Legal Insights

Application of the Environmental Audit Overlay to a subdivided building

By Josh Montebello

• 15 May 2020 • 4 min read

The Tribunal has recently considered how to interpret and apply the Environmental Audit Overlay (EAO) in the red dot decision: Almia Pty Ltd v Port Phillip CC (Red Dot) [2020] VCAT 163 (Almia).

The applicant in Almia sought a declaration as to the relevant ‘land’ to which EAO requirement in Clause 45.03-1 applies, and the relevant segment of the environment which requires assessment. The applicant was seeking to commence a sensitive use on an upper level of a subdivided multi-storey office building which was subject to the EAO. The question posed was whether the ‘land’ referred to in the EAO is:

limited to the separate title to the upper level (where the residential use will commence); or
the whole of the land in or under the building.

If the latter, the scope of the environmental audit could require an assessment of soil and/or groundwater contamination on land under the building not owned by the applicant.

Provisions of the EAO

The EAO requires that before a sensitive (residential) use commences, even when a planning permit is not required:

a certificate of environmental audit must be issued for the land; or
an environmental auditor must make a statement that the environmental conditions of the land are suitable for the sensitive use.

Both dot points refer to ‘land’ - the land to be covered by the environmental audit, or the land to be covered by the statement. The purpose of the EAO is to:

'ensure that potentially contaminated land is suitable for a use which could be significantly adversely affected by any contamination'.

"The purpose of the EAO is to ensure that potentially contaminated land is suitable for a use which could be significantly adversely affected by any contamination."

Environmental Audit Overlay

Can ‘land’ be a lot in a building above ground level?

The planning scheme does not define the word ‘land’. However, the Tribunal considered the definition of land in clause 73 of the Planning and Environment Act. That definition is non-exhaustive and includes buildings fixed to land, land covered with water, and ‘any interest … in or over land’. Accordingly, the building on a site is part of the physical land. The planning scheme defines ‘lot’ as:

'a part (consisting of one or more pieces) of any land (except a road, a reserve, or common property) shown on a plan, which can be disposed of separately and includes a unit or accessory unit on a registered plan of strata subdivision …'

Accordingly, the Tribunal acknowledged that the lots above ground are a parcel of land that is separate from the land in other subdivided lots, and separate from the physical land at ground level.

"The planning scheme defines ‘lot’ as a part (consisting of one or more pieces) of any land (except a road, a reserve, or common property) shown on a plan, which can be disposed of separately and includes a unit or accessory unit on a registered plan of strata subdivision …"

Planning and Environment Act

How does the EAO apply to a lot above ground level?

Deputy President Dwyer held that Clause 45.03-1 must be taken to mean that ‘land’ for which an environmental audit or statement must be provided under the EAO is the relevant parcel of land (commonly identified by title or lot) within which the sensitive use will be commenced. In this case, that was limited to the upper level strata title rather than being the land under the building.

The Tribunal set out the following reasons for preferring this interpretation:

The interpretation is grammatically and literally correct having regard to the wording used in the clause, and the fact that the lot comprises a separate parcel of land.
The interpretation is correct from a planning perspective while adopting a purposive approach.
The interpretation is correct for a practical perspective. In particular, the owner of the lot above the ground does not own the land on or beneath the ground. Accordingly, the owner does not have the legal or practical ability to enable soil or groundwater contamination to be tested.
This interpretation is supported by considering how the matter would be assessed on a horizontal plane rather than a vertical plane.
Contrary to the views of the Environmental Protection Agency, the Tribunal considered that this interpretation of the EAO is consistent with the Environmental Protection Act 1970. There is nothing in the regulatory framework that supports a view that a change in an activity on a separate lot on the upper level of a building mandates an environmental audit of soil or groundwater on a different lot at or below ground level.

The Tribunal recommended clarification of the Clause 45.03-1 and has referred the decision to the Minister, so there may be further development in this space.