s.1 –
“The main purpose of this Act is to seek to control prostitution in Victoria.”
55	That purpose, of course, covers both present and future.  Further, object (b) in s.4 is of some relevance, in that it refers to one of the objects of the Act being –
“(b)	To lessen the impact on the community and community amenities of the carrying on of prostitution-related activities.”
56	The present application to develop the premises seeks to improve the facilities available to those seeking sexual services.  It is obvious that those who have made the decision to carry out the works are of the view that the money will be well spent in the interest of the business and will, no doubt, attract more business.  That consideration tends to support the view that the object of the Act, being to lessen the impact on the community of carrying out prostitution related activities, does relate to past matters.  I accept that there are references in s.4 which refer to seeking to ensure “that brothels are not located in residential areas or in areas frequented by children”, and that that is a reference to future.  But nevertheless, I am not in any way persuaded that anything the Attorney-General said in the Second Reading Speech provides any evidence that the purpose of the Act is confined to future rather than present brothels, or that the part dealing with planning controls is confined to future established brothels.
57	The next argument that was relied upon, was that if s.74(1) covers the activities of a present brothel, then an absurd result could occur if there is a blanket prohibition in respect to development of the land.  Examples were given.  For example, it was submitted that it may stop the construction of bollards for the purposes of parking at the brothel, or the removal of a tree on the land used for a brothel.  As a general rule, it is accepted that if the effect of an interpretation would lead to an absurd result, the Court should interpret the legislation to avoid an absurd result, on the basis that it is presumed that Parliament would not enact a law which had such an effect.  I do not accept that an interpretation prohibiting development would lead to absurd results.  
58	First, as I have already stated, it is wrong to assert that the operation of s.74(1) would not permit certain works to be carried out.  Secondly, what can or cannot be done depends on the interpretation of the word “development”.  In my opinion, it does not preclude all works.  This may be the explanation for the permit granted in respect of the store room.  Some works will be considered development within the meaning of s.74(1), and some will not.  
59	The next submission was that the purpose of the Act is to “seek to control” prostitution in Victoria, rather than to eliminate or reduce it.  It was asserted that the purpose is not achieved by prohibiting the grant of a permit where the development has no bearing “on the existence of prostitution on the land”.  
60	First of all, it must be emphasised that s.35 of the Interpretation of Legislation Act 1984 requires the Court to adopt a construction that would promote the purpose or object of the Act in preference to a construction that would not.  In other words, there is a competition between interpretations, one of which would promote the purpose, and one which would not do so.  This is clear from the words of s.35, and is supported by what the High Court said in Chugg v Pacific Dunlop Ltd.  As Dawson, Toohey and Gaudron JJ said –
“The choice directed by section 35(a) of the Interpretation of Legislation Act is not as to the construction which would ‘best achieve’ the object of the Act.  Rather, it is a limited choice between ‘a construction that would promote the purpose or object of the Act’ and one ‘that would not promote that purpose or object’.”
61	Mr Dreyfus submitted that the purpose is advanced by limiting the locations where a new brothel can be established, and that is correct.  But then he went on to submit that the purpose is not achieved by prohibiting the grant of a permit for the development, where the development has no “bearing on the existence of prostitution on the land”.  
62	I do not accept Mr Dreyfus’ submission.  There is no competition between purposes.  There is no question of preferring one to another.  The development will realistically have a bearing on the existence of prostitution on the land, purely and simply because of the reason why the works are to be carried out.  The object is to improve the facilities and the premises, and to make them more attractive for business.  If achieved, that will have an effect upon the level of prostitution. 
63	In my opinion, the argument put forward in relation to purpose does not have the effect of confining s.74(1) to the establishment of a new brothel.
64	Mr Dreyfus also referred to the way the draftsman of the Planning Scheme had understood the provision, as demonstrated by reference to the opening sentences of clause 19.04-2.  In my view, it is not open to submit that the way in which somebody may have construed the Act when drafting a Planning Scheme can have any effect upon the proper interpretation and application of s.74.  
65	Finally, Mr Dreyfus submitted that there is the principle that legislation is presumed not to interfere with vested proprietary rights and interests.  He made reference to Clissold v Perry and Springhall v Kirner.  In Clissold’s case, Griffith CJ at p.373 said –
“In considering this matter it is necessary to bear in mind that it is a general rule to be followed in the construction of statutes such as that with which we are now dealing, that they are not to be construed as interfering with vested interest unless that intention is manifest.”
66	In considering that principle of interpretation, the first question is to identify the alleged vested proprietary interest.  At present, Popular Pastimes has a right to operate a brothel at the premises.  However, that does not give it a right to carry out building works without a permit.  Whatever interpretation is given to s.74(1) of the Act, Popular Pastimes’ right to conduct a brothel at the premises is not affected.   The refusal of the application because s.74(1) forbids the grant of the permit does not interfere with the rights that Popular Pastimes presently enjoys.  What it is seeking to do is to obtain a permissive right to develop the property.  It does not have a right to do so until permission is granted.  The principle does not assist in the interpretation of s.74(1).  
67	In my opinion, none of the arguments put forward by Popular Pastimes leads to the conclusion that it was an intention of Parliament that s.74(1) of the Act should be confined in its operation to a future established brothel.
Conclusion
68	It follows that, in my opinion, the learned member misconstrued the interpretation and operation of s.74(1) of the Act and, accordingly, made an error of law.  It follows that the order made by the senior member Mr R J Ball on 10 October 2005 must be set aside.  Since the order was accepted as correct on the hearing of the merits in January this year, the order made by VCAT on 15 March 2006 must also be set aside.  
69	Subject to any submissions by counsel, I propose to order –
(a)	That the orders made by the Victorian Civil and Administrative Tribunal on 10 October 2005 in proceeding no P1593/2005 be set aside;  
(b)	That the orders made by the Victorian Civil and Administrative Tribunal on 15 March 2006 in the same proceeding be set aside;  
(c)	That the application to review the decision of Melbourne City Council refusing the application of Popular Pastimes Pty Ltd to perform development works at the premises located at 58 Dudley Street, West Melbourne be dismissed;
(d)	That the respondent Popular Pastimes Pty Ltd pay the costs of the appellant Melbourne City Council including any reserved costs.
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