Konann Pty Ltd (ACN 084 100 149) v Casey City Council (in its capacity as collecting agency of the Cranbourne North Precinct Structure Plan Development Contributions Plan)

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2018 0133

KONANN PTY LTD (ACN 084 100 149)	Applicant
v
CASEY CITY COUNCIL (in its capacity as collecting agency of the Cranbourne North Precinct Structure Plan – Development Contributions Plan)	Respondent

---

JUDGES:	TATE, EMERTON AND OSBORN JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	15 October 2019
DATE OF JUDGMENT:	20 December 2019
MEDIUM NEUTRAL CITATION:	[2019] VSCA 316
JUDGMENT APPEALED FROM:	[2018] VSC 565 (Garde J)

---

PLANNING – Development contributions – Infrastructure levies – Precinct structure plan – Development contributions plan – Infrastructure works to be constructed under a development contributions plan completed by developer – Whether Council as collecting agency bound to credit costs of works against developer’s levy obligations – Duties and powers of collecting agency compared to duties and powers of responsible authority – Extent of credit or refund payable to developer – How determined – Double dipping –Planning and Environment Act 1987 (Vic) Pt 3B, s 46P(2) – Casey City Council v Carson Simpson (2007) 18 VR 19 considered; Commissioner of State Revenue (Vic) v Royal Insurance Ltd (1994) 182 CLR 51 distinguished.

---

APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr G Harris QC	Sinisgalli Foster Legal
For the Respondent	Mr A Finanzio SC with	Maddocks
Ms S Gory

tATE ja
EMERTON JA
oSBORN JA:

Introduction

The applicant (‘Konann’) is the developer of an estate known as ‘Tulliallan’, which occupies around 77 hectares in the urban growth area of Cranbourne North. The respondent (‘Council’) is the responsible authority for the Casey Planning Scheme (‘Planning Scheme’) under the Planning and Environment Act 1987 (‘PE Act’). It is also the ‘collecting agency’ and the relevant ‘development agency’ for the purposes of pt 3B of the PE Act, which provides for development contributions to be made by developers to fund the provision of works, services and facilities in relation to the development of land in the area to which a development contributions plan applies.[1]
[1]PE Act, s 46I(1)(a).

In this case, the relevant development contributions plan, the Cranbourne North Precinct Structure Plan Development Contributions Plan dated June 2011 (‘DCP’), provided, among other things, for developer contributions for the provision of a signalised intersection at the junction of Glasscocks Road and what is now known as Wheelers Park Drive[2]. This project is referred to in the DCP as project ‘RD 18’. Construction of RD 18 was costed at just over $2.1 million.
[2]Also referred to in the documents as ‘White Connector Street’, the ‘North South Connector’, ‘Connector Road’, ‘Connector Boulevard’ and ‘Boulevard Connector Street – Residential’.

On 1 May 2014, the Council granted Konann a planning permit (‘Permit’)[3] to develop its land as a multi-lot staged subdivision. The Permit required the construction of a T-intersection at the junction of Glasscocks Road and Wheelers Park Drive generally in accordance with functional layout plans approved by VicRoads. The Permit was granted subject to conditions which required the construction of the intersection prior to the grant of the statement of compliance for stage 6 of the subdivision in accordance with specified layout plans.
[3]City of Casey Planning Permit No. Pln A00646/13.

The Permit also required the payment of the levy imposed by the DCP under pt 3B of the PE Act.

Konann constructed the intersection at a cost of $3.66 million in accordance with the VicRoads requirements in the Permit. As will be explained below, these intersection works (‘the Permit intersection works’) corresponded to some extent with RD 18, being the works required and costed for the same intersection in the DCP but they also went beyond RD 18.

Under s 46P(2) of the PE Act, the Council, as the ‘collecting agency’, has the power to accept land, works, services or facilities in lieu of a levy or part thereof.

A dispute arose about whether Konann was entitled to offset the $3.66 million it had spent on the Permit intersection works against the levy payable by it pursuant to the DCP, on the basis that the Permit intersection works constituted works provided ‘in lieu’ of part of the levy.

That Konann might provide works in lieu of the levy was contemplated by the Permit. A permit condition (condition 31) required Konann to enter into an agreement pursuant to s 173 of the PE Act relating to, among other things, the timing of any credit or payments to be made in respect of any infrastructure project, having regard to the availability of funds in the DCP.

Although drafts of a s 173 agreement between Konann and the Council were circulated and discussed, no s 173 agreement was concluded. The parties became deadlocked in their negotiations. As a result, there was no agreement in relation to the provision of works in lieu of the levy. However, the subdivision continued apace despite the fact that the parties had not agreed on the terms of the s 173 agreement.

On 19 January 2016, Konann sought the Council’s consent to change the staging sequence in the Permit to allow stage 11, which included the Permit intersection works, to be developed after stages 15, 16 and 17. The Council refused to give its consent, which resulted in Konann issuing proceedings in the Victorian Civil and Administrative Tribunal (‘Tribunal’). Those proceedings were settled on 29 April 2016, with the Council agreeing to the resequencing on the basis that Konann would provide a security deposit for the Permit intersection works. The terms of settlement expressly recorded that Konann and the Council were at odds as to the amount to be credited for the Permit intersection works under s 46P(2): the Council’s position was that, as collecting agency, it would not agree to the crediting of an amount greater than the DCP cost estimate for RD 18; Konann’s position was that it was entitled to the whole of the cost of the Permit intersection works.

Konann paid the security deposit for the Permit intersection works.

In about June 2016, with the issue of credit for the Permit intersection works remaining unresolved, Konann commenced construction of the Permit intersection works, the Council having approved their scope and the relevant contracts.

On 30 May 2017, the Council issued a certificate of practical completion for the Permit intersection works and, on 15 June 2017, it returned the security deposit to Konann. On 20 June 2017, the Council issued a statement of compliance under s 21 of the Subdivision Act 1988 for stage 11 of the subdivision, which included the Permit intersection works. On 27 June 2017, the Council updated its Register of Public Roads to record the vesting of the Permit intersection works in the Council.

The construction of the intersection thus benefits Konann in two ways. It provided greatly improved road access at a gateway to its subdivision and it enabled that subdivision to proceed expeditiously in circumstances where its staged implementation was conditional upon the provision of necessary infrastructure.

On 9 August 2017, Konann made a claim pursuant to s 46P(2) of the PE Act that costs for the Permit intersection works in the amount of $3,658,834 be credited as a part payment of its DCP levy. Konann’s letter to the Council stated:

On 20 June 2017, the Council accepted, for the purposes of s 46P of the Planning and Environment Act 1987 (Vic), the Works in satisfaction of part of Konann’s liability to pay its DCP levy by issuing the Statement of Compliance for Stage 11 of the subdivision undertaken pursuant to [the Permit], which stage included the RD 18 intersection.

On 21 August 2017, Konann issued an originating motion[4] under O 56 of the Supreme Court (General Civil Procedure) Rules2015 seeking declarations, in substance, that, for the purposes of s 46P(2), the Council had accepted the Permit intersection works constituted by part of RD 18 in part satisfaction of Konann’s DCP liability when it issued the statement of compliance for stage 11 and that, by accepting the Permit intersection works under s 46P(2) in part satisfaction of Konann’s liability under the DCP, the Council became obliged to recognise the fair and reasonable value of the Permit intersection works against Konann’s DCP liability by crediting that value against any outstanding liability and/or repaying amounts previously paid to the Council as DCP levy. Konann also sought a declaration that the fair and reasonable value of the Permit intersection works was the $3.66 million that it had expended carrying out those works and an order in the nature of mandamus compelling the Council to give the credit or make the repayment in accordance with the declarations.
[4]Amended on 22 September 2017.

Following a trial in the Supreme Court, the judge dismissed the proceeding, holding that Konann was not entitled to the relief sought. We describe the judge’s reasons more fully below, but, in substance, the judge held that s 46P(2) conferred a wide discretion on the collecting agency as to whether to accept works in lieu of levies, the exercise of which discretion involved the collecting agency undertaking ‘governmental decision-making’, and it was not the role of the Court to substitute its own decision for that of the collecting agency.[5] To declare that Konann was entitled to be credited with the whole of the value of the Permit intersection works assessed at an amount exceeding $3.66 million would be to engage in impermissible merits review and to usurp the role and power of the collecting agency, which alone is given the authority to accept the provision of land, works, services or facilities in part or full satisfaction of the levy.
[5]Konann Pty Ltd v Casey City Council [2018] VSC 565 [162] (‘Reasons’).

Konann now seeks leave to appeal that decision. For the reasons that follow, leave to appeal will be refused. We see no error in the decision below.

Planning and Environment Act

Before considering the proposed grounds of appeal it is necessary to set out the legislative scheme in which the dispute fell to be determined.

Part 3B — Development contributions

Part 3B of the PE Act makes provision for development contributions plans to be included in planning schemes for the purposes of levying contributions to fund the provision of works, services and facilities in relation to the development of land in the area to which the development contributions plan applies.[6]
[6]PE Act, s 46I(1)(a).

The scheme for contributions in pt 3B distinguishes between a ‘development infrastructure levy’ and a ‘community infrastructure levy’.[7] Here, we are concerned with the development infrastructure levy only.
[7]Ibid s 46J.

The scheme also distinguishes between a ‘development agency’ and a ‘collecting agency’. A collecting agency is a person specified in a development contributions plan as a person to whom, relevantly, a development infrastructure levy is payable under pt 3B.[8] A development agency means a person specified as the person responsible for the provision of works, services, or facilities or for the plan preparation costs for which, relevantly, a development infrastructure levy or part of a levy is payable under pt 3B.[9]
[8]Ibid s 46H (definition of ‘collecting agency’).
[9]Ibid s 46H (definition of ‘development agency’).

It is uncontroversial in this case that the Council is the collecting agency and the development agency for the projects identified in the DCP, including the intersection project, RD 18.

Section 46K(1) of the PE Act describes the contents of a development contributions plan and provides that it must, relevantly:
(a) specify the area to which it applies; and
(b)set out the plan preparation costs, works, services and facilities to be funded through the plan, including the staging of the provision of the works, services or facilities; and
(c)relate the need for the plan preparation costs, works, services and facilities to the proposed development of land in the area; and
(d)specify in respect of each of the plan preparation costs, works, services and facilities—
(i)the amount of the plan preparation costs and the estimated cost of the works, services or facilities; or
(ii)the standard levy applicable to the plan preparation costs, works, services or facilities; and
(e)unless a standard levy is applied, specify the proportion of the total estimated cost of the plan preparation costs, works, services and facilities which is to be funded by a development infrastructure levy or community infrastructure levy or both; and
(f)specify the land in the area and the types of development in respect of which a levy is payable and the method for determining the amount of levy payable in respect of any development of land; and
(fa)specify the Minister, public authority or municipal council to whom or to which the community infrastructure levy or development infrastructure levy is payable under this Part (the collecting agency); and
(fb)specify any Minister, public authority or municipal council that is to be responsible for the provision of the works, services or facilities or for the plan preparation costs for which the community infrastructure levy or development infrastructure levy or part of that levy is payable under this Part (the development agency); and
(g)provide for the procedures for the collection of a development infrastructure levy in respect of any development for which a permit under this Act is not required.
Subsections (2) and (3) provide respectively that a development contributions plan may exempt certain land or certain types of development from payment of a development infrastructure levy and that a development contributions plan may specify the same person to be both a collecting agency and a development agency.

