The removal of Clause 52.27: What does it mean for planning permits?

Introduction

On 8 December 2024, the State government announced that as part of the Economic Growth Statement, clause 52.27 of the Victorian Planning Provisions (VPP) schemes will be removed “by 1 July 2025”.

The initiative has been widely applauded as streamlining the approval process for the sale and consumption of liquor. The so-called ‘doubling up’ of planning permit (from the council) and liquor licence (from the Victorian Liquor Commission) will be removed – leaving it to the Victorian Liquor Commission (VLC) to regulate the sale and consumption of liquor.

In this article, we consider the implications of removing clause 52.27 on existing planning permits for the sale and consumption of liquor and, in particular, whether those permits and the permit conditions attached to them continue to have ongoing effect. We examine whether the answer differs according to whether the planning permit was issued solely under clause 52.27 or as part of a planning permit containing a number of permissions.

The current provisions regulating the sale and consumption of liquor

Clause 52.27 applies to premises licensed, or to be licensed, under the Liquor Control Reform Act 1998 (LCR Act). Subject to specified exceptions, a planning permit is required to sell or consume liquor if:

• A licence is required under the Liquor Control Reform Act 1998.

• A different licence or category of licence is required from that which is in force.

• The hours of trading allowed under a licence are to be extended.

• The number of patrons allowed under a licence is to be increased.

• The area that liquor is allowed to be consumed or supplied under a licence is to be increased.

Except for a pre-retail licence, a limited licence and a major event licence, it is a condition of every liquor licence and BYO permit that “the use of the licensed premises does not contravene the planning scheme that applies to the licensed premises under the Planning and Environment Act 1987” [see s.16 Liquor Control Reform Act]. The VLC must not delay the grant or refuse to grant an uncontested or contested application for liquor licence “on the ground that an application for a permit made under the Planning and Environment Act 1987 to permit the use of the premises to which the application relates is not yet determined” [see s44 and s47 Liquor Control Reform Act]. The grant, variation or relocation of a liquor licence takes effect on the day on which:

• So, by combination of the VPP schemes and the LCR Act, a planning permit is required to sell or consume liquor if one of the matters listed in clause 52.27 applies and, with respect to the main liquor licences granted by the VLC, it is a condition of those licences that the use of the licensed premises not contravene the planning scheme. Not contravening the planning scheme includes complying with the permit conditions attached to a planning perm either an application for a planning permit to permit the use of the premises has been granted, or

• other evidence from the relevant responsible authority or planning authority is given to the VLC that the premises may be used without contravening the planning scheme [see s. 49A Liquor Control Reform Act].

The post-1 July regulation of the sale and consumption of liquor

It is expected that on or before 1 July 2025, clause 52.27 will be removed from the VPP schemes. There is no mention of a saving or transitional provision. So, where a planning permit is currently required to sell or consume liquor, there will be no such requirement.

A number of councils currently have planning scheme policies that apply to an application under clause 52.27 (see for example clause 13.07-1L-02 of the Yarra Planning Scheme). It is not expected that the State government will remove these policies when it removes clause 52.27. Presumably it will be left with each council to review its planning scheme to assess the necessity and/or the value in leaving the policy in the planning scheme. Until the policies are assessed, they will presumably remain in the planning schemes without any work to do.

It is not known whether it is proposed to review the LCR Act in conjunction with the removal of clause 52.27. Presumably not. The above noted provisions will continue to have work to do given that they operate not only with regard to whether the premises to which the liquor licence will attach are authorised to sell and or consume liquor but whether “the use of the licensed premises” complies with the planning scheme.

This last point serves as a reminder that under the VPP schemes, premises from which liquor is sold or consumed are not regulated by clause 52.27 alone. For example, while the use of land for a bar, hotel, or restaurant does not require a planning permit in the Commercial 1 zone, those uses do require a permit in the General Residential zone or in the Mixed use zone (if the leasable floor area exceeds 150 square metres). Where a use requires a planning permit, there is often a need for a buildings and works permit for the section 2 use.

