Warde Street Pty Ltd v Minister for Planning

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

VALUATION, COMPENSATION AND PLANNING LIST

S ECI 2019 05027

WARDE STREET PTY LTD	Plaintiff
v
MINISTER FOR PLANNING	Defendant

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JUDGE:	OSBORN JA
WHERE HELD:	Melbourne
DATE OF HEARING:	17 March 2021
DATE OF JUDGMENT:	7 May 2021
CASE MAY BE CITED AS:	Warde Street Pty Ltd v Minister for Planning
MEDIUM NEUTRAL CITATION:	[2021] VSC 238

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VALUATION AND PLANNING – Land in urban renewal area made subject of a development contributions plan (‘DCP’) overlay pursuant to amendment AMC145 to the Maribyrnong Planning Scheme (‘MPS’) – DCP overlay requires permit granted for specified types of development within area to contain condition requiring payment of a levy as condition of the right to develop pursuant to permit – Plaintiff holder of planning permits to construct multi-story mixed use developments comprising residential and retail premises – Permits required plaintiff to enter into agreement under s 173 of the Planning and Environment 1987 to provide a financial contribution towards costs of some infrastructure items subsequently included in DCP – Plaintiff also holder of permits to subdivide proposed developments into lots in stages in accordance with endorsed plans – Condition 3 of subdivision permit required payment of development infrastructure levy in accordance with DCP in respect of each unit payable in stages prior to issue of statement of compliance with any works or payments which the owner has paid under earlier specified permits to be reflected as a credit for the value of any works comprised in infrastructure projects funded by the DCP – Combined effect of permits requires plaintiff to make sequential payments towards infrastructure costs first under development permits which authorise construction of proposed mixed use buildings and secondly under the permits which permit subdivision of those buildings – Second requirement imposed pursuant to and in accordance with terms of MPS as amended by AMC145.

JUDICIAL REVIEW – Whether AMC145 beyond power and of no legal effect because contrary to s 46K of the Planning and Environment Act 1987 Act it purports to levy development contributions in respect of development that has already been approved by existing permits and/or does not relate the need for works, services and facilities (or some of them) to the proposed development of land in the area as required by s 46I – Whether to the extent that the DCP purports to levy development contributions in respect of the subdivision of the air space for dwellings, the construction of which has already been approved under an existing permit, such requirement is invalid because it is not a DCP within the meaning of s 46K of the P&E Act; it does not relate the need for the works, services and facilities to be provided (or some of them) to the proposed development of the land in the area as required by s 46I of the P&E Act; it is an unlawful tax – Meaning of ‘proposed development’ in s 46K(1) – Meaning of requirement that the proposed works and facilities relate to the development of land in the area to which the DCP applies – Whether imposition of levy upon subdivision of proposed development valid – AMC145 valid – Maribyrnong Planning Scheme, AMC145, cls 45.06, 72.04; Planning and Environment Act 1987 ss 6(2)(j), 6(2)(l), 46I, 46J, 46K, 46N, 62(1)(a), 173, Part 3B; Eddie Barron Constructions Pty Ltd and Shire of Pakenham (1991) 6 AATR 10; Casey City Council v Carson Simpson Pty Ltd (2007) 18 VR 19.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D J Batt QC with Ms S Gory	Norton Rose Fulbright
For the Defendant	Ms R Orr QC with Mr R Watters	Victorian Government Solicitor’s Office

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1
The DCP............................................................................................................................................... 4
The statutory provisions................................................................................................................... 8
Does the DCP comply with s 46K(1)(c) of the P&E Act?.......................................................... 13
(a).......... The plain meaning of the text......................................................................................... 15
(b)......... The contingent quality of planning permits............................................................... 16
(c).......... The purpose of the requirement for the need for the proposed works to be related to the proposed development of land in the area.................................................................. 17
(d)......... The statutory context including:
(i).... Provision for the exclusion of a proportion of the total estimated costs of the works from the amount to be funded by the levy......................................................... 18
(ii)... Specification of the land in the area and types of development which are to be the subject of the levy.................................................................................................... 19
(iii).. The adoption of planning scheme provisions as the means by which DCP contributions are to be levied................................................................................ 19

(e).......... Background to the relevant concept of nexus.............................................................. 20
(f).......... Conclusions with respect to the construction of s 46K(1)(c)..................................... 21
Does the DCP comply with s 46K(1)(f)?...................................................................................... 23
Conclusion......................................................................................................................................... 27

HIS HONOUR:

Introduction

The plaintiff is the owner of two parcels of land (the ‘Warde Street land’ and the ‘Moreland Street land’) situated within an urban renewal area known as the Joseph Road Precinct in Footscray (the ‘Precinct’).

By amendment C145 (‘AMC145’) to the Maribyrnong Planning Scheme (‘MPS’), the Precinct was made the subject of a development contributions plan (‘DCP’) overlay pursuant to cls 45.06 and 72.04 of the MPS.

The effect of an overlay is to require compliance with controls which are additional to the underlying zone and other general controls over particular uses imposed by the planning scheme.[1]
[1]MPS cl 71.04.

The DCP overlay relevantly requires a permit granted for specified types of development within a specified area to contain a condition requiring payment of a levy as a condition of the right to develop pursuant to the permit. The purpose of the levy is to fund infrastructure relating to that area in in a practical and equitable way.