Section 46J provides, relevantly, that a development contributions plan may provide for the imposition of a development infrastructure levy in relation to the development of land in the area to which the plan applies.

Section 46N(1) provides that if a development infrastructure levy is payable in respect of the development of any land and an application is made under the PE Act for a permit to carry out that development on that land, the responsible authority must include a condition in the permit that the applicant pay the amount of the levy to the relevant collecting agency within a specified time or within a time specified by the collecting agency, or enter into an agreement with the collecting agency to pay the amount of the levy within the time specified in the agreement.

Section 46P contains provisions applying to the collection of levies and relevantly provides as follows:

(1)The relevant collecting agency may require the payment of an amount of levy referred to in section 46N or 46O to be secured to its satisfaction.
(2)The relevant collecting agency may accept the provision of land, works, services or facilities by the applicant in part or full satisfaction of the amount of levy payable.
(3)Subsection (2) applies to land, works, services or facilities provided before or after the application for the permit was made or the development is carried out.

The proper construction of s 46P(2) is in issue in this appeal. Konann submits that the word ‘may’ in the phrase ‘the collecting agency may accept’ in fact means ‘must’ in circumstances where the collecting agency—here, the Council—has ‘accepted’ the works by a series of administrative actions, including issuing a certificate of compliance pursuant to the Subdivision Act 1988 and recording the works as being in public ownership.

Section 46Q applies to a municipal council in its capacity as a collecting agency or a development agency. Insofar as the municipal council is a collecting agency, subsection (1A) provides:

A municipal council to which an amount of levy is paid as a collecting agency under this Part must forward to a development agency any part of the levy that is imposed for plan preparation costs incurred by the development agency or for the carrying out of works, services or facilities by or on behalf of that development agency.

Insofar as a municipal council is paid an amount of levy as a development agency, s 46Q(2) provides that it must apply that amount only for a purpose relating to plan preparation costs or the provision of works, services and facilities in respect of which the levy was imposed and in accordance with the approved development contributions plan.

Section 46Q(3) provides that the municipal council may refund any amount of levy paid to it as a development agency under pt 3B in respect of a development if it is satisfied that the development is not to proceed. Section 46Q(4) provides that if an amount of levy has been paid to a municipal council as a development agency for plan preparation costs or for the provision by it of works, services or facilities in the area and that amount has not been expended within the period required by the approved development contributions plan, then the municipal council must within six months after the end of that period—

(c)with the consent of the Minister and in the manner approved by the Minister, pay that amount to the current owners of land in the area; or
(d)in accordance with Part 3, submit to the Minister an amendment to the approved development contributions plan to provide for the expenditure of that amount; or
(e)with the consent of the Minister and in the manner approved by the Minister, expend that amount for the provision of other works, facilities or services in that area.

The development contributions plan therefore creates a pool of funds available for the projects designated in the plan and if a project is not carried out, funds must be returned or used for other approved purposes only. The collecting agency is not entitled to keep the funds for its own purposes. The development contributions plan is intended to be revenue neutral for the municipal council.

In argument before us, senior counsel for Konann referred at some length to the second reading speeches for two Bills, the first being a 1995 Bill[10] to enact and insert the pt 3B regime in the PE Act; the second being amending legislation in 2004[11] to improve the effectiveness and workability of the then existing development contributions system in pt 3B of the PE Act. These extraneous materials, it was submitted, were relevant to construing s 46P(2) of the PE Act and establishing Konann’s entitlement to have the value of the Permit intersection works credited against its DCP liability.
[10]Planning and Environment (Development Contributions) Bill 1995.
[11]Planning and Environment (Development Contributions) Bill 2004.

In the second reading speech for the 1995 Bill,[12] the Minister described the key features of the proposed approach to development contributions as follows:
[12]Victoria, Parliamentary Debates, Legislative Assembly, 4 May 1995, 1240–1242 (Robert Maclellan, Minister for Planning).

•a single, consistent system across all municipalities, whether established or fringe metropolitan, provincial city or rural which applies to both residential and non-residential development;
•councils will be encouraged to properly plan for infrastructure and services required for new development;
•a limit to the extent to which development contributions can be used to fund infrastructure;
•appropriate timing of contributions to match infrastructure demand, thereby supporting efficiency and affordability; and limiting the need for developers to borrow the money at the highest rate of interest merely to find that the council holds the money in a council account for some years before it is spent;

•clear rules on what infrastructure can be included in the levy;
•an equitable system which involves documented justification for the required infrastructure, its timing and costs; and a highly visible process to provide strong community accountability.

The Minister then said:

The provisions limit levies being obtained outside the development contributions framework to those of a minor nature directly related to the site in question, such as the crossovers outside a service station.[13]

[13]Ibid 1242.

Konann highlights the statement that levies outside the development contributions framework are intended to be limited in the manner described.

In relation to the 2004 amending Bill,[14] Konann relied on the report prepared in May 2003 reviewing the system of development contributions prepared by an independent steering committee.[15] In Part 5 of the report, the committee stated that the government recognised that not all infrastructure requirements could be anticipated and included in the development contributions plan and that there should be some ability for responsible authorities and referral authorities, in certain circumstances, to levy or require developers to provide infrastructure where it could not be reasonably provided for in a DCP. The report stated:
[14]Victoria, Parliamentary Debates, Legislative Assembly, 4 November 2004, 1320–1323 (Mary Delahunty, Minister for Planning).
[15]The 2004 Bill was said in the second reading speech to be part of the implementation of the recommendations of the review.

Section 62 of the Planning and Environment Act 1987 may need to be amended to clarify the use of planning permit conditions that require payments for, or the provision of, infrastructure, or infrastructure to be provided, in order to mitigate the impacts of the permitted use and development where:
•that infrastructure could not have been reasonably anticipated and included in a [development contributions plan], and
•the works, services, or facilities are required as a result of the specific use and development.

As with any planning permit condition, such conditions can be ultimately subject to review at VCAT, and responsible authorities will be required to justify their valid application.
Under the reformed system, it is intended that councils and other authorities will continue to be able to impose planning permit conditions on developments to provide infrastructure on or to the site, so that infrastructure servicing the individual development, normally provided by developers (for example, on site roads, on site drainage, access to the site, etc.) will not be required to be incorporated into a [development contributions plan].[16]

[16]Department of Sustainability and Environment (Vic), A New Development Contribution System for Victoria (May 2003) 6.

Again, as Konann pointed out, this reveals an intention to limit the circumstances in which conditions can be imposed requiring the provision of infrastructure outside the development contributions plan framework.

Part 4 — Permits and permit conditions

Section 62 of the PE Act makes provision for the responsible authority to impose permit conditions requiring the payment of development contributions and otherwise for the provision of works by developers, either pursuant to a s 173 agreement or more generally.

Section 62(1)(a) relevantly provides that in deciding to grant a permit, the responsible authority must—
include any condition which the planning scheme or a relevant determining referral authority requires to be included;
Section 62(5) provides that in granting a permit, the responsible authority may—

(a)include a condition required to implement an approved development contributions plan ...; or
(b)include a condition requiring specified works, services or facilities to be provided or paid for in accordance with an agreement under section 173; or
(c)include a condition that specified works, services or facilities that the responsible authority considers necessary to be provided on or to the land or other land as a result of the grant of the permit be—
(i)provided by the applicant; or

(ii) paid for wholly by the applicant; or
(iii)provided or paid for partly by the applicant where the remaining cost is to be met by any Minister, public authority or municipal council providing the works, services or facilities.

Section 62(6) provides that the responsible authority must not include in a permit a condition requiring a person to pay an amount for or provide works, services or facilities except—

(a)in accordance with subsection (5), section 46N(1) ...; or
(b)a condition that a planning scheme requires to be included as referred to in subsection (1)(a); or
(c)a condition that a determining referral authority requires to be included as referred to in subsection (1)(a).

In other words, the responsible authority cannot impose a permit condition requiring the provision of works or the payment of monies for works other than pursuant to a development contributions plan under pt 3B or unless the relevant planning scheme or a referral authority requires the imposition of such a condition.

Konann has not challenged the validity of condition 46(e) in the Permit, which is a VicRoads condition expressed to require the construction of the ‘interim signalised intersection’ ‘Glasscocks Road/Collector Boulevard’ as shown in the drawings that are specified. The condition required the construction of the Permit intersection works prior to the issue of the statement of compliance for stage 6 of the subdivision.

The DCP

The DCP was prepared by the Growth Areas Authority. It identifies and describes projects required for the development of the DCP area, establishes a framework for development proponents in the area to make a financial contribution towards the costs of the identified infrastructure projects and provides details of the calculation of financial contributions that must be made towards the nominated projects.[17] It seeks to ensure ‘that the cost of providing new infrastructure and services is shared equitably between various development proponents and the wider community’.
[17]Growth Areas Authority, Cranbourne North Precinct Structure Plan Development Contributions Plan (June 2011) 3.

The DCP area covers 435.74 hectares proposed to contain an estimated 5,400 to 7,000 dwellings and 15,640 to 20,740 people, and includes the Tulliallan estate as well as a number of other existing and proposed residential subdivisions. As a result, a number of development proponents are required to make contributions to infrastructure projects across the DCP area. The DCP lists and costs no less than 25 road and intersection projects, eight of which involve some part of Glasscocks Road. These projects have been included in the DCP based on the ‘Cranbourne North Transport Modelling and Assessment’ carried out by GTA Consultants.

The DCP replaced the 2007 Cranbourne North Development Contributions Plan. A number of the projects contained within the 2007 DCP were carried forward in the DCP with updated costs. Some projects were removed, including the precursor to RD 18.

Project RD 18 is described in the DCP as follows:

Construction of Intersection of Glasscocks Road and White Connector Street.
Construction of interim intersection including provision of traffic signals in accordance with agreed intersection scope prepared by GTA Consultants and CEDC.

The DCP contains a diagram showing the layout for RD 18 and estimated costs of individual items forming part of the works for RD 18. The diagram shows an area coloured orange as the ‘intersection area’, which includes a rectangle formed by joining the four corners of the intersection of Glasscocks Road and what is described on the plan as the ‘North South Connector’. The ‘intersection area’ also includes, to the north of the rectangle, part of the connector road north of Glasscocks Road. It does not include any ‘road flaring’.

The DCP specifies for RD 18 a contribution by each development proponent of $4,852.74 per net developable hectare, based on its estimated construction cost of $2,119,500.

