The end of 'transformation' as we know it?
A recent judgment of the Victorian Supreme Court warrants reporting and commentary. It significantly impacts on the way town planners, planning lawyers and the Victorian Civil and Administrative Tribunal (Tribunal) apply the principle of 'transformation' to section 72 applications.
The Court in Mondib Group Pty Ltd v Moonee Valley City Council  VSC 722 considered an appeal against a decision of the Tribunal to summarily dismiss an application for review. The application for review in question was against the Council’s refusal to amend a planning permit in accordance with section 72 of the Planning and Environment Act 1987 (Act).
The Tribunal found that the amendment to the permit would, if granted, involve a ‘transformation’ of what is allowed under the permit . According to the Tribunal, the application fell outside the power of amendment in section 72 of the Act.
To understand the magnitude and ‘reach’ of the Court’s judgment, it is necessary to record what the permit authorised and what the permit would authorise if the amendment was granted.
The Permit was issued on 21 July 2016. It authorised the construction of a multi-storey building accommodating ground floor retail, dwellings, reduction in the car parking requirements and works within a Road Zone. The plans endorsed under the Permit showed a:
- 14-storey mixed use building comprising 187 dwellings and commercial premises (including four retail premises) at ground floor level;
- five levels of basement car parking;
- total of 212 car parking spaces and 67 bicycle spaces;
- building height of 50.07 metres; and
- separation of the building into two separate forms from level 10 and above.
The applicant sought to amend the Permit to authorise the construction of a multi-storey building comprising a ground floor restaurant, residential hotel and works within the RZ1. This would include:
- amending the preamble to refer to the construction of a multi-storey building accommodating a residential hotel and a restaurant;
- amending the plans to show a 15-storey mixed use building comprising 335 residential hotel rooms, with a lobby, a pick-up and drop off area, a restaurant at ground floor level and meeting rooms and a lounge at first floor level;
- three levels of basement car parking;
- a total of 94 car parking spaces, 3 pick-up and drop off spaces, 6 motor bike spaces and 86 bicycle spaces;
- a building height of 46.55 metres;
- changing the built form, including fewer external balconies and deleting the break above 10 storeys; and
- amending the permit conditions by deleting conditions and introducing new conditions.
The applicant sought to make the changes in accordance with section 72 of the Act, sub-section (1), which reads:
“A person who is entitled to use or develop land in accordance with a permit may apply to the responsible authority for an amendment to the permit”.
Why did the Tribunal summarily dismiss the application to review the Council’s refusal to amend the permit?
The Tribunal summarily dismissed the application for review for being ‘misconceived or lacking in substance’. It said the proposed amendment was a transformation of what was allowed under the permit rather than an amendment to the Permit. What was sought, said the Tribunal, was beyond that which could be made in accordance with section 72. It said the Tribunal “lacked power” to amend the permit in the manner sought.
The Tribunal outlined its reasoning as follows:
Some of the differences between what is approved under the Permit and the Proposed Amendment may, in isolation constitute an amendment of the Permit (rather than a transformation). However, based on the facts and circumstances of this matter, I find that the combination of changes proposed leads to a transformation, rather than an amendment of the Permit. This includes the changes to the proposed uses, the changes to the internal layout and external appearance of the building and the modified conditions discussed above. The differences in the appearance and layout, and the permit conditions are a product of the change in the purpose of the uses proposed. In my view, the development approved by the Permit is proposed to be changed, and what results is a different permit, as opposed to a modified permit.
What errors of law did the appellant (permit applicant) claim were made by the Tribunal?
The appellant advanced its appeal on two grounds. It was successful on both grounds but the first ground is of more significance. By that ground, the appellant claimed (relevantly) that the Tribunal:
- adopted a concept – that of ‘transforming’ a permit – which is not found in, or to be implied by, the text, context or purpose of the Act and which is based upon common law principles developed in a different context
- failed to give proper effect to, and to properly consider, the meaning of the word ‘amendment’ in section 72(1); and
- failed to construe the words ‘amendment to the permit’ in accordance with the text, context and purpose of section 72(1), including by failing to properly consider the intent of section 72(1) that a person who is entitled to use or develop land in accordance with a planning permit should be permitted to apply for an amendment comprising the addition of elements, the deletion of elements and the substitution of elements.
