Applicant v Second Respondent

1 This is an application brought pursuant to s 148(1) of the Victorian Civil and Administrative Tribunal Act 1998 and Order 4 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008 for leave to appeal and, if leave is granted, to appeal the orders of the Victorian Civil and Administrative Tribunal (the 'Tribunal') made on 2 May 2017 in proceeding numbers P2542 & P2673 (together, the 'VCAT Proceedings').

2 The application is brought by TPSC Pty Ltd ('TPSC'), the owner of land at 171-181 Nepean Highway, Mentone (the 'TPSC Land').

3 The VCAT Proceedings involved the grant of a planning permit to the second respondent, Bonleaf Pty Ltd ('Bonleaf'), to use and develop land at 165-169 Nepean Highway and 8-10 Lower Dandenong Road, Mentone (the 'Bonleaf Land') for the purposes of a mixed-use development.[1] There were five proceedings between TPSC and Bonleaf before the Tribunal,[2] four of them applications by TPSC, but only two of those decisions are now before this Court. Bonleaf's planning permit application sought to develop its land more intensively than an earlier proposal which had formed part of the context of Amendment C81 to the Kingston Planning Scheme in 2009. The application for a permit was opposed by TPSC, the adjoining landowner and developer of the Thrift Park Shopping Centre.

4 The VCAT Proceedings involved the interpretation of Agreement AH049451J made pursuant to s 173 of the Planning and Environment Act 1987 (the 'PE Act') (the 's 173 Agreement'). The primary issues in contention were the access to the Bonleaf Land via the TPSC Land and the provision of shared car parking both on the planning merits and in the context of the s 173 Agreement.

5 The Kingston City Council (the 'Council'), the first respondent, is the responsible authority under the PE Act and a party to the s 173 Agreement. The Council did not take an active part in this proceeding but advised it would abide the decision of this Court.

6 The Roads Corporation, the third respondent, is also a party to the s 173 Agreement. The Roads Corporation did not take an active part in this proceeding but advised it would abide the decision of this Court.

7 At the time of this hearing, the applicable principles guiding a decision to grant leave to appeal were those considerations set out in Department of Premier and Cabinet v Hulls.[3] In particular, that an applicant must identify a question of law 'which is important to the appeal's succeeding or failing'[4] and the decision below must be 'attended by sufficient doubt to justify the grant of leave'.[5]

8 The question of law involved in the application for leave, and the appeal, is the proper construction of the s 173 Agreement and consequently the power to grant a permit for the Bonleaf Land in the form sought by Bonleaf.

9 I am satisfied that TPSC has made out a sufficient case for the grant of leave. The question of construction of the s 173 Agreement is clearly a question of law and one which is potentially capable of a construction in the manner which TPSC contends and, if that construction were accepted, it would be important to the success of the appeal. However, for the reasons which follow, I do not accept that the Tribunal was in error in its construction of the s 173 Agreement, nor in its application of the s 173 Agreement to the proposal before the Tribunal.

10 The Bonleaf Land and the TPSC Land collectively comprises most of the neighbourhood activity centre known as the Thrift Park Shopping Centre.

11 In 2008, Fabcot Pty Ltd ('Fabcot') (the predecessor in title to TPSC) and Bonleaf jointly proposed to the Council a scheme for the integrated development of the Thrift Park Shopping Centre as a Neighbourhood Activity Centre. Amendment C81 to the Kingston Planning Scheme was a combined planning scheme amendment and permit application process.[6] Amendment C81 rezoned land from Business 4 Zone to Business 1 Zone (what is now Commercial 1 Zone) and introduced a Design Development Overlay (Schedule 20) to the Thrift Park Neighbourhood Activity Centre. Concurrently, pursuant to s 96A the PE Act, Fabcot applied for a permit to develop the TPSC Land for a supermarket, specialist retail tenancies and ground-level car parking and Bonleaf applied for a permit to develop the Bonleaf Land for two mixed-use buildings, including forty residential dwellings and some aboveground car parking.[7]

12 The s 173 Agreement was entered into by the Council, Fabcot, Bonleaf and the Roads Corporation on 26 October 2009.[8]

13 On 18 November 2009, Amendment C81 was approved and became part of the Kingston Planning Scheme. On 9 December 2009, permits were issued for the TPSC Land and for the Bonleaf Land, being planning permit KP375/08 (the 'TPSC Permit') and planning permit KP374/08 (the '2008 Bonleaf Permit') respectively.