In relation to ‘works in kind’, the DCP states:

Works may be constructed in lieu of cash contribution on some projects. This is only possible where the arrangement has been approved in writing by the Collecting Agency.
As outlined in Section 3.1.1, payments of development contributions is to be made in cash.
Alternatively, infrastructure works and land may be provided by developers with a credit provided against their development contribution, subject to the written agreement of the Collecting Agency. In determining whether to agree to the provision of works in lieu of cash the Collecting Agency will have regard to the following:
•Only works or land identified in the DCP can be provided in lieu of cash,
•Works must be provided to a standard that generally accords with the DCP unless agreed between the Collecting Agency and the developer,
•Detailed design must be approved by the Collecting Agency and generally accord with the standards outlined in the DCP unless agreed by the Collecting Agency and the developer,
•The construction of works must be completed to the satisfaction of the Collecting Agency, and

• There is no financial impact on the DCP.[18]

[18]Ibid 3.1.2 (emphasis added).

The important dot points for present purposes are that only works or land identified in the DCP can be provided in lieu of cash and there may be no financial impact on the DCP if works or land are provided in lieu. It is also important to note that any provision of works in kind is only possible where there has been written approval by the collecting agency.

Clause 3.1.3 of the DCP deals with ‘credit for overprovision’ as follows:

Where the Collection [sic] Agency agrees that a development proponent can physically provide an infrastructure item (either works and/or land), the situation may arise where the developer makes a contribution with a value that exceeds that required by the DCP for the individual project.
In such a case the developer may be entitled to credits against other projects in the DCP to the extent that they ‘over contributed’. Alternatively, a developer may seek agreement with the Collecting Agency to provide for a cash reimbursement where a significant over contribution has been made on a particular project.
The details of credits and reimbursements will need to be negotiated with, and agreed to by the Collecting Agency.[19]

[19]Ibid 3.1.3 (emphasis added).

Again, the agreement of the collecting agency to offsets or credits is required. This is fundamental, having regard to the responsibility of the collecting agency to ensure that the levies collected are applied to all the identified projects, ensuring an equitable distribution of funds for infrastructure across the DCP area.

The Planning Scheme

The DCP is incorporated in and forms part of the Planning Scheme along with the relevant precinct structure plan (discussed below). The Planning Scheme provides the framework for the development and use of the land in the DCP area and planning requirements intersect at a number of points with the obligations in the DCP. The Council is the responsible authority for the Planning Scheme and charged with a number of decision-making powers in that capacity.

Clause 45.06 of the Planning Scheme incorporates a development contributions plan overlay. Clause 46.06-1 requires consistency between any permit and the provisions of any applicable development contributions plan. Hence, a permit must:

•Be consistent with the provisions of the relevant development contributions plan.
•Include any conditions required to give effect to any contributions or levies imposed, conditions or requirements set out in the relevant schedule to this overlay.

The DCP area is in the Urban Growth Zone (‘UGZ’) pursuant to cl 37.07 of the Planning Scheme. The purpose of the UGZ is expressed to include:

To manage the transition of non-urban land into urban land in accordance with a precinct structure plan.
To provide for a range of uses and the development of land generally in accordance with a precinct structure plan.
To contain urban use and development to areas identified for urban development in a precinct structure plan.
To provide for the continued non-urban use of the land until urban development in accordance with a precinct structure plan occurs.
To ensure that, before a precinct structure plan is applied, the use and development of land does not prejudice the future urban use and development of the land.

The land covered by the UGZ is land transitioning from ‘green fields’ (in general) to urban use and development. The existence of a precinct structure plan is key to the development of land within the UGZ, as it sets out the framework for urban development in the area, specifying the location of residential areas and activity centres, schools and other community facilities, open space and active leisure areas such as playing fields, roads and bike paths. Urban development can only occur if there is a precinct structure plan and in accordance with it. Clause 37.07-9 requires any permit to be consistent with the precinct structure plan applying to the land and cl 37.07-10, which controls the subdivision of land requires consistency between the precinct structure plan and any permit granted for the subdivision of land.

Schedule 5 to the UGZ contains use and development provisions relating to the land covered by the precinct structure plan. Clause 3.0 of sch 5 requires developers to formulate a ‘public infrastructure plan’ to accompany any application for subdivision. The public infrastructure plan must address, among other things, what if any infrastructure set out in the DCP is sought to be provided as ‘works in lieu’, subject to the consent of the collecting authority. If the developer wishes to provide works in lieu of the DCP levy, the consent of the collecting authority should therefore be sought at the time of the application for subdivision.

Clause 4.0 of sch 5 requires a planning permit to include conditions which ensure that any requirements or conditions set out in the precinct structure plan are implemented as part of the planning permit. Moreover, prior to the issue of a statement of compliance for the first stage of a development, the owner must, if required, enter into an agreement under s 173 of the PE Act which specifies the infrastructure required to be provided as part of the development. The s 173 agreement must give effect to the approved ‘public infrastructure plan’.

The PSP

The relevant precinct structure plan is the Cranbourne North Stage 2 Precinct Structure Plan dated June 2011 (‘PSP’).[20] The PSP was prepared by the Growth Areas Authority concurrently with the DCP and applies to approximately 186 hectares of land forming part of the DCP area, which is significantly larger. It is expressed to be a long-term plan to guide future urban development in the precinct, describing how the area is expected to be developed and where infrastructure and services are planned in order to support development. Relevantly, the PSP outlines projects that have been identified ‘to ensure that future residents, visitors and workers within the PSP area can be provided with timely access to services and transport’. It provides the basis for the use and development controls in sch 5 to the UGZ that apply to planning permits granted pursuant to that sch (such as the Permit).
[20]Growth Areas Authority, Cranbourne North Precinct Structure Plan (June 2011) 5.

Clause 5 of the PSP is a ‘precinct infrastructure plan’ which sets out infrastructure and services required to meet the needs of development of the precinct. It recognises that infrastructure and services are to be provided through a number of mechanisms, including subdivision construction works by developers, development contributions, utility service provider requirements and capital works projects by the Council, State Government agencies and non-government organisations. The PSP therefore contemplates that public infrastructure may be provided by developers outside the development contributions plan framework.

Clause 5.1.1 of the PSP provides that as part of subdivision construction works, new development (ie. the developers) must meet the costs of delivering the following infrastructure:

•        Connector streets and local streets, including culverts;
•        Local bus stop infrastructure;
•        Landscaping all existing and future roads and local streets;
•Intersection works and traffic management measures along arterial roads, connector streets and local streets.

It also contains the following note:
Note:Subject to the approval of the collecting agency, part or all of the cost of works on intersections included in a Development Contributions Plan may be able to be provided as in-kind works in lieu of cash payment.

The PSP therefore contemplates that developers will meet the cost of intersection works of the kind here in issue but may be able to offset the cost of those works or part thereof against levy obligations in the DCP.

A table in the PSP lists the infrastructure and services required within the precinct. The table is divided into a number of project groups, including roads. In relation to Glasscocks Road and its intersection, the project description is ‘signals at intersection of Connector Road and Glasscocks Road’. The designated ‘lead agency’ is the Council and the timing is given as ‘medium to long-term’, long-term being the year ‘2020+’.

The PSP does not oblige the Council to construct the intersection in the short-term or, indeed, within the contemplated timing for the development of the relevant part of the precinct.

The PSP also sets out planning and design guidelines for the construction of intersections with arterial roads. Clause 4.8.3 states that the following planning and design guidelines must be met:

•All intersections with existing or proposed arterial roads must be designed, constructed and controlled to the satisfaction of the Roads Corporation and the municipal council, with the main design objective being to allow for a minimum 10-year design life having regard to the anticipated traffic growth on the affected roads from both the ultimate development of the Precinct Structure Plan area and the external traffic.
•Staging of subdivisions is to provide for the timely connection of road links between properties and the arterial road network and bus, cycle and walking routes to the satisfaction of the responsible authority.
•Land must be provided for right of way flaring at all arterial road connections to existing and proposed arterial roads for the ultimate design of the intersection in accordance with VicRoads standard.[21]

[21]Ibid 4.8.3.

The PSP therefore casts the burden on the developers to stage subdivisions by reference to the provision of connections to the arterial road network and to provide land for road flaring. It contains a table with a road hierarchy showing Glasscocks Road with an indicative number of 30,000 vehicles per day, four traffic lanes and a median strip. It records that responsibility for Glasscocks Road rests with the ‘Council (potential VicRoads in the future)’.

It is not in dispute that the Council is responsible for Glasscocks Road and its intersection. However, the Council’s proposal to construct the intersection is timed in the medium to long-term, which does not necessarily accord with the timing for the subdivision developments that will generate demand for the intersection

The Permit

The Permit allows a multi-lot subdivision on the Tulliallan estate.

Clause 6 of the Permit provides that before the first plan of subdivision is certified under the Subdivision Act 1988, a public infrastructure plan (as required by the PSP) must be submitted and approved by the Council showing, relevantly:

(a)What land may be affected or required for the provision of infrastructure works and the timing of when such land will be provided;
…

(c)The provision, staging and timing of road works internal and external to the land consistent with any relevant traffic report or assessment;
…
(g)What (if any) infrastructure set out in the Development Contributions Plan applying to the land is sought to be provided as ‘works in lieu’ subject to the consent of Casey City Council.

Clause 18 relevantly provides that before commencement of any road works associated with each stage of the subdivision, detailed construction plans must be submitted to and approved by the Council. These plans must include:

(b)Functional layout plans for the interim and ultimate intersection of Wheelers Park Drive and Glasscocks Road as approved by the Responsible Authority and VicRoads, along with detailed design of the interim intersection;

Clauses 27 and 28 concern development contributions and provide:

27.A Development Infrastructure Levy, in accordance with the provisions of the [DCP] must be paid by the applicant to the Collecting Agency after certification of the relevant plan of subdivision but not more than 21 days prior to the issue of a Statement of Compliance in respect of that plan under the Subdivision Act 1988.
28.Where the subdivision is to be developed in stages the infrastructure levy for the stage to be developed only may be paid to the Collecting Agency within 21 days prior to the issue of a Statement of Compliance in respect of that stage, provided that a Schedule of Development Contributions is submitted with each stage of the plan of subdivision. This Schedule must show the amount of development contributions payable for each stage and the value of the contributions in respect of prior stages to the satisfaction of the Collecting Agency.

Clause 31 provides that prior to the issue of a statement of compliance for the first stage of subdivision, the landowner must enter into an agreement under s 173 of the PE Act which provides for, among other things:

(a)The implementation of the Public Infrastructure Plan approved under this permit.
…

(e)The timing of any credit or payments to be made to a person in respect of any infrastructure project having regard to the availability of funds in the [DCP].[22]

[22]Any dispute concerning the terms of the required agreement was able to be referred by Konann to the Tribunal pursuant to s 184 of the PE Act.

Clause 34 requires, prior to the issue of a statement of compliance for the relevant stage, fees to be paid to the Council to cover the costs of ten years of maintenance of the traffic signals associated with the interim Glasscocks Road/North-South Connector Road intersection.