At the date of the approval of AMC145, the plaintiff was the holder of planning permits enabling it to:

·construct a multi-storey mixed use development comprising 198 residential dwellings and retail premises (4 lots) on the Moreland Street land; and
·construct a multi-storey mixed use development comprising 350 residential dwellings and retail premises (10 lots) on the Warde Street land.

Each permit required the permit holder to enter into an agreement under s 173 of the Planning and Environment Act 1987 (‘P&E Act’) providing for a financial contribution towards the cost of some items of infrastructure subsequently included in the DCP.[2]
[2]See P&E Act s 62(2)(f).

Moreover, condition 33 of the Warde Street land permit further provided:

Unless otherwise agreed by the responsible authority, prior to the issue of the Building Permit, the owner of the land must pay a development contribution levy of $450 per dwelling (or the relevant development contribution as otherwise specified by the Maribyrnong Planning Scheme at the time of the issue of the building permit) to the Maribyrnong City Council.

Since the implementation of AMC145, the plaintiff has also sought and obtained planning permits to subdivide the proposed developments of the Warde Street land and Moreland Street land into 562 lots in stages in accordance with endorsed plans. Condition 3 of the subdivision permit provides:

A Development Infrastructure Levy in accordance with the approved Development Contributions Plan which applies to the land must be paid to the Collecting Agency for the land in respect of each demand unit within the following specified time, namely after the certification of the relevant plan of subdivision but no earlier than up to 21 days prior to the issue of a Statement of Compliance for that plan of subdivision.
Where the subdivision is to be developed in stages, the Development Infrastructure Levy for the stage to be developed may only be paid to the Collecting Agency no earlier than up to 21 days prior to the issue of a Statement of Compliance for that stage.
The Collecting Agency may agree to a different time for payment.
Where any infrastructure projects funded by the approved Development Contributions Plan comprise the same works or payments which the owner has provided under planning permit 2010030488 issued 17 May 2011 and amended on 25 May 2017 or planning permit 2012006036 issued 8 July 2015 and amended on 2 August 2018, the Collecting Agency should ensure that the value of any such works or payments provided by the owner is reflected as a credit so as to proportionally offset the monetary amount of the development contributions required to be made under this permit. The value of any works proposed that are to be offset must be determined by the Collecting Agency by reference to and must not exceed the value of the relevant works (or part of them) as set out in the approved Development Contributions Plan as appropriate.

The effect of the permits which the plaintiff holds is thus that, if it proceeds with the proposed developments, it is required to make sequential payments towards infrastructure costs first under the development permits which authorise construction of the proposed mixed use buildings, and secondly, under the permits which permit subdivision of those buildings.

The second requirement is imposed pursuant to, and in accordance with, the terms of the MPS as amended by AMC145.

The effect of the second requirement will be to impose an additional impost upon completion of the residential development of the land, being the difference between the first requirement and the second requirement calculated after the giving of the credit contemplated by condition 3 in the subdivision permit.

By an amended originating motion for judicial review dated 13 February 2020, the plaintiff contends that AMC145 is beyond power and of no legal effect because, contrary to s 46K of the P&E Act, it purports to levy development contributions in respect of development that has already been approved by existing permits and/or does not relate the need for works, services and facilities (or some of them) to the proposed development of land in the area as required by s 46I.

The plaintiff further contends that to the extent that the DCP purports to levy development contributions in respect of the subdivision of the air space for dwellings, the construction of which has already been approved under an existing permit, such requirement is invalid because:

(a) it is not a DCP within the meaning of s 46K of the P&E Act;

(b) it does not relate the need for the works, services and facilities to be provided (or some of them) to the proposed development of the land in the area as required by s 46I of the P&E Act; and

(c) it is an unlawful tax.

For the reasons set out below, I am not persuaded that AMC145 is invalid:

(a) development which has been approved by a planning permit but not constructed falls within the category ‘proposed development’ contemplated by s 46K;

(b) the proposed works and facilities which are intended to be funded by the DCP relate to the development of land in the area to which the DCP applies in accordance with s 46I and the DCP itself relates to the need for the proposed works and facilities to the proposed development of the land in the area in accordance with s 46K;

(c) the imposition of a levy upon subdivision of the plaintiff’s land is the imposition of a levy in relation to the development of land in the area to which the DCP applies;

(d) subdivision is validly specified as a type of development in respect of which a levy is payable in accordance with s 46K(1)(f); and

(e) s 46I does not preclude the specification of subdivision of land as a form of development in respect of which a levy is payable in circumstances such as the present case.

In order to explain both the plaintiff’s case and my conclusions, it is necessary to say something further about the DCP itself and the relevant statutory scheme before turning to the plaintiff’s submissions in more detail.

The DCP

The Precinct is an area of approximately 15 hectares located between the Maribyrnong River to the east, a railway reservation to the north and west, and Hopkins Street to the south. It is shown on the planning scheme map below marked with the capital letters DCPO1.

The Precinct comprises a former industrial and warehousing area identified by the Maribyrnong Council (‘the Council’), as appropriate for transformation into a high density housing and mixed use area accommodating over 4,500 dwellings and a population of around 10,000 people.

As part of the proposed urban renewal process the Council commissioned a ‘Public Realm Plan’ which identified the need for a series of roadworks, traffic management works, and drainage works to be undertaken in order to improve the public realm within the Precinct for the purpose of the proposed new land uses.