14 The Thrift Park Shopping Centre was built on the TPSC Land pursuant to the TPSC Permit. However, Bonleaf did not act on the 2008 Bonleaf Permit. No plans were ever endorsed under the 2008 Bonleaf Permit and the 2008 Bonleaf Permit has now expired.

15 Amendment C81, the TPSC Permit and the 2008 Bonleaf Permit required a s 173 agreement pursuant to the PE Act to be entered into to provide for appropriate contributions towards the signalised intersection of access from the Nepean Highway, the planning of integrated vehicle and pedestrian access arrangements, shared car parking and some other cost sharing matters.

16 In 2014, Bonleaf applied for another permit to develop the Bonleaf Land for a mixed-use development, including approximately 240 apartments in two buildings. One building proposed three levels of car parking underground, ground floor retail and commercial uses and seven levels of residential apartments above the ground floor. The second building proposed to have a bottle shop on the ground floor, a medical centre on first floor and six levels of residential apartments. By the orders made by the Tribunal on 2 May 2017 in the VCAT Proceedings, the 2014 Bonleaf Permit was granted to Bonleaf.

17 The key differences between the 2014 Bonleaf Permit and the earlier 2008 Bonleaf Permit are:

(a) a more intense form of development in terms of height, scale and overall number of dwellings;

(b) an increase in the intensity of use and amount of commercial floor space; and

(c) no provision of ground-level car parking instead, all car parking is proposed to be underground.

18 TPSC argued before the Tribunal that these differences were material, primarily due to the combined effect of the changes on car parking and because ground-level parking is more attractive to patrons. TPSC argued that provision of underground car parking would be less convenient to patrons of the Thrift Park supermarket and retail stores located on the TPSC Land, which would be detrimental to TPSC's interests. TPSC sought to be released from its obligations under the s 173 Agreement with respect to shared car parking and the access provision over the TPSC Land. TPSC opposed the grant of the 2014 Bonleaf Permit, both as an objector to the permit application before the Council and on appeal to the Tribunal.

19 The s 173 Agreement provided for, inter alia, the joint development of the Thrift Park Activity Centre, shared parking and access arrangements between the Bonleaf Land and the TPSC Land, payment for traffic infrastructure, restrictions on the leasable floor area applicable to the Bonleaf Land and some other cost sharing matters.

20 The 'Background' to the s 173 Agreement is set out in some detail in the agreement. The relevant recitals of the s 173 Agreement in the 'Background' section are as follows:

1. Council, in its capacity as Planning Authority for the Planning Scheme, has prepared Amendment C81 to the Planning Scheme (the Amendment) at the request of Fabcot and Bonleaf. When approved, the Amendment will, amongst other things:

• rezone part of the Fabcot Land and the Bonleaf Land from Business 4 Zone to Business 1 Zone;

• apply the Design and Development Overlay to the Fabcot Land and the Bonleaf Land; and

1. Concurrently with the Amendment, Fabcot and Bonleaf have each lodged an application for a planning permit pursuant to section 96A of the Act.

1. The parties have agreed to enter into this Agreement to:

L.1 provide for:

• arrangements in relation to the future construction, use and ongoing maintenance of the car parking and access roads and paving areas beyond the boundaries of the Fabcot land and Bonleaf land;

• the construction and funding of new access arrangements (including traffic signalisation devices) to the Bonleaf Land and Fabcot Land from the Nepean Highway;

• payment of appropriate monetary contributions from each of Bonleaf and Fabcot towards local road works to be carried out by Council in Long street;

• integrated vehicular and pedestrian access arrangements between the Bonleaf Land and Fabcot Land;

...

• shared car parking arrangements on both the Bonleaf Land and the Fabcot Land; and

L.2 achieve and advance the objectives of planning in Victoria and the objectives of the Planning Scheme in respect of the Fabcot Land and the Bonleaf Land.