Clause 46 of the Permit contains ‘VicRoads conditions’. Paragraph (b) concerns the intersection and provides:

Unless otherwise agreed in writing by VicRoads, before the certification of the Stage 6 … or the subsequent stages of the plan of subdivision by the Responsible Authority, the following must be submitted to the satisfaction of VicRoads:
(i)A functional layout of the ultimate and interim Glasscocks Road/Connector Boulevard signalised intersection, generally in accordance with the drawings Drg G 15503-03B Glasscocks Road Functional Layout Ultimate and G 15503-01B – Glasscocks Road/Connector Boulevard Functional Layout Plan-Interim by TraffixGroup and a functional stage Road Safety Audit.
(ii)A plan of subdivision showing land set aside as ‘Road’ and vested to the Responsible Authority, generally in accordance with the approved functional layout of the ultimate Glasscocks Road/Connector Boulevard intersection’.

Paragraph (e) then provides:

Unless otherwise agreed in writing by VicRoads, prior to the statement of compliance being issued for stage 6 or the subsequent stages 6-19, as shown on drawing 36461CP-A revision Z, the Glasscocks Road/Connector Boulevard interim signalised intersection must be constructed, generally in accordance with the approved functional layout drawing and to the satisfaction of VicRoads and the Responsible Authority.

Overall, the Permit provides for the Permit intersection works in the following ways:

(a) By providing for the connection with the arterial road (Glasscocks Road) as part of the subdivision layout: conditions 4(e), (f) and (g) and 11(d) and (e). This gives effect to the PSP in accordance with cl 37.07.10 of the Planning Scheme.

(b) By the requirement for a public infrastructure plan under condition 6. This governs the provision, staging and timing of road works (cl 6(c)) and what infrastructure under the DCP is sought to be provided as works in lieu, subject to the consent of Council (cl 6(g)).

(c) By requiring detailed construction plans for the interim and ultimate intersection: conditions 18(b), (d), (e), (f), (g), (i), (j), (m), (p), (r), (s), (t), (u) and (v).

(d) By payment of a levy pursuant to conditions 27 and 28. This gives effect to the DCP in respect of item RD 18.

(e) By condition 31 requiring Konann to enter into a s 173 agreement for the timing of any credit or payments to be made in respect of any infrastructure project, having regard to the availability of funds in the DCP.

In addition, cl 46 of the Permit contains the following enforceable conditions:

(f) condition 46(b) requiring VicRoads’ satisfaction with the subdivision and functional layout of the intersection;

(g) condition 46(e) requiring construction of the intersection to the satisfaction of VicRoads and the responsible authority prior to the statement of compliance for stage 6 or subsequent stages;

(h) condition 46(f) providing all works required by VicRoads be the subject of a detailed engineering design to the satisfaction of VicRoads;

(i) condition 46(g) requiring all works required by VicRoads under the Permit to be completed to the satisfaction of VicRoads and at no cost to VicRoads; and

(j) condition 46(h) requiring compliance with VicRoads procedures relating to developer funded projects.

Finally, condition 47 requires the provision of final construction plans to the Council and condition 59 provides for the transfer of land required for road widening of an intersection with an existing or proposed arterial road to VicRoads.

The PIP

In accordance with condition 6 of the Permit, Konann prepared a number of iterations of its public infrastructure plan, which was ultimately approved by the Council on 21 December 2016 (‘PIP’). The PIP shows the Glasscocks Road/Wheelers Park Drive intersection (with provision for flaring) to be provided at stage 11 of the subdivision and as being a developer responsibility. In the column relating to ‘land/works in kind’, the intersection is marked ‘to be determined’.

Accordingly, as at 21 December 2016, although the PIP had been finalised, there was no agreement as to whether the Council would accept the Permit intersection works as ‘works in kind’, that is, as works provided in lieu of the DCP levy.

The s 173 agreement

Although the Permit required there be an agreement under s 173 of the PE Act which would specify, among other things, whether, and if so which, works in kind would be provided by Konann, no final agreement was reached.

A s 173 agreement was in draft form when the negotiations stalled. The latest draft of the s 173 agreement under negotiation shows the main points of disagreement relating to RD 18:

(a) The Council sought to define the scope of RD 18 by reference to plan 4 in the DCP, whereas Konann sought an amendment to define the extent of the project as being as per the design requirements of the Council and/or VicRoads under the Permit, including all associated works necessary to complete the project.

(b) The Council sought to define the agreed project value as the amount specified for RD 18 in the DCP or the actual costs of construction, whichever was the lesser amount, whereas Konann sought to define the agreed project value as the lowest of three tender prices for carrying out the Permit intersection works.

This reflects the dispute before the Court, namely, as to whether Konann was entitled to have the Permit intersection works treated as works in kind under the DCP and their full cost treated as amounts paid in part satisfaction of its DCP levy.

Reasons below

In substance, in the proceeding below, Konann sought a declaration from the Court that the value of the intersection works accepted by the Council was the fair and reasonable value of the works amounting to $3.66 million to be credited against its DCP liability or refunded to it. Konann also sought an order in the nature of mandamus compelling the Council to provide a credit or refund in this amount against its DCP liability.

In essence, Konann sought an order that it was entitled to deduct all of its expenditure on the Permit intersection works from its outstanding DCP liability or to receive an equivalent refund. It claimed that the Council had failed in its statutory duty under s 46P(2) of the PE Act by not allowing the deduction or giving the refund.

The judge identified the fundamental issues before the Court concerning the exercise of the discretionary power in s 46P(2) to be as follows:

(a) What is the nature of the Council’s discretion under s 46P(2)?

(b) Is the Council required to afford procedural fairness?

(c) Does the Council still have a discretion?

(d) Is the Council obliged to make a decision?

(e) Is the Council required to exercise its discretion in Konann’s favour for the whole of the intersection works?

(f) Should the Court exercise the Council’s discretion for it?[23]

[23]Reasons [103].

In relation to the Council’s discretion under s 46P(2) generally, the judge observed that s 46P gives discretion as to the mode of collection of levies by the collecting agency and it does not give the discretion to any other body, or provide for merits review to the Tribunal or the Court.[24] He further observed that the factors which the collecting agency is required to consider in exercising its discretion under s 46P(2) are not expressly stated and that it followed that the scope of the discretion that could lawfully be exercised by the collecting agency had to be determined by implication from the subject matter, scope or purpose of the PE Act.[25] Furthermore there is a limitation as to the manner in which the power contained in s 46P(2) can be exercised in that it must be exercised in a manner as far as practicable which ensures that there is no double dipping by the collecting agency.[26]
[24]Reasons [105] citing Carson Simpson (2007) 18 VR 19, 36 [74] (Osborn J).
[25]Reasons [109] referring to Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24, 39–40.
[26]Reasons [110].

The judge made reference to cll 3.1.2 and 3.1.3 of the DCP which respectively list relevant factors when a collecting agency is asked to agree to the provision of works in lieu of levy and provide for a collecting agency to agree that a developer make a contribution with a value exceeding the value required by the DCP for the individual project, in which case the developer will be entitled to credits against other DCP projects or may seek a cash reimbursement.[27] The DCP recognises that works or land may be provided to an extent or standard exceeding that required by the DCP for an individual project. He concluded:

It is plain that under s 46P(2) and the provisions of the DCP, the collecting agency has considerable decisional freedom, subject to the limitation on ‘double dipping’. It can accept land, works, services or facilities in lieu of levy payable under the DCP. It can provide credits for overprovision of works or land beyond that required by the DCP for an individual project. It is not confined to the specific sum or value that is afforded to a particular project or works by the DCP. In the case of a partly completed project or works, it is not confined to the derived value of the part as against the whole if it decides to accept overprovision.
It is fundamental that Parliament has conferred the power to make decisions as to whether land, works, services or facilities provided by a permit applicant are to be accepted in part or full satisfaction of the amount of levy payable on the relevant collecting agency – in this case, the Council. Likewise, Parliament has given decisions about the provision of security for the amount of levy that may be payable under s 46P(1) to the same agency. As I have said, and repeat, there is no merits review available in relation to those decisions. The decision is one for the Council to make. The only basis for challenge of these decisions is by judicial review.[28]

[27]Reasons [112]–[113].

[28]Reasons [115]–[116].

In considering the nature of the discretion in s 46P of the PE Act, the judge referred to the analysis of Osborn J in Casey City Council v Carson Simpson Pty Ltd[29] (‘Carson Simpson’).[30] In that case, Osborn J described the imposition of a requirement that the subdivider provide infrastructure contemplated by the development contributions plan as ‘a significant election on [the council’s] part as to the implementation of the DCP’, noting that the council could not ‘in fairness so require and fail thereafter to give credit for the value of the works it has required’.[31] In this context, Osborn J stated that he had used the word ‘elects’ as ‘it is always open to a responsible authority to stipulate the provision of necessary infrastructure, as a precondition to subdivision, without requiring the subdivider to be the provider’.[32]
[29](2007) 18 VR 19 (‘Carson Simpson’).
[30]Reasons [82].
[31]Carson Simpson (2007) 18 VR 19, 38 [88].
[32]Ibid 37 [85].

The judge held that Osborn J had used the term ‘election’ in a general sense to mean ‘decision’, and not in the technical sense of common law election.[33] His Honour noted that decisions under s 46P(2) of the PE Act ‘will often involve judgments as to matters of degree, and opinions as to the public and private benefit derived from construction works’ and the doctrine of common law estoppel has no application in such circumstances.[34]
[33]Reasons [91].
[34]Ibid.

As to the question of procedural fairness, having regard to High Court authority[35] and the decision of Osborn J in Stonington City Council v Roads Corporation[36] wherein his Honour distinguished between a decision ‘apt to affect individual interests’ where the law would ordinarily imply a duty to accord procedural fairness and the decision affecting the rights, interests or expectations of a class of citizens generally, the judge concluded that the Council’s obligation to provide procedural fairness to Konann under s 46P(2) brought with it the responsibility to notify Konann of the issues and considerations that Konann should address, and the opportunity to provide written submissions, and expert and lay material to the Council before any decision was made. The judge stated that the Council would be wise to provide an opportunity for representatives of Konann to address it at a Council meeting or in committee.[37]
[35]Kioa v West (1985) 159 CLR 550; Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252; CPCF v Minister for Immigration and Border Protection (2015) 255 CLR 514.
[36](2010) 30 VR 303.
[37]Reasons [125].

As to Konann’s submission that the Council had exhausted its discretion under s 46P(2) by accepting the Permit intersection works and could not now decline to give credit for the actual cost of the works, the judge was not satisfied on the facts that the Council had exercised its power as collecting agency under s 46P(2) as alleged by Konann.

Konann submitted that the Council was to be taken by its conduct as having decided to accept the Permit intersection works in part satisfaction of the levy payable to it. It relied on the Council having issued the statement of compliance for stage 11 of the subdivision certifying that all requirements under the PE Act relating to public works had been met, refunding the security deposit of $2.8 million for the intersection works and recording the Permit intersection works to be in public ownership.