Why did the Court uphold the appeal and remit the application for review back to the Tribunal?
After considering the history and purpose of section 72, the dictionary and the Act’s definitions of 'amendment', other sections of the Act that include the term 'amendment' (or 'amended'), the structure of the Act and the line of Court and Tribunal decisions that have formulated and adopted the principle of 'transformation' - including Addicoat, Bestway, Central Estate Properties and Coles Property - the Court upheld the appeal, ruling that the Tribunal had erred in law in summarily dismissing the application for review.
At paragraphs 88 and 89 of the Court’s reasons, the Court explained the error of law in the following terms:
Section 72 allows a person to use or develop land in accordance with a permit to apply for an amendment to the permit. An amendment is an alteration to the terms of the permit. The text, purpose and context of the provision does not support a limitation on the power of the kind adopted by the Tribunal. The word amendment does not carry any particular limitation of the kind ascribed by the Tribunal and neither the purpose or overall scheme of the Act requires a limitation to be applied. A so called transformative change would, if made, still be an amendment to the permit. The changes in an application to amend may be profound and entail a different use or a different development of the same land but they do not, for that reason, fall outside the power contemplated by s72.
The Tribunal erred in dismissing the application on the basis that the proposed changes were transformative. The nature and extent of the changes were properly a matter to be assessed on the merits of the application and not at the threshold.
The Court considered the approach taken by the Tribunal in section 72 applications “introduced a level of uncertainty as to when the power exists.” Discretions are common in planning but, said the Court, “the content of them more comfortably arises in the exercise rather than the existence of a specific power”.
In an earlier part of its reasons the Court said, at paragraph 66:
The word ‘amend’ means to alter or change and in a legal context often refers to a change in legal meaning. In Attorney General (WA) v Marquet, the High Court said the central meaning of ‘amend’ is to alter the legal meaning of an Act or provision short of entirely rescinding it. An amendment to a document or instrument often describes a change to an existing and continuing thing, and to that extent may be contrasted with a repeal, cancellation or rescission. In contrast to an event that brings the permit to an end, the word ‘amend’ does not carry with it any particular limitation on the extent of the change that may be involved.
The last few words of the above passage bears repeating. The Court is saying, as part of the reasoning of its judgment, that in terms of the legislative scope of section 72 there is no “particular limitation on the extent of the change that may be involved”.
Implications of the judgment
There is a proper basis, and probably not an exaggeration, to say the Mondib judgment – which will be binding on the Tribunal - represents a fundamental departure from the way planners, planning lawyers and the Tribunal have considered and applied section 72 of the Act. Previously, section 72 has been applied as being confined to applications to amend a permit that do not 'transform' the permit. It is treated as a matter of legislative power.
It would now seem this is a mistake. It is no longer beyond the legislative scope of section 72 of the Act to transform a permit. To reject an application on the basis of transformation without considering the merits of the application is now not permissible. Presumably this extends also to section 87 and section 87A applications given the line of Tribunal decisions that have regarded sections 72, 87 and 87A as analogous permit amendment provisions.
If the judgment is accepted as now binding on planners and the Tribunal, it begs a question as to how a decision-maker is to assess the merits of an amendment application where the amendment leaves little if anything of the original permit. Especially as the decision-maker is told by the Act and the Tribunal that its consideration of the application and its ability to impose permit conditions is confined to the differences between that which has already been approved by the original permit and that sought to be approved by the amendment of the permit.
Some guidance about this is contained in the Court’s reasons, where at paragraphs 84, 85 and 86 the Court said:
The matters that the responsible authority must take into account or may take into account in deciding an amendment application made under s72 are set out in s60 of the Act. The significance of the terms of the existing permit and the permissions granted under it will depend on the nature of the changes and all of the relevant matters to which the decision maker must or may have regard.