L.3 give effect to the requirements of the planning permits referred to in introductory clauses F and G above.

21 Clause F of the 'Background' referred to the TPSC Permit application number KP375/08 and clause G referred to the 2008 Bonleaf Permit application number KP374/08.[9]

22 Many terms in the s 173 Agreement were defined in the 'Definitions' at clause 1. These include:

Activity Centre Land means the Fabcot Land and the Bonleaf Land.

Development means the construction of a building and the carrying out of works pursuant to any planning permit issued by Council in respect of either the Bonleaf Land or the Fabcot Land including but not limited to the construction of buildings and works depicted in the plans endorsed under planning permit numbers KP375/08 or KP374/08 (Planning Permits).

Developer means Fabcot and Bonleaf.

(citation omitted)

23 Interpretation of the s 173 Agreement, set out in clause 2, provides:

In this Agreement unless the context admits otherwise:

....

2.8 The obligations of Fabcot under this Agreement, will take effect as separate and several covenants which are annexed to and run at law and equity with the Fabcot Land until the Agreement ends.

2.9 The obligations of Bonleaf under this Agreement, will take effect as separate and several covenants which are annexed to and run at law and equity with the Bonleaf Land until the Agreement ends.

24 In relation to car parking arrangements, clause 5 provides:

5.1 The parties agree that upon the completion of Development of the Fabcot Land under planning permit number KP375/08 Fabcot must make all car parking spaces available at all times to the general public including any visitors to the Bonleaf Land unless Fabcot obtains the prior written consent of Council, which consent may be withheld in Council's absolute discretion.

5.2 The parties agree that upon the completion of Development of the Bonleaf Land under planning permit number KP374/08 Bonleaf must make all car parking spaces other than Resident Parking Spaces and Tenant Parking Spaces available at all times to the general public including any visitors to the Fabcot Land unless Bonleaf obtains the prior written consent of Council, which consent may be withheld in Council's absolute discretion

25 In relation to the development of the TPSC Land and Bonleaf Land, clause 9 provides:

9.1 Other than for the current use for which existing use rights apply, subject to this clause 9.2 and 9.3 of this Agreement regardless of any rights conferred by the Planning Scheme or the Act, the use and development of the Activity Centre Land must be generally in accordance with the use and development depicted in the plans endorsed under planning permit numbers KP375/08 and KP374/08 (Planning Permits) whether or not the Planning Permits have expired, for a period of 7 years.

9.2 Council may consent to a change to the development as required to be maintained under clause 9.1 of this Agreement where Council is satisfied that:

9.2.1 any changes to the buildings are of high urban design standards;

9.2.2 the changes do not materially increase the total leasable floor area in the opinion of Council; and

9.2.3 development will not increase the car parking requirements.

9.3 Notwithstanding clause 9.1 and 9.2 of this Agreement but subject to clause 10.1, any part of the Activity Centre Land and the buildings constructed on the Activity Centre Land may be used for an alternative use specified in section 1 of the Business 1 zone provided any other requirements of the Planning Scheme and this Agreement are met.

26 In relation to leasable floor area, clause 10 provides:

1. Restriction on leasable floor area for shop

10.1 The combined leasable floor area for all Shops on the Bonleaf Land must not exceed 3,000 square metres unless Council agrees. The leasable floor area of any Shop on the Bonleaf land must not exceed 1,400 square metres unless Council agrees.

27 In relation to ending the s 173 Agreement, clause 21 provides:

21.1 This Agreement ends upon the earlier of:

21.1.1 in relation to the Bonleaf land, the owner of the Bonleaf Land for the time being and Council agreeing to end this Agreement or any part of it;

21.1.2 in relation to the Fabcot Land, the owner of the Fabcot land for the time being and Council agreeing to end this Agreement or any part of it;

provided that alternative arrangements are first put into place to the satisfaction of Council in respect of the obligations in clauses 4.1, 5.1, 5.2, 14 and 15.3.1 of this Agreement and provided that the obligations of the relevant Developer as set out in clauses 12[10] and 14.4[11] have been satisfied.[12]

21.1.3 the date the Amendment lapses; and

21.1.4 when the parties mutually agree that this Agreement is at an end.[13]

....