However, the judge recognised that since August 2015, Konann and the Council had been unable to agree as to how the cost of the Permit intersection works would be met or shared. They had not agreed on the contents of the s 173 agreement and there was no evidence of any resolution by Council relating to the intersection works under s 46P(2) of the PE Act or any decision by a delegate of the Council in that respect. Additionally, the judge said that s 46P(3) of the PE Act contemplates that the decision of a collecting agency may be made after the development has been carried out, meaning that the completion of development by a subdivider does not bring with it any implication that the Council as collecting agency is obliged to accept land or works as part or in full satisfaction of the payment of the levy. The development of the estate, and the actions of the Council as responsible authority under the PE Act and in various other capacities to approve the subdivision and associated works did not imply that the Council had made any decision under s 46P(2).[38] Furthermore, under the terms of settlement between Konann and the Council, Konann acknowledged that the Council’s position as collecting agency was that it did not, and would not, agree to the provision of any recognition, credit or payment in an amount greater than the amount specified in the DCP for the delivery of the intersection.[39]
[38]Reasons [129].
[39]Reasons [130].

The judge found on the facts that the respective positions of the parties as reflected in emails, correspondence, executed and draft agreements had been clear since the dispute commenced, and that the Council had always maintained that it had not made a decision to exercise its discretion in s 46P(2) or to refuse to exercise that discretion.[40]
[40]Reasons [131].

The judge held that the power in s 46P(2) to decide to accept works in lieu of the levy was solely given to the relevant collecting agency and not to the Court or the Tribunal. The Council is the relevant body and decision-maker under the DCP and the appropriate body to determine whether overprovision can be accommodated having regard to the financial impact on the DCP fund of accepting works in kind.[41]
[41]Reasons [133]–[134].

As to whether the Council was obliged to make a decision, the judge accepted Konann’s submission that once application was made to a collecting agency for the exercise of its discretion under s 46P(2), the collecting agency was under a duty to consider and determine the application. As with any other statutory office holder, if the holder of the office failed to discharge its duty, it was potentially amenable to judicial review.[42]
[42]Reasons [139].

As to whether the Council was required to exercise its discretion in Konann’s favour for the whole of the Permit intersection works, the judge rejected Konann’s submission based on analogy with certain taxation cases,[43] where an apparent discretion is rendered obligatory having regard to the purpose of the legislation, the statutory power in question and the circumstances of the case. The judge held that this line of authority had no application. This was not a taxation case but, rather, a case in which the Council was required to make a decision of a different and complex character involving ‘multifactorial decision making’. It involved the balancing of conflicting factors, the making of an evaluative judgment and the consideration of expert material.[44]
[43]Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1971) 127 CLR 106; Commissioner of State Revenue (Vic) v Royal Insurance Limited (1994) 182 CLR 51; International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319; Attorney-General (NT) v Emmerson (2014) 253 CLR 393.
[44]Reasons [146].

The judge also rejected as relevant the principle that a statute will not be read as authorising the expropriation of property without compensation unless the intention to do so is clearly expressed.[45] The judge held that whether works should be accepted in lieu of levies was a discretionary decision to be made by the Council as collecting agency. The question whether works should be accepted in lieu of levies ‘crossed the line’ into the area reserved for governmental decision-making, as distinct from the exercise of a permit condition discretion.[46] There might be very good reasons why a collecting agency would not wish to exercise its discretion to accept the provision of works under s 46P(2). The works might be defective, or unsuitable or inconsistent with the requirements or standards required by the DCP. The Council might decide not to accept the works, or to accept them only in part satisfaction of the amount of levy payable.[47]
[45]Reasons [147].
[46]Reasons [150].
[47]Reasons [152].

The judge did, however, caution that a failure to exercise the power contained in s 46P(2) should not lead to ‘double dipping’, where the Council collected a levy from the developer and from other landowners but nonetheless required the developer to construct the same works or works that include the works the subject of the DCP.[48]
[48]Reasons [153].

Finally, as to whether the Court should exercise the Council’s discretion, the judge held that to make the declaration sought by Konann would usurp the role and power of the collecting agency, which alone was given the authority to accept the provision of land and works in part or full satisfaction of the levy.[49] The judge concluded:

In the present case the Council is the primary decision maker. The Council, as collecting agency, has been given the power to accept the provision of land, works, services or facilities by Konann in part or full satisfaction of the amount of levy payable. This proceeding is not the opportunity for a merits review. It is not the role of the court to substitute its own decision for that of the Council. Still less is it the function of the court to pre-empt the primary decision maker by determining the issue in advance. Rather the role of the court is to facilitate decision making by the body entrusted by Parliament to make the decision, and then to undertake judicial review of that decision on specific grounds if requested to do so.[50]
[49]Reasons [161].
[50]Reasons [162].

Proposed grounds of appeal

The proposed grounds of appeal are many and varied. It is apparent that the applicant has deployed a scatter-gun approach to formulating its grounds, which is unhelpful, as it tends to obscure the real issues in contention. Such an approach is to be discouraged. The proposed grounds are, in full and in the order in which they appear in the notice of appeal, as follows:

1.The trial judge erred in finding that the use of the term ‘election’ by Osborn J in Casey City Council v Carson Simpson Pty Ltd (2007) 18 VR 19, at [84]-[86] did not mean an election at law ([2018] VSC 565 (Reasons), [91]).
2.The trial judge erred in failing to find that by requiring Konann to provide to the Council the Intersection Works, the Council had elected, alternatively, decided to implement the collection of Konann’s levy under Part 3B of the PE Act by accepting the provision of those works services and facilities in part satisfaction of the amount of the levy payable (Reasons, [129]-[132]).
3.The trial judge erred in failing to find that, pursuant to s 46P(2), Konann had provided to the Council the required Intersection Works in part satisfaction of the amount of levy payable by Konann.
4.Konann having provided to Council the Intersection Works as required, the trial judge erred in finding that the Council retained any discretion under s 46P(2) (including as to the costs to be applied in satisfaction of the amount of levy payable), to not accept those works (Reasons, [161]).
5.The trial judge erred in failing to find that s 46P(2) requires the amount of the fair and reasonable costs of development infrastructure provided by the developer as required by the Council is to be applied in part or full satisfaction of the amount of levy payable by that developer.
6.The trial judge erred in finding that the Intersection Works constituted by the western eastern and southern approaches were not development infrastructure (Reasons, [11]) and ought to have found that those works also constituted works, services and facilities for the purposes of s 46P(2).
7.The trial judge erred in not finding that the fair and reasonable cost of the Intersection Works as required by and provided to the Council by Konann for the purposes of s 46P(2) was $3,658,834.39.
8.The trial judge erred by finding that in respect of the Intersection Works as required by and provided to the Council by Konann for the purposes of s 46P(2), the Council was entitled to reduce the amount to otherwise be applied in part satisfaction of the levy payable to take into account of the demand generated by Konann’s development on the need for the Intersection Works (Reasons, [172]-[173]).
9.The trial judge erred in failing to consider in the Reasons and find in favour of Konann’s submission that:
(a)the amendments made to Part 3B of the PE Act by Act 101/2004 did not alter the existing rights, duties and obligations of the Council (as the relevant municipal council) in administrating that Part merely by the repeal of the term ‘relevant municipal council’ and the substitution therefor of ‘collecting agency’ and ‘development agency’;
(b)the power to impose an obligation under s 62(5) of the PE Act to provide works, services or facilities associated with a development infrastructure item independent of the obligation under s 46P(2) is limited to those works, services or facilities that are minor in nature, directly related to the site in question and which were not reasonably anticipated or strategically planned for in the development contributions plan (DCP);
(c)by the Council failing to call any evidence which explained the purpose of and reasons for the form and content of the costing sheet in the DCP for development infrastructure item ‘RD 18’, an adverse inference should be drawn that any evidence the Council could have led on those issues would not have assisted the Council’s position as to the amount to be applied under s 46P(2) for the provision of the required Intersection Works.

10.The trial judge erred in finding that Konann bore the burden of proving that the decision of the Council to elect, alternatively, to decide to implement the collection of Konann’s levy under Part 3B of the PE Act by accepting the provision of those works services and facilities in part satisfaction of the amount of levy payable was made by a person with actual authority (Reasons, [128]).
11.The trial judge erred in making the following findings of fact that were contrary to or not supported by the evidence:
(a)the estimate of the cost of the works, services and facilities in the DCP for project RD-18 comprised $933,066.70 for the construction of the rectangular area and approximately $1.2 million for the northern approach (Reasons, [9]);
(b)Konann provided the signalisation that constituted part of the Intersection Works at a reduced cost, and did not need the contingency allowance in the DCP (Reasons, [10]);
(c)the western, eastern and southern approaches of the Intersection Works were ‘non-DCP works’ (Reasons, [11]);
(d)there was no dispute between the parties as to the underlying facts (Reasons, [12]);
(e)the funding available to the Council for the work, services and facilities constituting the Intersection Works was limited to the intersection as configured in DCP for RD-18 (Reasons, [29]);
(f)the provision of the Intersection Works constituted an over provision of works, service[s] or facilities (Reasons [134]).

12.The trial judge erred in finding that the line of authorities relied on by Konann as to the proper construction and operation of s 46P(2) had no application and misapplied the authorities he relied on (Reasons, [140]-[148]).
13.Given the nature of the relief sought by the amended originating motion (i.e., declarations relief and relief in the nature of mandamus), the trial judge erred in refusing the parties’ joint application that they be afforded the opportunity to read and consider the Reasons before final substantive orders were made to allow either party to formulate such further or other orders that ought be made based on the Court’s findings (Transcript 4/10/18 at p.2.1-2.10).

In substance, the applicant contends that the judge erred in failing to hold that the Council was bound to exercise its discretion under s 46P(2) to accept the Permit intersection works in part satisfaction of the amount of levy payable by Konann under the DCP and to give Konann full credit for the amount expended by Konann on those intersection works; alternatively, the judge erred in failing to find that the Council has effectively exercised its discretion under s 46P(2) by accepting the Permit intersection works and issuing a certificate of compliance.

One way or the other, the principal questions on appeal turn on Konann’s entitlement to have the full cost of the Permit intersection works credited to it pursuant to s 46P(2) of the PE Act.

Proposed ground 6

The underlying premise of Konann’s case is that it has been unlawfully required both to pay the DCP levy and to construct works that were to be funded by the DCP levy. This raises a threshold issue to be resolved by reference to the facts: are the intersection works in the DCP—RD 18—the same as the Permit intersection works?

They are not. The scope of RD 18 is set out in the DCP, which contains a drawing and a table of estimated costs. The scope of the Permit intersection works is set out in the Permit itself, which refers to specific drawings of the functional layout of the intersection. The relevant drawing or ‘Functional layout plan’ for the interim option is ‘G15503-D-04’.[51]
[51]The Permit refers to two drawings, one ‘Ultimate’, the other ‘Interim’. Drawing G15503-D-02 is the interim option approved by the Council. A later functional layout plan for the ‘Interim T Option’ is G15503-D-04, which depicts the intersection with broken lines to the north.