A draft DCP was produced by the Victorian Planning Authority in July 2019. It formulated a framework for the proponents of development in the Precinct ‘to make a financial contribution towards the cost of the identified infrastructure projects in the public realm’ which it was said ‘ensure[d] that the cost of providing new infrastructure and services is shared equitably between various development proponents in accordance with the demand to be created by each development.’ It did this by providing for the charging of a development infrastructure levy towards works, services, and facilities within the Precinct, apportioned according to the probable share of the use of an identified infrastructure item by the occupants of each site within the Precinct.

In order to identify the infrastructure requirements of the Precinct, the DCP contained a projection of all development within the Precinct over 15 years. This projection was extrapolated from the level of development provided for in existing planning permits for a number of sites within the Precinct including the Moreland Street land and the Warde Street land. The development projection was then used as a basis for identifying all infrastructure needs within the Precinct.

The DCP also noted that there were existing permits with conditions requiring some contributions to the public realm,[3] and provided for the collecting agency to give credit against the levies where contributions had been made.
[3]Such contributions related in substantial part if not wholly to works deemed necessary by reason of the particular development proposals.

The Council then proposed AMC145 which sought to give effect to the DCP through the overlay provisions of the MPS. AMC145 applied the DCP overlay to the Precinct by identifying the Precinct as subject to the overlay, inserting a new schedule to cl 45.06 of the MPS and incorporating the DCP into the scheme pursuant to cl 72.04.

AMC145 was placed on exhibition pursuant to s 19 of P&E Act and 11 submissions (including submissions from the plaintiff) were received. These were referred to a panel appointed under Part 8 of the Act for independent consideration.

The Panel conducted a hearing and subsequently issued a report dated 21 May 2019 which, as the Minister notes, contained the following relevant findings:

(a)In regard to the existing state of the infrastructure in the Precinct, the Panel found that:
much of the road and footpath infrastructure is inadequate or in poor condition and certainly not suitable for a large resident population. The streets are largely devoid of trees, there is no street furniture and limited formalised on-street parking arrangements.

(b)In regard to the public realm improvements to be funded under the DCP, the Panel found that:
the nature of the infrastructure works are directly relatable to the level of development that is expected in this precinct. The proposed infrastructure will clearly be used by residents and workers in the precinct to move about the precinct safely and comfortably.

(c) In relation to the need for the works, the Panel found that:
There was general acceptance from the submitters that there is a significant need for infrastructure works to be undertaken within the precinct as it transitions to a mixed use, residential precinct.

(d)Discussing the link between the road improvements to be funded under the DCP and the development of the land in the Precinct, the Panel found that:
the roads are in poor condition or in some instances barely exist. The need to upgrade them is directly attributable to the new development in the precinct.

(e)Similarly, in relation to the upgrades to the traffic signals at Hopkins Street, the Panel found that:
the upgrade works are the direct result of the traffic being generated by the level of residential development in the precinct. The same can be said of the upgrades of the signals at the Whitehall Street intersection (TR03).

(f)In relation to the drainage works to be funded by the DCP, the Panel found that those upgrades were ‘directly related to the precinct’s development and [do] not serve external catchments’.

As the Minister emphasises, none of the Panel’s findings are the subject of challenge in this Court:

There is therefore no challenge to the need in the Precinct for the infrastructure that is to be funded by the DCP, no dispute that the infrastructure will serve and be used by residents and workers within the Precinct (including residents of and workers on the plaintiff’s developments), and no argument that there is no relationship between the infrastructure to be funded by the DCP and the development of the Precinct as a whole.

Following the Panel’s report, AMC145 was adopted by the Council and approved by the Minister. It may be inferred that these steps were informed by the Panel’s conclusions.

Subsequent to the approval of AMC145, the Victorian Civil and Administrative Tribunal ordered by consent on 28 October 2019 that a permit for the subdivision of the Warde Street land and the Moreland Street land be granted.

The subdivision permit contained a condition requiring payment of a development infrastructure levy in accordance with the DCP in the terms I have already set out above, and further provided that the value of any payments previously made by the plaintiff under previously issued permits in respect of the same works be credited against the amount of the levy.

The statutory provisions

This case turns on the construction of the provisions of the P&E Act which provide for the making of development contributions.

Pursuant to s 4 of the P&E Act, the objectives of planning in Victoria are not limited to the regulation of land use and development but extend to the following:

(a)to provide for the fair, orderly, economic and sustainable use, and development of land;

(b)to provide for the protection of natural and man-made resources and the maintenance of ecological processes and genetic diversity;
(c)to secure a pleasant, efficient and safe working, living and recreational environment for all Victorians and visitors to Victoria;
(d)to conserve and enhance those buildings, areas or other places which are of scientific, aesthetic, architectural or historical interest, or otherwise of special cultural value;
(e)to protect public utilities and other assets and enable the orderly provision and co-ordination of public utilities and other facilities for the benefit of the community;
(f)to facilitate development in accordance with the objectives set out in paragraphs (a), (b), (c), (d) and (e);
(fa)to facilitate the provision of affordable housing in Victoria;

(g) to balance the present and future interests of all Victorians.