(citations added)

28 In dealing with the proceedings before it, the Tribunal dealt first with the planning merits of the proposal raised in the review of the decision to grant the 2014 Bonleaf Permit[14] and the conditions review.[15] It concluded on the planning merits that the proposal be approved and the 2014 Bonleaf Permit be granted, but with some modifications.[16]

29 The Tribunal accepted, despite the submissions made on behalf of TPSC to the contrary, that locating car parking spaces in the basement as proposed by the 2014 Bonleaf Permit would provide adequate and convenient parking for those wishing to utilise the retail and commercial premises on the site as well as visitor parking for the residential uses.[17] The Tribunal was of the view that patrons wishing to use the services available within the development as a whole would take advantage of the availability of car parking within the basement levels.[18]

30 The Tribunal observed in relation to the difference in the car parking arrangement now proposed:

We believe that given the ease of parking within the basement, patrons visiting the activity centre will utilise the basement car parking area and that parking availability will be viewed by patrons in a holistic manner, just as one may expect it to be in an activity centre.

We further note that the parking arrangement in this proposal is not dissimilar to that shown in the previous Bonleaf permit for the Bonleaf land. We note the pedestrian linkage location is similar. Whilst we accept the Bonleaf permit plans were never endorsed, the permit application plans show the basement level being slightly below the equivalent of the TPSC land at the southern entry to the car park, however because the TPSC land rises to the north, the Bonleaf carpark is essentially 3 m below the TPSC land adjoining the northern part of the site near the Lower Dandenong Road abuttal.[19]

31 The Tribunal accepted that the s 173 Agreement was relevant to its decision whether to grant a permit. Correctly, this approach was not challenged in this proceeding by either party.[20]

32 In interpreting the s 173 Agreement, the Tribunal found that regard must be had to the overall intent and purpose of the s 173 Agreement; this includes the introductory causes of the s 173 Agreement, which clause 2.7 provides will be deemed to form part of the agreement. The Tribunal noted that the introductory clauses to the s 173 Agreement set out in detail the background to Amendment C81 and the two permit applications as well as the purpose of the agreement. In particular, the Tribunal noted that the purposes of the s 173 Agreement included:

(a) integrated vehicle and pedestrian access arrangements between the Bonleaf Land and the TPSC Land; and

(b) shared car parking arrangements on both the Bonleaf Land and the TPSC Land.[21]

33 The Tribunal found that the position advanced by TPSC of seeking to remove its obligation to provide vehicle and pedestrian access through its land to the Bonleaf Land under clause 4, or to release it from its obligations to make available TPSC's car parking spaces to the general public, including visitors to the Bonleaf Land pursuant to clause 5.1, was incompatible with the overall purpose and intent of the s 173 Agreement.

34 The Tribunal found that the fundamental principle underlying the s 173 Agreement was that the Bonleaf Land and the TPSC Land would be redeveloped in an integrated way, including vehicle and pedestrian access arrangements and shared car parking arrangements. At the time the s 173 Agreement was entered into, it was contemplated that this redevelopment would take place generally in accordance with the design and layout shown on the plans for the TPSC Permit application and the 2008 Bonleaf Permit application.[22]

35 The Tribunal interpreted clause 9 to mean that for a period of seven years both the TPSC Land and the Bonleaf Land could only be used or developed generally in accordance with the plans contemplated by the parties in 2008, whether or not the planning permit had expired. In other words, it considered that the Bonleaf Land could not have been used or developed in accordance with the 2014 Bonleaf Permit application prior to 26 October 2016. Prior to this date, the Council could have consented to a change to the development subject to certain criteria. Also, pursuant to clause 9.3 of the s 173 Agreement but subject to the restriction in clause 10 ('restriction on leasable floor area for shop'), the Bonleaf Land could be used for any alternative use specified in section 1 of the Business 1 Zone subject to the requirements of the Kingston Planning Scheme and the s 173 Agreement.

36 The Tribunal supported this interpretation by reference to the definition of 'Development' in the s 173 Agreement.[23] The Tribunal found that development (for the purpose of the s 173 Agreement) is not limited to the development approved under the TPSC Permit or 2008 Bonleaf Permit, and that therefore it was open to Bonleaf to use or develop the Bonleaf Land for something quite different to that contemplated in the original 2008 Bonleaf Permit as long as the other requirements set out in the s 173 Agreement of an ongoing nature were met.