For the purpose of comparison, each is reproduced in an appendix to this judgment. The DCP plan is Appendix 1; the functional layout plan for the purposes of the Permit is Appendix 2. In addition, the PIP shows the area of ‘road flaring’ for the intersection. The PIP is Appendix 3.

It is clear, having regard to these plans, that there is considerable overlap between the DCP intersection works (RD 18) and the Permit intersection works, but they are not co-extensive. Properly construed, the DCP describes a project — RD 18 —which involves the construction of a signalised intersection at the point where the two intersecting roads meet and the construction of the northern approach to that intersection.[52] RD 18 makes no provision for road flaring, and the eastern, western and southern approaches to the intersection are not included. Apart from the northern approach, RD 18 is part, or a subset, of the intersection to be constructed in accordance with the Permit conditions. The Permit intersection works comprise not only the signalised intersection, but also the eastern, western and southern approach roads, including the road flaring required by VicRoads and reflected in the provision for ‘road flaring’ in the PIP. It follows that the Permit intersection works go beyond RD 18, the intersection works identified under the DCP.
[52]The northern leg of the intersection was to be provided by a third party and is immaterial to the dispute between Konann and the Council about the relationship between RD 18 and the Permit intersection works.

Konann submitted that the DCP did not define the scope of the works for RD 18 and could not confine the costs of delivery. In fact, so it submitted, the potential for variation in the scope of the works was recognised in cl 2.2.1 of the DCP, which, in relation to the calculation of costs for road construction and intersection works, states:

The largest possibility of cost change is from any proposed change of scope detailed, not from individual component rates or current on ground conditions. The potential for change of scope has been minimised through detailed road network modelling and agreement from the road authority regarding the road cross-sections. In relation to intersection projects, detailed intersection analysis was undertaken to determine the functional layout of an intersection with a 10-year design life. The relevant intersection layout is shown in the cost sheets. The intersection layout was agreed with the relevant road authority — which usually meant [the Growth Areas Authority as the author of the DCP] reaching consensus with both VicRoads and Casey City Council regarding the scope of the works.

According to Konann, the purposes of the DCP in s 46I do not constrain the scope of what the law otherwise requires for the construction of an intersection or the cost of that scope. RD 18 must have ‘legs’ (flaring) in order to be a functioning intersection. The Permit intersection works (required by and provided to the Council) were works required by the Council’s intersection design obligations.

In our view, this misunderstands the purpose and scope of the DCP as well as the effect of the Permit condition. The DCP is in essence a funding arrangement for specified infrastructure, or part thereof. DCP projects are scoped by reference to the extent to which they are to be funded by development contributions. What is funded by the DCP in respect of RD 18 are elements of the cost of the broader intersection. Those elements are set out in the costings in the DCP.

In relation to the cost of intersection works generally, cl 5.1.1 of the PSP provides that as part of subdivision construction works, new development must meet the cost of delivering ‘[i]ntersection works and traffic management measures along arterial roads, connector streets and local streets’, but that, subject to the approval of the collecting agency, part or all of the cost of works on intersections that are included in a development contributions plan ‘may be able to be provided as in-kind works’.

The starting point is therefore that intersections with arterial roads are to be a developer cost. This cost may be offset where the intersection, or part of it, is included in a development contributions plan but then only to the extent that the works are accepted by the collecting agency as works in lieu of the levy.

Clause 4.8.3 of the PSP, which deals with planning and design guidelines for intersections with arterial roads, requires all intersections with arterial roads to be designed, constructed and controlled to the satisfaction of VicRoads and the Council. There are specific requirements in this clause of the PSP that the staging of subdivision provide for the timely connection of the arterial road network and that land be provided for right of way flaring at arterial road connections. These are planning requirements, reflected in part in the UGZ, which are to be taken up in subdivision permits, as they have been in condition 46 of the Permit. The Permit contains VicRoads requirements for the construction of the intersection, which is necessary if stages 6 to 19 of the subdivision are to be completed. The Permit does not require Konann to construct the intersection; rather, under condition 46(e) the construction of the works is a precondition to the sealing of plans for the latter stages of the subdivision. As mentioned, Konann’s construction of the intersection enabled its subdivision to proceed expeditiously and greatly improved access to its subdivision. The Permit does not describe the project for the purposes of the DCP.

Insofar as the Permit intersection works overlap with RD 18 some credit must be given for those works, but that is not what was sought by the proposed orders in the originating motion. In essence, Konann was seeking to be compensated for all of its costs of the Permit intersection works despite the fact that it was not obliged under the Permit to undertake the construction of those works and that it gained significant advantages from that construction associated with its development, and despite the fact that the Permit intersection works extend beyond the intersection works recognised under the DCP, RD 18. With respect to the Permit intersection works that extend beyond RD 18, Konann is in effect seeking to be compensated through the DCP for non-DCP works.

Proposed grounds 1, 2, 3, 4 and 5

These grounds are founded on the proposition that the judge erred in not holding that the Council accepted or was obliged to accept the Permit intersection works as works in kind for the purposes of s 46P(2) of the PE Act and offset their ‘fair and reasonable’ cost against Konann’s DCP levy liability.

Konann’s submissions

Konann submits that the Council was obliged to construct the intersection at its own cost because it was the development agency for RD 18 and the coordinating road authority and responsible road authority for the design and construction of the intersection pursuant to the Road Management Act 2004 and the Local Government Act 1989. According to Konann, this legislation, in combination with the Council’s ‘Road Management Plan (15 December 2015)’ and the ‘Engineering Design and Construction Manual for Subdivision in Growth Areas’ published by the Growth Areas Authority, imposed on the Council ‘intersection design obligations’. In discharge of these obligations, the Council approved the design of the Permit intersection works and required the provision of security sufficient for the Council to construct these works itself. The Council approved the engineering drawings and charged and received a plan checking and supervision fee. When it was satisfied that the Permit intersection works were compliant, the Council issued a certificate of practical completion, a statement of compliance for stage 11, returned the security deposit to Konann and caused the Permit intersection works to vest in public ownership.

Konann submits that in these circumstances, the judge ought to have found that the Council ‘elected’ or decided to implement the collection of part of Konann’s DCP levy by accepting the provision of the Permit intersection works in part satisfaction of the amount of the levy payable. The discretion in s 46P(2) is whether or not to require the provision of the works and in this case, the Council elected to have Konann provide the works. Konann submits that as the Council made an election at law to implement the collection of Konann’s DCP levy by the acceptance of the Permit intersection works under s 46P(2), it is not now open to the Council to maintain that it has not done so and retain the whole of Konann’s DCP levy (in the amount of $14,928,798). The only remaining question is what accounting flows from the fact of the Council’s election and the accounting, so Konann submits, is not controlled by the costings in the DCP.

In this context, Konann submits that the costing sheets in the DCP do not contain a complete account of the monies available to the Council to deliver the DCP projects. The DCP makes reference to the availability of other funds for DCP projects and there is nothing in the DCP to suggest that the Council will not be able to deliver the other DCP projects if it pays Konann $3.66 million for the Permit Intersection Works.

Konann submits that the authority given by s 46P(2) is ‘binary’. Before making its choice to collect Konann’s DCP levy by requiring the provision of development infrastructure that the Council was otherwise required to provide (the Permit intersection works), the Council had some latitude in the design and specification of the works for the intersection. In making those choices, the Council could have had regard to the availability of funds from the DCP (and/or otherwise) to meet the fair and reasonable costs of the works required by the Council. The Council having required the Permit intersection works, the fair and reasonable costs of the works were paid by Konann. Section 46P(2) prescribes that such a payment constitutes a collection of DCP levy by the Council when the works are provided to it. Were it otherwise, Konann’s levy liability would be greater than that imposed by the DCP and such an outcome is prohibited by ss 46N and 62(6) of the PE Act.

Konann submits that the designation of the Council as ‘collecting agency’ under pt 3B of the PE Act, as distinct from its designation as the ‘responsible authority’ for the purposes of the Permit, did not alter the existing rights, duties and obligations of the Council as the relevant ‘municipal authority’ by the repeal of that term in 2004.

As to the proper construction of s 46P(2), Konann submits that the word ‘may’, when read in context, is used to confer authority to collect the amount of levy payable by way of the provision of land, works, services or facilities. Such authority ‘must’ be exercised when the circumstances are such as to call for its exercise. According to Konann, the choice provided to the Council by s 46P(2) is how to implement the collection of the DCP levy. That choice was made when the Council required the provision of the Permit intersection works. Konann having provided the Permit intersection works as required, the Council did not have any discretion to refuse to accept those works under s 46P(2).

Reflecting the submissions it made before the trial judge, in this context, Konann relies on a series of cases — principally involving the overpayment of taxes[53] — holding that a discretion may have to be exercised in a particular way having regard to the purpose of the legislation, the statutory power in question and the circumstances of the case.
[53]Finance Facilities Pty Ltd v FCT (1971) 106, 134–5 (Windeyer J); Commissioner of State Revenue (Vic) v Royal Insurance Limited (1994) 182 CLR 51; see also D C Pearce and R S Geddes, Statutory Interpretation in Australia (LexisNexis, 8^th ed, 2014) [11.3], [11.5]–[11.7]. These are discussed at [152]–[156] below under proposed ground 12.

Furthermore, according to Konann, the principles of statutory construction applicable to statutes that seek to impose an impost or to acquire property apply to the construction of pt 3B of the PE Act. Accordingly, the judge erred in failing to find that s 46P(2) requires the fair and reasonable costs of the Permit intersection works to be applied in part satisfaction of the amount of DCP levy payable by Konann.

Analysis

The purpose of the DCP is to raise contributions from developers in the DCP area to fund the provision of specified works, services and facilities in that area. The DCP must set out the works, services and facilities to be funded in this way along with their estimated costs. Where a permit is required to develop the land, a permit condition will require the payment of the DCP levy and the obligation to pay the levy will be enforceable by that means. Section 46P(2), however, allows the collecting agency to accept land, works, services or facilities in part or full satisfaction of the amount of levy payable.

The power in s 46P(2) is discretionary and there is no express constraint on its exercise. Section 45 of the Interpretation of Legislation Act 1984 provides that ‘where … the word “may” is used in conferring a power, that word shall be construed as meaning that the power so conferred may be exercised, or not, at [the decision-maker’s] discretion’.[54] The discretionary nature of the power reflects the arrangements for the levying and application of development contributions in pt 3B of the PE Act to enable the collecting agency to ensure that funds are available to enable all of the designated works, services and facilities to be provided and in a timely manner. When deciding whether or not to accept works in lieu of cash, particularly where the works are sought to be valued at much more than the monetary provision for those works in a development contributions plan, the collecting agency is involved, as the judge found, in ‘multifactorial decision making’ that involves balancing competing factors while maintaining the integrity of the development contributions plan.
[54]See the language of s 46P(2) in [28] above.

