Australia: Amendments to the Planning and Environment Act 1987 (Vic) might give rise to unexpected results

Amendments to the Planning and Environment Act 1987 (Vic) have commenced, and change the game with respect to 'section 173 agreements'.

No longer is it necessary to have Ministerial approval and the agreement of all persons bound to amend a section 173 agreement. Nor does the responsible authority need approval from the Minister for Planning to end an agreement.

Instead, section 173 agreements can be amended or ended through a new process which has a number of similarities to the regular permit application process.

In particular, a land owner can apply to the responsible authority for 'in principle' agreement to amend or end the agreement. If that is provided, notice of the proposal is given to affected persons who have an opportunity to comment before a decision can be made.

These changes are intended to "improve the operation and administration" of section 173 agreements and, more generally, to "refine, update and improve the general operation" of the Act.

But whether they will achieve this is questionable, as there are a few quirks and risks in the new process which might cause unexpected results.

For example, responsible authorities have a greater role (and administrative burden) in amending and ending agreements through the new process. They must make both an initial 'in principle' decision, as well as a final decision, with the initial decision serving as a gateway to the rest of the process. Whilst there is no statutory timeframe imposed for the gateway decision, the general obligation to act expeditiously (subject to what is reasonably practicable) will apply.

If the responsible authority refuses to provide its in principle agreement, the matter ends there – as there is no right to seek merits review of that decision.

In contrast, if in principle agreement is provided, wide ranging rights to apply to VCAT for review arise regardless of the final outcome.

Two issues flow from this.

  1. First of all, there is a question about what scale of inquiry should be devoted to the initial decision. Technically, responsible authorities must consider the factors listed in section 178B(1). But this says little about the extent of the consideration. In practice, it would be understandable for an under-resourced Council (responsible authority) to assess the proposal at a high level only for the purposes of providing its in principle agreement, and leave the more detailed evaluation to after submissions have been made.
  2. The second (and related) issue is the prospect of proposals slipping through the gateway when they ought to have been rejected at the 'in principle' stage. If that occurs, and rights of review are exercised, the already strained resources of both Councils and VCAT could be put under even greater pressure.

In light of the above, it is foreseeable that parties may want to 'contract out' of the new statutory process and/or rights to review. For example, it may be desirable to include in a section 173 agreement a timeframe within which the responsible authority will make its initial in principle decision, and/or a mechanism for dispute settlement as an alternative option to VCAT.

Given the character of a section 173 agreement as both a statutory and common law instrument, some challenging questions arise. Could such provisions be enforced? Would a provision seeking to oust statutory rights for review be seen as oppressive? Assuming they could be enforced, how would this occur? In particular, would Supreme Court action be necessary and how would this interact with the statutory review or enforcement processes in VCAT?

There are no black and white answers to these questions, because so much depends on the circumstances in each case. But these issues should be borne in mind in drafting section 173 agreements, because there is a chance that the new statutory provisions will cause a few surprises.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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