Licensed premises operating under an existing use right

Many licensed premises throughout Victoria operate under an existing use right. That is, by reason of the premises being lawful immediately before the approval date of the planning scheme or through continuous use, the premises is ‘protected’ and may continue, often unregulated by the planning scheme, notwithstanding that the use now requires a planning permit or is prohibited.

While early cases that considered the matter determined that clause 52.27 applied so as to require a planning permit to do one of the matters listed in clause 52.27 [see Barjen -v- Port Phillip CC [2000] VCAT 1306], the Tribunal has now settled on clause 52.27 not operating to regulate the sale or consumption of liquor to a hotel operating under an existing use right [see for example, Insite Architects Pty Ltd -v- Kingston CC [2023] VCAT 1076]. It is assumed that the same will be said with regard to other types of licensed premises operating under an existing use right (restaurants, clubs etc).

Removing clause 52.27 from the VPP schemes will render the question moot. Councils will no longer need to concern themselves with the question of whether clause 52.27 applies.

Licensed premises operating under an existing planning permit

The issue is not so clear with regard to the many (probably thousands of) licensed premises operating under an existing planning permit granted under clause 52.27.

Such permits undoubtedly contain permit conditions regulating things such as the hours of operation, patron numbers, noise emission, general amenity and the management of patrons.

With respect to such permits, there is a question as to whether, after 1 July 2025, the permit continues to impart benefit on the owner of the land such as is required in order to apply the Benedetti principle of the ongoing effect of permit conditions [see Benedetti -v- Moonee Valley CC [2005] VSC 434]. That is to say – do the permit conditions attached to such permits continue to operate and be enforced after 1 July 2025, even though no planning permit would be required if the use of the premises was notionally to commence to sell or consume liquor after that date?

Readers will no doubt know that Benedetti was concerned with a planning permit that authorised buildings and works under an old Design and Development overlay (DDO). The Court was required to determine whether that permit was ‘spent’ at the completion of the works such that the permit conditions, including the standard condition about not making alterations to the approved development without the council’s prior consent, no longer had effect.

The argument that the permit was spent was rejected by, firstly, the Tribunal and, secondly, on appeal by Osborn J in the Victorian Supreme Court. As to such condition, His Honour said

31. In my view Condition 1 continues to have effect while the owner of the land takes the benefit of the permit. It will have no effect if the permitted development which includes an element over six metres is demolished, but while such development is maintained, the conditional obligation not to modify the layout or the size of the buildings persists.

It is acknowledged that Benedetti was concerned with a planning permit that authorised buildings and works, but, if, as we believe to be the case, a planning permit continues to have effect while the owner takes the benefit of the permit, and only if the owner takes the benefit of the permit, it would follow that a planning permit that has been issued under clause 52.27 will no longer impart benefit on the owner of the land after 1 July 2025. This is because, after that date, the owner could notionally cease the use of the land to sell or consume liquor, even if for only a matter of hours, and recommence without the need for a planning permit. It is the use of land equivalent of His Honour saying that the permit “will have no effect if the permitted development……over six metres is demolished”.

This application of the Benedetti principle might be seen as at odds with Deputy President Gibson’s decision in Box -v- Moreland CC [2014] VCAT 246 (Box), where the Deputy President understood Benedetti to say that a permit condition continues to have ongoing effect where the owner “has taken the benefit of this permit……..even though they may not otherwise require a permit under the planning scheme” [paragraph 26, emphasis added]. If the Box interpretation was applied, permit conditions attached to a planning permit issued under clause 52.27 would continue to have effect if, as will overwhelmingly be the case in terms of the sheer number of clause 52.27 permits, the permit has been acted on.

We have in a past article cast doubt on the soundness of the Box interpretation of the Benedetti principle. Aside from the fact that His Honour did not use the words “has taken the benefit” (instead “while the owner takes the benefit”), intuitively it does not seem right that those who commence to use land to sell and consume liquor after 1 July 2025 will be free from any planning permit obligation and any planning permit constraint, whereas those who currently have a planning permit and will be doing the exact same thing as those who commence after 1 July 2025 will be subject to planning permit constraint.