As a result, the discretion in s 46P(2) is a broad discretion. The matters to be taken into consideration in exercising such a discretion may be identified having regard to the subject matter, scope and purpose of the provision.[55] In the Reasons, the judge identified some of the relevant factors to be taken into consideration when a collecting agency decides whether to accept the provision of works in part or full satisfaction of the levy payable by an applicant. They include the cost and standard of the works, the need to avoid double dipping and, importantly, the financial impact on the DCP of the acceptance of the works in satisfaction of the levy.[56]
[55]Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, 39–40.
[56]Reasons [174].

As the judge correctly pointed out:

There may be very good reason why a collecting agency may not wish to exercise its discretion to accept the provision of works under s 46P(2). The works may be defective, or unsuitable or inconsistent with the requirements or standards required by the DCP. The Council may decide not to accept the works, or to accept them only in part satisfaction of the amount of levy payable.[57]

[57]Reasons [152].

Most importantly, the exercise of the discretion under s 46P(2) involves consideration of the funding requirements for the DCP projects as a whole, along with their timing and the capacity of the development agencies to provide the works in a timely manner to the requisite standard.

As to whether the Council has ‘accepted’ the Permit intersection works for the purpose of s 46P(2), it has plainly not done so expressly. The Council has made it clear to Konann that it has not made a decision to accept the Permit intersection works in part satisfaction of Konann’s DCP levy for the purposes of s 46P(2) and that it considers that it is not obliged to accept the full value (even if ‘fair and reasonable’) of the Permit intersection works.[58]
[58]Under the terms of settlement dated 29 April 2016, Konann acknowledged that the Council’s position as collecting agency was that it did not, and would not, agree to the provision of any recognition, credit or payment in an amount greater than the amount specified in the DCP for the delivery of the intersection works. So much is acknowledged by Konann in its Amended Written Case, where it states that Council maintains that it is entitled to refuse to accept the Permit intersection works unless and until Konann compromises its claim by accepting an amount that reflects a portion of the DCP costing for RD 18.

The Council submits that under s 46P(2) it is only entitled to accept a proportion of the costing for RD 18 as works in satisfaction of the DCP levy, as s 46P(2) does not authorise a collecting agency to accept works which are not identified in the development contributions plan. As we have found, the intersection component of RD 18, identified in the DCP, is a smaller project than the Permit intersection works. The Council’s argument is based on ss 46Q(3) and (4), which provide for the return or formal re-allocation of funds not expended on DCP works and on the DCP, which states that, ‘only works or land identified in the DCP can be provided in lieu of cash’.[59] In our view, the statutory power in s 46P(2) is not constrained in this way. Sections 46Q(3) and (4) apply where funds have actually been advanced to the municipal council as the development agency for the provision of specified works. They do not inhibit the council’s discretion as a collecting agency. The fact that the DCP provides that only DCP works can be accepted as works in kind is a matter to be taken into account in the exercise of the discretion in s 46P(2), but is not determinative of the question.
[59]Growth Areas Authority, Cranbourne North Precinct Structure Plan Development Contributions Plan (June 2011) 3.1.2.

We consider that the judge was also correct to reject the submission that the Council’s ‘acceptance’ of the Permit intersection works for the purposes of s 46P(2) could be inferred from the aggregation of the various acts performed by the Council in other statutory capacities and under the authority conferred by other statutory provisions.

The legislative regime outlined above[60] establishes different bodies for the exercise of different statutory powers and discretions. The repository of power under s 46P(2), the collecting authority, is not necessarily a municipal council, just as the responsible authority under the PE Act is not necessarily a municipal council, even where the municipal council is a collecting agency for the purposes of pt 3B. In this case, the Council is at once the collecting agency and the development agency for the purposes of the DCP, as well as the responsible authority for the purposes of the Planning Scheme. As the ‘responsible authority’ that granted the Permit, the Council is responsible for securing compliance with its terms, including cl 46, which contains VicRoads’ requirements for the construction of the intersection. In these different capacities, the Council has different statutory powers and responsibilities.
[60]See [20] following above.

The factors that must be taken into account by a responsible authority in granting a planning permit or administering a subdivision permit are generally not relevant to the exercise of the discretion under s 46P(2) to accept works in lieu of payment of the DCP levy. The grant of a permit which requires both the payment of a DCP levy and the construction of an intersection as a precondition to completion of certain stages of the subdivision, does not constitute a decision by the collecting agency under s 46P(2). The various acts of the Council exercising distinct and separate statutory powers under the PE Act or the Subdivision Act 1998 (granting permits, approving plans, issuing certificates of compliance, recording land in its register) cannot, either independently or taken together with other administrative steps performed by the Council in various capacities, amount to an election at law, capable of binding the separate statutory personality of the ‘collecting agency’. As Osborn J said in Carson Simpson:

Discretion with respect to the mode of collection of levies is provided for in s 46P and is granted not to the responsible authority exercising the permit power but to the ‘collecting agency’ collecting the levy.[61]

[61]Carson Simpson (2007) 18 VR 19, 36 [74].

Osborn J went on to accept the submission that ‘the question of whether works should be accepted in lieu of a levy “crosses the line” into the area reserved for governmental decision-making as distinct from the exercise of the permit condition discretion’.[62] We deal with the nature or character of the decision of the collecting agency under s 46P(2) further below.
[62]Ibid.

The proposition that the Council impliedly accepted the Permit intersection works under s 46P(2) simply by giving the necessary approvals and certifications for the works at the outset and upon completion is not supported by s 46P(3) of the PE Act, which provides that the decision of the collecting agency to accept or not to accept the works in kind may be made after ‘the development is carried out’. The carrying out of the development itself does not foreclose a decision under s 46P(2). That decision remains open to be made by the collecting agency upon completion of the works having regard to all relevant considerations.

It follows that the completion of works by a developer does not give rise to any implication that the Council, as collecting agency, is obliged to accept the works in part or full satisfaction of the payment of the levy. The development of the Tulliallan estate and the ongoing involvement of the Council as the responsible authority under the PE Act and the Subdivision Act 1988 to approve the stages of the subdivision and associated works, did not give rise to any implication that it had made a decision under s 46P(2) or any commitment as a matter of law to credit or refund Konann the cost of the Permit intersection works.

The fact that the Council might otherwise have proceeded to construct the intersection itself does not affect this analysis. The Council, as the development agency in the DCP, was not obliged to construct the intersection. Although the development agency is responsible for the provision of projects specified in a DCP, the Council had no positive obligation to carry out those works. The statutory obligation of a development agency is to apply the levy only to projects specified in the DCP. Where a DCP project is not delivered, the levy is to be dealt with in the manner provided by ss 46Q(3) or (4).[63]
[63]Carson Simpson (2007) 18 VR 19, 37 [87].

Carson Simpson does not assist Konann. In that case, Osborn J held that where the council ‘elects’ to require a subdivider to provide infrastructure works contemplated by a development contributions plan, ‘it elects to implement the DCP in this way’[64] and it will be ‘just and equitable to set-off the value of those works’ against the DCP levy liability.[65] However, where the notion of ‘election’ is discussed in Carson Simpson, it is in a context of Osborn J having made clear that the decision under s 46P(2) is a decision for the collecting agency alone and not for the responsible authority or the Tribunal on review, and that the discretion in s 46P(2) is of a broad and ‘governmental’ nature.
[64]Ibid [86].
[65]Ibid [84].

The principles of common law election cannot apply where the conduct relied upon is the conduct of an entity other than the repository of the power to decide whether to accept the works in lieu of the levy under s 46P(2). It is a matter for the discretion of the collecting agency as to whether works will be accepted under s 46P(2), and as to the extent of works that will be accepted. It is not a matter for the responsible authority or anyone else.

Furthermore, Konann has not been required by the Council to provide RD 18. The Permit intersection works overlap with RD 18, but they are not the same. As mentioned, nor did Permit condition 46(e) oblige Konann to carry out the Permit intersection works, although their construction was a precondition to the sealing of plans for the later stages of the subdivision. There can be no ‘election’ by the Council in these circumstances in any event.

In our view, therefore, the Council had no obligation to accept the reasonable cost of works carried out by Konann, especially as the works were not works within the contemplation of a project specified in, and funded by, the DCP. In particular, the Council was not obliged to offset the reasonable costs of carrying out the Permit intersection works against the DCP levy in circumstances where those costs, even if fair and reasonable, were much higher than the amount allowed in the DCP for RD 18. The levies collected from all of the development proponents within the DCP area for the purpose of funding no less than 25 road and intersection projects were not struck to fund the entirety of the Permit intersection works.

The DCP has a timeframe of 25 years (until 2035). During that period, funds will be paid in and will be paid out progressively to provide the infrastructure needed in the precinct as it is developed. In administering the DCP, the Council has to make a range of administrative decisions such as when projects are to be carried out, which projects can be undertaken through a ‘works in kind’ arrangement and which projects it will undertake as principal. Those decisions are dependent on the amounts of the contributions made from time to time, the likely timing for the receipt of funds in the future, and so forth. Sections 46Q(3) and (4) recognise this complex function and provide for the reassignment of unused funds to other projects or for such funds to be repaid to developers if not used for DCP purposes.

A relevant consideration for the collecting agency when making its decision under s 46P(2) therefore includes the impact of accepting the works upon the ability of a development contributions plan fund to continue to achieve its purpose of funding the designated projects across the development contributions plan area. Accepting works ‘in lieu’ of a much higher value than provided for in a development contributions plan may compromise the ability of the fund to pay for other designated projects, such as intersections closer to other subdivisions, which may be very important to their development proponents.

The Council, as collecting agency, was responsible for the DCP and the funding of the other projects in the DCP, including as to timing and the provision of works in kind. It was the appropriate body to determine whether overprovision could be accommodated, having regard to the financial impact of accepting works in kind to the DCP fund as a whole.

Finally, it remains to be stated clearly that the mechanism required by the Permit and the DCP for the provision of works in lieu of levy is that they be agreed in a s 173 agreement. That has not occurred. Insofar as there is a dispute about the content of a proposed s 173 agreement in this regard, the Tribunal has jurisdiction to deal with the merits of the dispute.

As to the declaratory relief sought by Konann, as the collecting agency alone is given the authority to accept the provision of works in part or full satisfaction of the levy, the judge was correct to hold that for the Court to have made a declaration that Konann be credited with the value of the Permit intersection works would have involved the usurpation of the role of the collecting agency.[66] It is not the role of the Court to substitute its decision for that of the collecting agency on an application for judicial review.
[66]Reasons [161]–[162].