In turn Part 3B of the P&E Act provides for the inclusion in a planning scheme of development contribution plans for the purposes of levying developer contributions. Section 46I(1) provides:

Without limiting section 6, a planning scheme may include one or more development contributions plans for the purposes of levying contributions to fund—
(a)the provision of works, services and facilities in relation to the development of land in the area to which the plan applies; and
(b)the reasonable costs and expenses incurred by the planning authority in preparing the plan and any strategic plan or precinct structure plan relating to, or required for, the preparation of the development contributions plan (the plan preparation costs).

Section 46J states the mechanisms which a DCP may utilise:

A development contributions plan may provide for either or both of the following—
(a) the imposition of a development infrastructure levy;
(b) the imposition of a community infrastructure levy—
in relation to the development of land in the area to which the plan applies.

The current proceeding is concerned with a development infrastructure levy and not a community infrastructure levy.

Both the statement of the purpose for which contributions may be levied in s 46I and the provision authorising the imposition of levies in s 46J qualify the power to impose a levy by way of a requirement requiring a nexus to ‘the development of land in the area to which the plan applies.’ In the first case, the purpose of the provision of the relevant works, services and facilities must be in relation to such development. In the second case, the levy must itself be imposed in relation to such development.

Section 46K(1) of the P&E Act goes on to provide for the mandatory contents of a DCP:

(1) A development contributions plan must—
(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.

It can be seen that s 46K(1) requires the DCP to deal in turn with a series of detailed requirements. Section 46K(1)(c) requires the DCP to relate the need for the contents of the plan to the proposed development of land in the area. It thus requires the relevant purpose of the plan to be disclosed on the face of the plan. In so doing it gives effect to the purpose requirement of s 46I.

In addition, s 46K(1)(f) requires the DCP to specify the land in the area and the types of development in respect of which a levy is payable. In so doing it gives effect to the mechanism requirement of s 46J.

‘Development’ is defined by s 3 of the P&E Act:

development includes—
(a)the construction or exterior alteration or exterior decoration of a building; and
(b)the demolition or removal of a building or works; and
(c)the construction or carrying out of works; and
(d)the subdivision or consolidation of land, including buildings or airspace; and
(e)the placing or relocation of a building or works on land; and
(f)the construction or putting up for display of signs or hoardings;

‘Subdivision’ is also defined:

subdivision means the division of land into two or more parts which can be disposed of separately;[4]

[4]P&E Act, s 3.

‘Land’ is defined in turn:

land includes—
(a) buildings and other structures permanently fixed to land; and
(b) land covered with water; and
(c)any estate, interest, easement, servitude, privilege or right in or over land;[5]

[5]Ibid.

It may be noticed that both ‘development’ and ‘land’ are given inclusive and extended meanings. Most relevantly for present purposes, ‘development’ includes the subdivision of land ‘including buildings or air space’. Moreover, ‘land’ includes any interest or right in or over land.

Section 46K(2) of the P&E Act further qualifies the scheme of s 46K(1) by providing for exemptions and differential rates with respect to the payment of levies.

(2) A development contributions plan may—
(a)exempt certain land or certain types of development from payment of a development infrastructure levy or community infrastructure levy or both; and
(b)provide for different rates or amounts of levy to be payable in respect of different types of development of land or different parts of the area.

Turning from the contents of a DCP, s 46I(1) and s 6(2)(l) authorise the inclusion of DCPs within planning schemes and thus provide a statutory mechanism for their implementation.[6]
[6]Section 6(2)(l) enables a planning scheme to ‘provide for any other matter which this Act refers to as being included in a planning scheme’.

Section 46N(1) further provides that, where development within a DCP area requires a planning permit, the requirement to pay DCP levies is to be implemented by way of permit condition.

In the present case, cl 45.06 of the MPS comprises a development contribution overlay which is in a standard form, but adopts a schedule specifically relating to the Precinct DCP.

Clause 45.06–1 requires a DCP to be incorporated into the MPS with respect to land designated as subject to the overlay on the planning scheme map. It further provides that a permit granted to subdivide land, construct a building or construct or carry out works must:

·be consistent with the provisions of the relevant DCP;
·include any conditions required to give effect to any contributions or levies imposed, conditions or requirements set out in the relevant schedule to the overlay.

Clause 45.06–2 reflects the scheme of P&E Act and further provides:

Preparation of a development contributions plan
The development contributions plan may consist of plans or other documents and may, with the agreement of the planning authority, be prepared and implemented in stages.
The development contributions plan must:
·Specify the area to which the plan applies.
·Set out the works, services and facilities to be funded through the plan, including the staging of the provision of those works, services and facilities.
·Relate the need for the works, services or facilities to the proposed development of land in the area.
·Specify the estimated costs of each of the works, services and facilities.
·Specify the proportion of the total estimated costs of the works, services and facilities which is to be funded by a development infrastructure levy or community infrastructure levy or both.
·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 levy payable in respect of any development of land.
·Provide for the procedures for the collection of a development infrastructure levy in respect to any development for which a permit is not required.

The development contributions plan may:
·Exempt certain land or certain types of development from payment of a development infrastructure levy or community infrastructure levy or both.
·Provide for different rates or amounts of levy to be payable in respect of different types of development of land or different parts of the area.

Schedule 1 to the DCP overlay describes the area covered by the DCP (being the Joseph Road Precinct) and sets out a summary of costs with respect to proposed road works, traffic management works and drainage works within the DCP area. It then summarises the contributions required by way of ‘levies payable by the development’, and calculated in the case of residential development at a specified rate per dwelling, and in the case of commercial and retail development at differential rates per square metre of gross leasable floor space.[7]
[7]The total levy payable is $5,077.68 per dwelling, $41.96 per square metre gross leasable floor space of commercial development and $267.25 per square metre of gross leasable floor space of retail development.