While it might be said that the jury is still out as to the ongoing effect of a planning permit once the need for a permit no longer exists, it is at the very least strongly arguable that the owner of land no longer derives benefit from a clause 52.27 permit after 1 July 2025 and that, as a consequence, the conditions attached to such permit do not have ongoing effect.

What about a planning permit that includes multiple permissions?

Benedetti and Box were, in a sense, ‘straight forward’ cases as they both considered a single permission planning permit (Benedetti under a DDO, Box under the residential zone). They were both for buildings and works.

There are, no doubt, numerous existing planning permits that have been issued under clause 52.27 alone. That is to say, a single permission planning permit. But equally there will be many (probably the majority) where the permission under clause 52.27 is one of a number of permissions granted under the planning scheme. It is not unheard of, for example, for the one planning permit to authorise the use of the land for a restaurant, authorise buildings and works, authorise a waiver of the car parking requirements and authorise the sale and consumption of liquor under clause 52.27.

Multi-permission planning permits complicate things. They complicate things because, even if the permission under clause 52.27 is not required after 1 July 2025, the other permissions would still be required if the permitted uses and/or development notionally commenced after 1 July 2025. As a consequence, the owner of the land continues to take the benefit of the permit. Applied that way, it follows that the permit conditions attached to such a permit will continue to have ongoing effect.

The question that will no doubt be asked is whether all the conditions attached to a multi-permission planning permit continue to have ongoing effect after 1 July 2025 or only those conditions that attach to the non-clause 52.27 permissions?

It would be tempting to say that only the conditions attached to the non-clause 52.27 permission have ongoing effect. However, is this right and, even if it is right, how does one disaggregate a planning permit into its component parts and allocate the permit conditions to each part or parts? A planning permit that validly and reasonably regulates the number of patrons or the hours of operation by permit condition could equally be said to be doing so not only because permission is given under clause 52.27 but because of the permission for the land use (e.g. as a restaurant), or even of the permission to waive the car parking requirement.

Until otherwise directed by Court or Tribunal decision or a legislative instrument, we would not recommend that responsible authorities embark on a disaggregation of existing multi-permission planning permits or attempt to allocate permit conditions between the clause 52.27 permission and non-clause 52.27 permissions. It will be exceedingly difficult, if not impossible to do so. The better course is to proceed on the basis that, where a planning permit includes muti-permissions the permit conditions continue to have ongoing effect, unless of course none of the permissions are any longer required.

What will the VLC do with regard to existing liquor licences that are subject to the general condition that the licensed premises do not contravene the planning scheme?

It is assumed that there is no intention to amend the LCR Act to amend or remove the ‘link’ between the grant of a liquor licence and the conditions of such licence (on the one hand) and the planning scheme (on the other). As things currently stand, most liquor licences are subject to a condition that the licensed premises comply with the planning scheme and, in turn, any planning permit relating to the licenced premises.

Ultimately this will be a matter for the VLC and holders of a liquor licence, but we think it highly unlikely that the VLC will embark on some examination of planning permits and their ongoing effect .

Conclusion

The removal of clause 52.27 from the VPP schemes is a welcomed initiative. It may lead to the removal of other clauses where the permission might be said to duplicate or add an unnecessary layer to other permissions (e.g. clause 52.28 relating to the installation and use of gaming machines).

The initiative does, however, return the spotlight on the ongoing effect of a planning permit issued for a development or use that no longer requires a permit. If Benedetti is applied in the manner we believe it should, there is a real argument that those permits no longer impart benefit on the owner of the land and, as a consequence, do not have ongoing effect. The owners of such land could, if they wanted, put the issue beyond doubt by closing down the use of the land to sell or consume liquor (even if only for a few hours) – thereby effectively abandoning the permission granted by the planning permit – and recommence the use without the need for a planning permit. The issue is, however, complicated where the land is regulated by a multi-permission planning permit.