In exercising the power of amendment on an application under s72 of the Act, the responsible authority will be focused on the proposed changes, and any conditions that may be imposed must relate to the changes. Importantly, the greater the changes the less significant the permissions in the existing permit might be. That does not mean that the responsible authority must ignore those parts of the permit that are not the subject of amendment and again, the broader the change, the wider the potential scope for conditions to be imposed.
It emerges clearly from the decisions in the Tribunal applying the ‘Addicoat test’ that to allow a transformative amendment might not be consistent with good planning practice and current controls. So much may be accepted. Indeed, the applicant accepted the validity of that proposition. However, those matters go to the merits of the application rather than the width of the power to amend. In this case, the application was dismissed on a summary basis because the Tribunal considered the proposed amendments to be transformative. There was no consideration of whether the changes could or should be permitted having regard to the matters that inform the exercise of the power, which are the same as those that apply to an application for a permit. It is neither necessary nor desirable for me to say how the presence of existing permissions in the permit might influence any application to amend. The outcome of the amendment process will involve the consideration of many disparate matters. I have little doubt that, having regard to ss60 and 61, the breadth of the decision making power on an application to amend is adequate to deal with any contrivance or illegitimate grandfathering based on an existing permit.
While we understand where the Court is coming from, we would respectfully put the above commentary in the "it’s easier said than done” basket.
Are there limits to section 72?
While the above suggests section 72 is unlimited in the nature and extent of change that can be made under its auspices, the Court identified “one express limitation”. It did so at paragraph 72 of its reasons as follows:
The only express limitation in s72 of the Act itself is the requirement that the holder is entitled to use or develop land in accordance with a permit. That carries with it a requirement that the permit be in force at least at the time the application is made. Therefore, it would not be open to make an application to amend a permit that has expired under s68 of the Act. Further, a permit may, in certain contexts, become spent or cease to be an operative permission, for example when a development has been completed. In those cases there would be nothing to amend. [Our underlining]
While the first proposition is uncontentious, as it has long been thought that a permit needs to be in force in order to be amended, the second proposition will likely send a chill through planners, planning lawyers and the Tribunal alike. The notion a planning permit cannot be amended if the development authorised by the permit has been completed would come as a surprise – not only because planners have been amending such permits for many years (and will no doubt continue to be asked to do so) but because it is so at odds with Benedetti and the cases that have followed Benedetti.
We can only think the Court’s commentary on 'spent' permits, particularly those permits which are spent on completion of development, was not intended to be taken or applied literally. It was not part of the Court’s reasoning for upholding the appeal. There are, in any case, some limited permits which, even after Benedetti, have been held by the Tribunal as being capable of being spent upon completion of the 'development' (albeit we are only aware of this being said in relation to permits for subdivision).
We would add an additional, and important, limitation; the prohibition on using a section 72 application to add a new permission to the permit if use is now prohibited (Fosters Group) or which extends beyond the accrued right imparted by the permit in cases where the extension is prohibited (Alkero).
We do not believe there is anything in the Court’s judgment or reasons to suggest these established principles are to be disregarded or modified.
It is fair to say that an application to amend a permit in accordance with section 72 of the Act (and presumably sections 87 and 87A) can no longer be rejected or summarily dismissed on the basis that the amendment sought constitutes a transformation of the permit.
The nature and scope of the amendment to the permit go to the merits of the application, but not to the statutory power to make the amendments. We would think in the case of transformative amendment applications, the decision-maker effectively assesses the application as if the application was for a new permit but with ‘an eye on’ those elements that are not changed.
Despite some of the Court’s commentary, we do not think an applicant can be prejudiced or punished for electing to amend a permit rather than apply for a new permit, even if the election to amend gives the applicant an advantage or excuses the applicant from an obligation or prohibition that may have applied if a fresh application was made.
Except in those few cases where the law is settled as to a planning permit being spent (eg subdivision permits), we think a decision-maker is on ‘safe ground’ to continue to amend planning permits even where the development has been completed.
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