Clause 72.04 then provides for the incorporation of the DCP into the MPS pursuant to s 6(2)(j) of the P&E Act. As a result, the DCP is part of the planning scheme.

Does the DCP comply with s 46K(1)(c) of the P&E Act?

As I have said, the amended originating motion for judicial review in this matter alleges that the DCP:

(a) is not a ‘development contributions plan’ within the meaning of s 46K of the P&E Act as it purports to levy development contributions to fund the provision of works, services and facilities (or some of them) in respect of development that had already been approved by existing permits; and

(b) does not relate the need for the works, services and facilities to be funded (or some of them) to the ‘proposed development’ of land in the area as required by s 46I.

In summary, the plaintiff submits that:

·this ground of review turns on the construction of s 46K(1)(c);
·the purpose of s 46I as reflected in s 46K(1)(c) is to enable the provision of works in relation to the proposed development of land;
·the DCP makes clear that it relates in part to works intended to accommodate land use resulting from residential development which is already the subject of planning permits authorising its construction;
·such works do not relate to the proposed development of land in the area as required by s 46K;
·more particularly, the phrase ‘proposed development’ used in s 46K(1)(c) is to be contrasted with, and does not include, ‘approved development’ which is the subject of a planning permit.

The Minister submits in summary:

·the plain meaning of ‘proposed development’ extends to all probable future development which is likely to occur in fact, including that which may occur pursuant to existing permit approvals;
·the relevant development is of the DCP area as a whole;
·the nexus required between the works intended to be funded by the DCP is one which turns on the needs of the land in the area as a whole and not the needs generated by particular sites within that area.

As the High Court has stated, the task of statutory construction must begin and end with the consideration of the statutory text.[8] The statutory text must be considered in its context, which includes the general purpose and policy of a provision.[9]
[8]Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503, 519 [39] (French CJ, Hayne, Crennan, Bell and Gageler JJ) (‘Consolidated Media’). See also, Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27, 46–7 [47]; SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362, 368 [14] (‘SZTAL’).
[9]Consolidated Media (2012) 250 CLR 503, 519 [39]; SZTAL (2017) 262 CLR 362, 368 [14].

I will address in turn the matters raised and addressed by the parties in the course of argument:

(a)the plain meaning of the text;
(b)the contingent quality of planning permits;
(c)the purpose of requiring that the need for proposed works be related to the proposed development of land in the area;
(d)the statutory context including:
(i)provisions within the statutory scheme for the exclusion of a proportion of relevant costs from the levy and for the exclusion of areas of land and types of development which should not be the subject of a levy as a matter of equity;
(ii)specification of the land in the area and types of development which are to be the subject of the levy;
(iii)the adoption of planning scheme provisions as the mechanism by which DCP contributions are to be levied;

(e)background to the relevant concept of nexus;
(f)conclusions as to the proper construction of s 46K(1)(c);

(a) The plain meaning of the text

The plain language of the text of ss 46I and 46K does not support the plaintiff’s construction. Section 46K(1)(c) makes clear that the need for the works proposed by the DCP must be related to the proposed development of land in the area.

The meaning of ‘development’ is defined by the P&E Act. It is relevantly the actual construction of buildings, carrying out of works and subdivision of land including buildings or air space.[10]
[10]The definition of ‘development’ is set out at [38] above.

The ordinary meaning of ‘proposed development’ includes development which is permitted but not constructed.

The words ‘proposed development’ are not qualified by a proviso ‘other than development previously authorised by a planning permit’. The implication of such words is not necessary to give the provision a sensible and effective meaning. Nor is it supported by the statutory context to which I shall shortly come.

As the findings of the Panel with respect to AMC145 demonstrate, the works proposed to be funded by the DCP are related to the anticipated needs of the fully developed Precinct.

That relationship is explained in the DCP itself by reference to the Public Realm Report and as required by s 46K(1)(c).

(b) The contingent quality of planning permits

The grant of a permit does not of course require the construction of a development. Indeed, there is no reason why land within an urban renewal area may not be the subject of sequential or multiple contemporaneous permits providing for a range of redevelopment options before one is actually constructed.

The existence of permits for substantial construction of residential buildings within the Precinct formed the basis for estimating the future infrastructure requirements of proposed development within the Precinct, but did not constrain or require development in accordance with particular permits.

Further, the existence of a permit to carry out one form of development does not prevent the imposition of additional permit requirements upon land by way of a planning scheme amendment. Thus land may have the benefit of a permit to construct development upon it but be subjected to an additional control requiring a permit for the demolition of heritage structures or the removal of native vegetation or some other matter which is additional to the development originally permitted.

The fact that the planning scheme controls change after the grant of the initial planning permit derives from a judgment made in the public interest and in the ordinary course after due process which enables persons affected (including the permit holder) to make submissions to the planning authority concerning the appropriateness of the amendment.[11]
[11]See pt 3 of the P&E Act.

In turn the fact that the planning scheme amendment may result in some costs incurred with respect to existing permits being thrown away cannot determine the proper interpretation of the planning scheme amendments.

The contingent quality of planning permits also counts against the implication for which the plaintiff contends.