In light of the foregoing, we have concluded that the judge did not err:

(a) in finding that the Council retained a discretion under s 46P(2) to accept or not to accept the Permit intersection works in lieu of part of Konann’s DCP levy obligation (ground 4);

(b) in declining to find that, pursuant to s 46P(2), Konann had provided to the Council the Permit intersection works in part satisfaction of the amount of levy payable (ground 3);

(c) in declining to find that, by requiring Konann to provide the Permit intersection works, the Council had elected, alternatively, decided, to implement the collection of Konann’s DCP levy by accepting the provision of those works in part satisfaction of the amount of the levy payable (ground 2);

(d) in finding that the term ‘election’ in Carson Simpson did not mean an election at law (ground 1); and

(e) in declining to hold that s 46P(2) required the amount of the fair and reasonable costs of development infrastructure provided by Konann as required by the Council to be applied in part or full satisfaction of Konann’s DCP levy (ground 5).

Proposed grounds 1 to 5 must fail.

Proposed ground 12

Proposed ground 12 is that the judge erred in finding that the line of authority relied on by Konann as to the proper construction and operation of s 46P(2) had no application and that he misapplied the authorities he relied upon.

The authorities in question state or confirm the principle that an apparent discretion may be rendered obligatory having regard to the statutory power in question and the circumstances of the case. The principal decision relied on by Konann is Finance Facilities Pty Ltd v Federal Commissioner of Taxation,[67] where the High Court considered the operation of a statutory provision empowering the Commissioner to allow a rebate if satisfied of certain matters. The Court held[68] that if the Commissioner was so satisfied, he was bound to allow the rebate. Windeyer J said:

This does not depend on the abstract meaning of the word ‘may’ but of whether the particular context of words and circumstances make it not only an empowering word but indicate circumstances in which the power is to be exercised — so that in those events the ‘may’ becomes a ‘must’.[69]

[67](1971) 127 CLR 106.

[68]Barwick CJ, Owen and Windeyer JJ, McTiernan J dissenting.

[69]Ibid 134 (Windeyer J).

To like effect, in Commissioner of State Revenue (Vic) v Royal Insurance Ltd,[70] a case involving the overpayment of stamp duty, the High Court said that where the circumstances call for the fulfilment of a purpose for which the power was conferred but the repository of the power declines to exercise it, mandamus will be the appropriate remedy, even if the repository has an unfettered discretion in other circumstances.[71]
[70](1994) 182 CLR 51.
[71]Ibid 88 (Brennan J).

We are not persuaded that the cases relied upon by Konann are of assistance in construing s 46P(2). They were, in our view, correctly analysed by the judge. This was not a case where there was a clear obligation to repay or refund if certain conditions were met. The Council was required to make a decision of an altogether different and more complex character involving what the judge described as ‘multifactorial decision making’, that is, involving the balancing of potentially conflicting factors, the making of an evaluative judgment and the consideration of expert material. In these circumstances, ‘may’ does not mean ‘must’.

Proposed ground 12 must fail.

Proposed ground 7

Konann alleges that the judge erred in not finding that the fair and reasonable cost of the Permit intersection works ‘for the purposes of s 46P(2)’ was $3,658,834.39.

This proposed ground as formulated assumes that the Permit intersection works were provided for the purposes of the DCP and attracted the operation of s 46P(2). For the reasons given above,[72] that is not the case. The Permit intersection works are not co-extensive with RD 18.[73] The fact that the Permit required the construction of the whole of the intersection, including approach roads (other than the northern approach), does not alter the scope or extent of the works for which the DCP provides funding.
[72]See especially [113]–[117] above.
[73]See [107]–[110] above.

Insofar as this ground attacks the judge’s failure to find or declare that the fair and reasonable cost of the Permit intersection works was $3,658,834, we see no utility in any such finding in that it was not necessary for the disposition of the proceeding below. The Court was not engaged in merits review.

We note further that the Council accepts that the costs of the Permit intersection works were of that order.

Proposed ground 7 must fail.

Proposed ground 8

Konann takes issue with the part of the Reasons where the judge commented that the scope of what was required by the Permit was a function of the scale and location of the subdivision proposed by Konann and that there was a link between the traffic that would be occasioned by the subdivision and the need to construct the intersection.[74] The judge also stated that in considering the exercise of the discretion in s 46P(2), the collecting agency could consider the extent to which the intersection works would benefit the estate.[75]
[74]Reasons [171]–[172].
[75]Reasons [173].

According to Konann, these ‘findings’ were in error.

The first thing to be said about this proposed ground is that it does not attack any finding or holding constituting part of the ratio. The judge decided that none of the relief sought could be granted. He then moved to consider a number of further issues that would arise when the Council considered its decision under s 46P(2), including whether Konann benefited from the construction works. Even if Konann is correct and the benefit of the intersection to Konann (or the estate) was an irrelevant consideration under s 46P(2), it could make no difference to the disposition of the appeal.

This is sufficient to dispose of proposed ground 8.

Furthermore, as a matter of construction, there is nothing in the statutory scheme that precludes consideration of the demand generated by the developer’s subdivision when exercising the discretion in s 46P(2).

Proposed ground 8 has no prospects of success.

Proposed ground 9(b)

Konann submits that the judge erred in failing to consider and find that the Council’s ability under s 62(5) of the PE Act to impose a requirement to provide works associated with a development infrastructure item independent of the obligation under s 46P(2) is limited to works that are minor in nature, directly related to the site in question and not reasonably anticipated or strategically planned for in the DCP.

This proposition is derived from the explanatory materials for the amendments to pt 3B of the PE Act referred to above. The Permit intersection works, it is contended, do not satisfy these criteria, as they are major works of a kind that should be included in the DCP.

However, it is not clear what is said to flow from this asserted error in the context of the present appeal. Given that we have found the Permit intersection works to be different in scope from RD 18, we see no error in the judge not treating the Permit intersection works as covered by or part of the arrangements in the DCP. The Permit intersection works as a whole are not works for which the DCP provides.

This ground appears to be, in substance, a challenge to the condition(s) in the Permit governing the Permit intersection works. In this capacity, it faces a major obstacle in that Konann has not challenged the permit conditions. It was open for Konann to challenge the validity of the permit conditions by making application to the Tribunal under s 80 of the PE Act, this being the mechanism provided by statute for the resolution of a dispute over permit conditions. Unless and until that occurs, the conditions remain valid.

Even if the permit conditions pertaining to the scope of the Permit intersection works were held to be invalid, that would not in and of itself enlarge the scope of RD 18 to embrace the Permit intersection works. An amendment to the DCP would be required which would most likely also include amendments to costings and to the levies imposed.

Proposed ground 9(b) cannot be made out.

Proposed grounds 9(a) and (c)

We have grouped grounds 9(a) and 9(c) together, although they have no common theme other than that, even if made out, they would not have affected the disposition of the proceeding below.

Proposed ground 9(a) is that the judge erred in not finding favour with the submission that the amendments to pt 3B of the PE Act in 2004 which introduced the distinction between a ‘collecting agency’ and a ‘development agency’ did not alter the ‘existing’ rights, duties and obligations of the Council.

This submission does not engage with the fact that pt 3B is explicit in distinguishing between these roles and conferring only on the ‘collecting agency’ the discretion to decide whether to accept works in kind. The responsibility for that decision is vested in the legal person collecting the levies and making funds available to the development agency for the provision of the infrastructure.

Even if, as Konann seems to want to suggest, the responsible authority and the collecting agency were to be treated as a single entity—as the ‘relevant municipal council’—that would not effect a merging of decisions to be made pursuant to separate powers under different sections of the PE Act so that one decision became determinative of another. The exercise of the power to certify works or issue a statement of compliance under a subdivision permit involves different considerations from the exercise of the power to accept works in lieu of the payment of a DCP levy, as we have outlined.

Proposed ground 9(a) has no prospects of success.

Proposed ground 9(c) is that the judge erred in not finding favour with the submission that a negative inference should be drawn from the Council’s failure to call evidence about the costings for RD 18.

Konann alleges that as the Council failed to call any evidence that explained the purpose of, and reasons for, the form and content of the costing sheet in the DCP for RD 18, an adverse inference should be drawn that any evidence the Council could have led on these issues would not have assisted the Council’s position as to the amount to be applied under s 46P(2) for the provision of the intersection.

It is not clear what difference an inference of the kind described by Konann could have made to Konann’s application for the relief sought at trial. If the costings were inadequate, and the levies raised to fund the works were therefore also inadequate, the Council, as the development agency for RD 18, might have been required to source additional funds for construction elsewhere and/or to delay the construction of the intersection. The costings are carried out and included in the DCP to enable the levies to be struck. Lower costings result in lower levies for developers. If costings are too low, the development agency bears the risk of having inadequate funds for the project.

Proposed ground 9(c) is misconceived and has no prospects of success.

Proposed ground 10

Konann submits that the judge wrongly held that it bore the burden of proving that the Council resolved to accept the Permit intersection works for the purposes of s 46P(2). This misreads the relevant paragraph in the Reasons. The fact that there was no evidence of any decision by the Council to accept the Permit intersection works in lieu of the levy was a straightforward finding of fact forming part of the matrix of facts supporting the finding that the Council did not expressly accept the Permit intersection works for the purpose of s 46P(2). Konann’s principal argument was that ‘acceptance’ for the purposes of s 46P(2) occurred by reason of a series of other actions or decisions by the Council.

Proposed ground 10 must fail.

Proposed ground 11

Konann challenges a number of factual findings made by the judge at [9], [10], [11], [12], [29] and [134] of the Reasons.

Whether these findings of fact are right or wrong is irrelevant to the disposition of the appeal. The findings of fact complained of are irrelevant to the critical issues, which concern the existence of a discretion and whether or not it has been exercised or must be exercised in a particular way.

Proposed ground 11 is misconceived and must fail.

Proposed ground 13

Proposed ground 13 is that given the relief sought by the amended originating motion, the trial judge erred in refusing the parties’ joint application that they be afforded the opportunity to read and consider the Reasons before substantive orders were made.

This proposed ground must fail. First, the Council denies that there was a ‘joint application’ and the transcript relied upon by Konann does not suggest that there was. The judge was told only that there had been ‘some discussions’. Secondly, the orders made were the only orders available given the relief sought and the conclusions of the judge about the availability of that relief.

Konann’s written submissions do not give any indication of what other orders could have been made in the circumstances. In oral submissions, it was argued that the Court should have declared that the Council must exercise its power under s 46P(2). However, senior counsel conceded in response to a question from the bench that the only positive duty was to consider the exercise of the power.

Disposition

None of the proposed grounds has any prospects of success. Leave to appeal will be refused on all grounds.

Konann’s rights to have works accepted in lieu of payment of development contributions were susceptible of determination before the Tribunal (a) by review of relevant planning permit conditions; or (b) by review of the Council’s requirement under the planning permit with respect to a s 173 agreement.

In the absence of review pursuant to these mechanisms, such rights depend upon the exercise of an administrative discretion by the Council. As we have emphasised, it is not the role of the Court to substitute its own decision for that of the Council.

---

APPENDIX 1

APPENDIX 2

APPENDIX 3

[2019] VSCA 316

20 December 2019