(c)The purpose of the requirement for the need for the proposed works to be related to the proposed development of land in the area

The obvious purpose of pt 3B is the provision of adequate and appropriate infrastructure within developing areas. The need for particular works will relate to the development of the area if those works are appropriate to accommodate the actual demands for infrastructure which will arise upon the completion of probable development within an area.

Conversely, if, as the plaintiff submits, proposed development of land in the area does not include development previously authorised by a planning permit, then the works funded in whole or in part by a DCP could only extend to works which did not in fact have the capacity to accommodate the actual projected needs of an area containing land the subject of existing permits for development. In such cases, there would be little or no point in constructing a road or sewer or other piece of infrastructure intended to carry a cumulative load if it did not have adequate capacity. If the statutory scheme is to work effectively as a whole, then the works must accommodate the total needs of the relevant area but conversely equity may demand that a levy is imposed with respect to part only of the costs in an appropriate case. Put another way, the works will relate to the development of an area if they accommodate the actual needs of the area but the assessment of such needs by reference to the development of an area as a whole (including development which may occur pursuant to existing permits) does not necessarily determine the liability for, or share of, costs which should be payable by a particular landholder.

The purpose I have identified, namely to provide infrastructure adequate for the needs within a development area as a matter of fact, does not favour the plaintiff’s interpretation.

The plaintiff’s construction would mean that the DCP provisions could never be effectively utilised to fund infrastructure where an existing permit or permits authorise any substantial development in an area. This would be a very significant limitation upon the uses of the DCP process which is not to be found in the language of the statute.

(d)(i)Provision for the exclusion of a proportion of the total estimated costs of the works from the amount to be funded by the levy

The fact that identification of the need for infrastructure (and its consequent total cost) is undertaken by reference to the whole of a relevant planning unit (being the area to which the DCP applies), does not determine the content of a levy by way of a fixed relationship. This is demonstrated first by s 46K(1)(e). This allows a proportion of the total estimated cost of the proposed works to be excluded from the amount forming the basis of the levy. Thus if the works will in part accommodate demand generated by existing development within the area or demand generated in some part outside the area (as will commonly be the case with a sub-arterial road or a trunk sewer), the proportion of the cost generated by that demand can be excluded.

In the present case, the costs generated by development in accordance with existing planning permits could theoretically have been excluded from the amount included in the levy if that were deemed desirable by way of the planning scheme amendment process. The capacity to deal with different categories of demand for infrastructure in different ways forms part of a basket of provisions which taken together count against the implication for which the plaintiff contends.

(d)(ii)Specification of the land in the area and types of development which are to be the subject of the levy

Section 46K(1)(f) allows the specification of land and 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. As set out above s 46K(2) further provides for the exemption of certain land or types of development from the payment of a levy.

One effect of ss 46K(1)(f) and 46K(2) is that a DCP may exclude specified land from the application of the levy. The DCP in the present case specifically identifies the land having the benefit of existing permits in the course of setting out development projections. If it had been thought desirable to do so, such land could have been excluded from the levy requirement. Likewise, if it had been thought appropriate to do so, subdivision could have been excluded from the types of development subject to the payment of a levy.

The provision of a series of mechanisms by which the particular position of the holders of existing permits to develop land might be addressed further counts against the implication for which the plaintiff contends. Put simply, the implication is unnecessary to accommodate consideration of the position of the holders of existing permits. The merits of that position falls to be considered by way of the planning scheme amendment process.

(d)(iii)The adoption of planning scheme provisions as the means by which DCP contributions are to be levied

Next, although the works which are to be provided are justified by reference to projections based upon the proposed development within the area as a whole, the structure of the planning scheme will protect the holder of existing permits authorising development from liability to pay the DCP in the ordinary case. This is because such liability will only arise in consequence of a permit condition requiring payment of the levy. Permits to develop land issued prior to the implementation of the DCP will not include such conditions.

Thus in the present case the plaintiff is at liberty to construct buildings in accordance with the permits it holds without complying with the requirements of the DCP. The difficulty it faces arises because it requires further permits for subdivision of those buildings. This difficulty does not detract from the proposition that the holders of existing permits will not be made liable pursuant to the DCP if they develop in accordance with those permits.

This contextual consideration also counts against the construction for which the plaintiff contends.

(e) Background to the relevant concept of nexus

The construction which I prefer reflects an intention that DCPs must demonstrate a nexus between the works proposed in the DCP and the proposed development within an area comprising a relevant planning unit when viewed as a whole.

In the seminal Administrative Appeals Tribunal (Vic) decision of Eddie Barron Constructions Pty Ltd and Shire of Pakenham,[12] the Tribunal articulated the concept of nexus in the context of the statutory scheme which pre-dated that of DCPs.
[12](1991) 6 AATR 10.

In that case, the applicant had applied for a permit to subdivide broad acre land on the outskirts of Pakenham. The Shire granted a permit to subdivide but imposed a condition requiring the applicant to enter into a s 173 agreement pursuant to the provisions of the P&E Act for the payment of development contributions to fund the provision of infrastructure around Pakenham. The Tribunal held that in order to be valid the development levy must meet the criteria of need, equity, accountability and nexus. It articulated the notion of nexus as follows:

[T]he nexus which must be established between the use or development proposed and the facilities to be provided is not confined to the question of whether the facilities will be physically used by the residents of the subdivision or whether the subdivision alone generates the need for the facilities. The subdivision must be looked at not in isolation but as part of any wider planning framework. Where a subdivision forms part of a wider planning unit and where it has been established that social and physical infrastructure will be needed by that larger unit then it is sufficient if the nexus is established between the facilities and that wider unit.[13]

[13]Ibid 30.

The provisions of pt 3B of the P&E Act were formulated in the context of the jurisprudence that had been formulated by the AAT with respect to development contributions.[14]
[14]See Casey City Council v Carson Simpson Pty Ltd (2007) 18 VR 19, 23 [20]–[26].

When pt 3B of the P&E Act was last amended in 2004,[15] the then Planning Minister expressly referred to the four principles identified by the AAT in Eddie Barron stating that the ‘revamped system will ensure that all development contributions satisfy the tests of need, nexus, and accountability’.[16]
[15]Planning and Environment (Development Contributions) Act 2004.
[16]Victoria, Parliamentary Debates, Legislative Assembly, 4 November 2004, 1321 (Mary Delahunty, Minister for Planning).

The background to the current legislation thus supports the view that the words of s 46I and s 46K(1)(c) are to be given their natural meaning and, in particular, that the provision of works ‘in relation to’ the development of land in the area extends to works which are needed to meet the actual cumulative needs generated by development within an area.

(f) Conclusions with respect to the construction of s 46K(1)(c)

Section 46K(1)(c) gives effect to s 46I(1) and should be given its plain meaning:

·the purpose stated in s 46I(1) of providing works, services and facilities in relation to the development of land in the area to which the plan applies should be given full and effective meaning;
·the concept of need in s 46K(1)(c) extends to works intended to accommodate the future needs of a rationally identified planning unit within a particular area;
·this concept of the nexus which must be established between proposed works and the needs of an identifiable area reflects a concept articulated prior to the current legislation and intended to be embodied within it;
·the words ‘proposed development’ in s 46K(1)(c) are intended to be given their natural meaning and extend to all development which is then proposed in fact whether or not permitted by previous planning permits;
·the grant of a permit carries no implication that development will in fact occur in accordance with that permit and the contingent quality of planning permits renders it unlikely that the legislation is intended to be restricted by implication as the plaintiff contends;
·the existence of a pre-existing permit will nonetheless mean that no further permit for development may be necessary and if development occurs in reliance upon the pre-existing permit no occasion may arise enabling the Council to recover a development contribution levy pursuant to permit condition as contemplated by the MPS and the DCP;
·the provision for the specification of the proportion of the total estimate of costs of the proposed works which is to be funded by the levy (s 46K(1)(e)) would allow the exclusion of that proportion of works referrable to projections based on existing planning permits if that were thought appropriate;
·the provision for specification of the land in the area and the types of development in respect of which a levy is to be payable would enable a DCP to contain provisions which did not apply to land the subject of existing planning permits or which did not apply to subdivision of land in areas of land intended for multi-level mixed use development;
·the provisions for exemptions contained in s 46K(2) would enable exemptions to be made with respect to land the subject of existing permits if that were desired;
·the adoption by the statute of planning schemes as the mechanism by which DCPs are to be implemented enables the planning scheme to specify the types of permit in respect of which a levy may be imposed by way of permit condition upon development;
·the existence of a whole series of mechanisms which are available to qualify and address the position of the holders of existing planning permits counts strongly against the implication of the words into s 46K(1)(c) for which the plaintiff contends;
·the text, context and purpose of s 46K(1)(c) all support the construction for which the Minister contends.

Does the DCP comply with s 46K(1)(f)?

The amended originating motion for judicial review further alleges that to the extent that the Precinct DCP purports to levy development contributions in respect of the subdivision of air space for dwellings that have already been approved under an existing permit:

(a) it is not a ‘development contributions plan’ within the meaning of s 46K; and

(b) does not relate the need for works, services and facilities to be funded (or some of them) to the proposed development of land in the area provided by s 46I; and

(c) is an unauthorised tax.

As this ground was elaborated in argument, it turns ultimately upon s 46K(1)(f). In particular, it is submitted that the types of development in respect of which the levy may be specified as payable pursuant to that subsection do not include the subdivision of air space for dwellings the construction of which has already been separately approved under an existing permit.

The provisions of s 46N(1) of the P&E Act and cl 45.06 of the MPS impose an obligation upon the Council to include a condition requiring payment of the development contribution levy within a permit for subdivision. A permit to subdivide must include any conditions required to give effect to any levies or contributions imposed or required as set out in the relevant schedule of the overlay. The schedule summarises the contributions which are provided for in the DCP itself which as I have noted is incorporated in full in the MPS.

Part 5.3 of the DCP provides as follows:

5.3      Payment of Contribution Levies and Payment Timing
Where a planning permit is issued, the following conditions must be included on the planning permit.
5.3.1    Planning Permit for subdivision of land
A Development Infrastructure Levy in accordance with the approved Development Contributions Plan which applies to the land must be paid to the Collecting Agency for the land in respect of each demand unit within the following specified time, namely after the certification of the relevant plan of subdivision but no earlier than up to 21 days prior to the issue of a Statement of Compliance for that plan of subdivision.
Where the subdivision is to be developed in stages, the Development Infrastructure Levy for the stage to be developed may only be paid to the Collecting Agency no earlier than up to 21 days prior to the issue of a Statement of Compliance for that stage.
The Collecting Agency may agree to a different time for payment.
A Schedule of Development Contributions must be submitted with each stage of a plan of subdivision. The Schedule of Development Contributions must show the amount of the Development Infrastructure Levy payable for each stage to the satisfaction of the Collecting Agency.
If the Collecting agency agrees to works-in-kind in lieu of the payment of the Development Infrastructure Levy, the owner must enter into an agreement under Section 173 of the Planning and Environment Act 1987 in respect of the proposed work in kind arrangements.
5.3.2.   Planning Permit for development of land
A Development Infrastructure Levy in accordance with the approved Development Contributions Plan which applies to the land must be paid to the Collecting Agency for each demand unit proposed to be developed. The Development Infrastructure Levy must be paid prior to the issue of any Building Approval under the Building Act 1993 unless the Collecting Agency agrees to a different time for payment.
If the Collecting agency agrees to works-in-kind in lieu of the payment of the Development Infrastructure Levy, the owner must enter into an agreement under Section 173 of the Planning and Environment Act 1987 in respect of the proposed works-in-kind arrangements.
5.3.3.   Where no planning permit is required
Where no planning permit is required to use or develop land, the land may only be used and developed when a Development Infrastructure Levy in accordance with the approved Development Contributions Plan that applies to the land is paid to the Collecting Agency prior to the issue of a Building Approval under the Building Act 1993 unless the Collecting Agency agrees to any other time for payment.
If the Collecting Agency agrees to works-in-kind in lieu of the payment of the Development Infrastructure Levy, the owner must enter into an agreement under Section 173 of the Planning and Environment Act 1987 in respect of the proposed work-in-kind arrangement.

The relevant demand unit is previously specified in the DCP being a charge ‘per lot/dwelling’ with respect to residential development and a rate per square metre of gross leasable floor space in respect of commercial and retail development.

The plaintiff submits that the subdivision of the buildings here in issue is not development in the relevant sense required by s 46K(1)(f) read in conjunction with s 46I(1)(a) because the proposed subdivisions will not contribute to any need for infrastructure.

There are four elements to the answer to this contention. First, subdivision is development as defined in the P&E Act by reason of the combination of the definitions of ‘development’, ‘subdivision’ and ‘land’.

Secondly, it is development of a type specified in the DCP as giving rise to a requirement to pay a levy.

Thirdly, it is development of a type specified in the planning scheme as being permissible only subject to a condition that the levy be paid. Such a condition must be imposed by reason of s 62(1)(a) of the P&E Act.

Fourthly, it is development of the kind provided for in s 46J which states that a DCP may provide for the imposition of the development infrastructure levy ‘in relation to the development of land in the area to which the plan applies.’ This provision relates to the subject matter of the levy. The purposive limitation relating to need contained in s 46I is implemented by s 46K(1)(c) relating to the works which may be the subject of a DCP. There is no such limitation contained in s 46J or s 46K(1)(f). These words do not require a nexus between the need for the works and the development of land to which the requirement to pay a levy attaches.

If I am wrong in this construction and s 46K(1)(f) only enables the specification of types of development which themselves have a nexus to the requirement for works within the area, then I would still remain unpersuaded that the inclusion of a permit requirement implementing the DCP with respect to subdivision of the type in issue was unlawful. I do not accept that, as the plaintiff submits, it is demonstrable that the proposed subdivisions will not contribute to the need for the proposed works. Rather it seems to me that the better view is that subdivision is itself a material part of the process of creation of individual dwellings. The creation of individual occupancies by way of subdivision is a matter which affects the use of land and hence may be regarded as a form of completion of development in the broad sense. In the present case, if the permitted developments were used for student housing or for the purpose of serviced apartments (perhaps with hotel facilities in the commercial floor space at ground floor level) the traffic generation and other characteristics relevant to the need for the proposed infrastructure works would differ from those of individual occupancies within a subdivided residential building.

There is thus a nexus between the proposed subdivision and the works to be the subject of the DCP.

It may be accepted that, as the plaintiff submits by reference to established principle,[17] a public authority is not permitted to impose a financial burden upon a citizen in the absence of plain and clear statutory language. For the reasons I have explained, however, the purpose of the DCP provisions contained within the P&E Act and MPS fall squarely within the objectives of the P&E Act and the effect of their language is plain.
[17]Citing Attorney-General v Wilts United Dairies (1922) 91 LJKB 897, 900 (Lord Buckmaster), cited with approval in Commonwealth v The Colonial Combing, Spinning & Weaving Co Ltd (1922) 31 CLR 421, 445 (Isaacs J); Meriton Apartments Pty Limited v Minister for Urban Affairs and Planning (2000) 107 LGERA 363 [46].

It follows that the plaintiff’s second ground of review must fail.

This said, I have been troubled by the provisions within the DCP providing for the levy of payments within a multi-storey development area, both upon the construction of residential buildings and upon their subdivision. Both requirements for levies are formulated by reference to the same demand unit, namely the creation of a dwelling unit. As the Minister conceded during the course of argument, it cannot be the intention of the DCP to require double payment for the same demand unit. This question does not however arise on the facts of this case because only the subdivision of the proposed buildings will attract the levy payable under the DCP. In the circumstances, I will say no more about it, save to observe that the drafting of the MPS and the DCP provisions could readily (and desirably) make clearer their effect.

Conclusion

For the above reasons, I would dismiss the originating motion.

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7 May 2021