37 Those requirements of an ongoing nature in the s 173 Agreement were noted to be:

(a) a restriction on the leasable floor area for shops as set out in clause 10;

(b) integrated vehicle and pedestrian access arrangements must be generally in accordance with the access arrangements associated with the 2008 Bonleaf Permit as required by clause 4;

(c) car parking on the Bonleaf Land and the TPSC Land must be shared and available to visitors to the Bonleaf Land, the TPSC Land and the general public as required by clause 5; and

(d) loading or unloading of trucks on the Bonleaf Land is restricted to trucks not exceeding 12.5 m in length without consent of the Council as required by clause 8.

38 The Tribunal considered the proposed 2014 Bonleaf Permit for the Bonleaf Land would continue to meet those requirements.[24]

39 The Tribunal also found that despite no permit plans ever being approved pursuant to the 2008 Bonleaf Permit, this did not detract from TPSC's obligation to provide access through the TPSC Land to the Bonleaf Land, as the requirements for integrated vehicular and pedestrian access as proposed met the intent and purpose of the s 173 Agreement.[25]

40 With respect to integrated vehicle and pedestrian access arrangements, the Tribunal noted that the 2008 Bonleaf Permit application plan showed that car parking access to the Bonleaf Land would be created approximately in the same position as those in the 2014 Bonleaf Permit application plans. The Tribunal found that there was no difference between the proposed vehicle and pedestrian access arrangements between the 2008 plans and the current (2014) plans in terms of location of access points or access ways over the TPSC Land.[26]

41 The main difference argued by TPSC was that in the 2008 Bonleaf Permit plans, the car parking was shown as being provided on two levels at basement level and at the ground floor level, compared with the currently proposed parking arrangements which would be in three basement level car parks. The Tribunal rejected the TPSC argument that the car parking spaces provided at ground level are more attractive than car parking spaces provided in a basement. The Tribunal noted that TPSC appeared to be of the erroneous belief that the car parking on the Bonleaf Land in accordance with the 2008 Bonleaf Permit plans would provide more convenient car parking that was more accessible by pedestrians using the supermarket on the TPSC Land than was currently proposed (in the 2014 Bonleaf Permit). No evidence was provided by TPSC to substantiate the assertion.

42 The Tribunal's examination of the 2008 Bonleaf Permit and TPSC Permit plans did not support the proposition advanced by TPSC of ground level connectivity. The Tribunal found there was limited direct connectivity due to the change of grade over the respective parties' land, the proposed design of the Bonleaf building and by a landscape strip planted with trees between the two sites. The Tribunal acknowledged that whilst the plans were conceptual, the plans illustrated that the difference in levels and the design of the ground floor of the 2008 Bonleaf Permit plans meant that the car park would be at least at a semi- basement level by comparison to the TPSC Land and the car park would not be visible as a car park from the TPSC Land.[27]

43 Pursuant to ss 60(1A)(i) and 84B of the PE Act, the Tribunal had regard to the s 173 Agreement as it considered the circumstances required the Tribunal to do so. It was not persuaded by the interpretation of the s 173 Agreement as advanced by TPSC. The Tribunal concluded that the 2014 Bonleaf Permit application was not contrary to the s 173 Agreement[28] and that the proposal would support the purpose and intent of the s 173 Agreement.[29]

44 The questions of law identified in the proposed notice of appeal which were argued were as follows:

(a) the construction and effect of the s 173 Agreement. In particular, whether it was open to conclude on the proper construction of the agreement that:

(i) the use or development of the Bonleaf Land could be 'for something quite different' to that contemplated in the 2008 Bonleaf Permit;

(ii) a permit for the development or use of the Bonleaf Land could be granted although the development or use did not include provision for car parking spaces for visitors to the TPSC Land generally in accordance with the plans endorsed under the 2008 Bonleaf Permit;

(iii) TPSC was required to make car parking spaces depicted on the plans endorsed under the TPSC Permit available to occupiers and visitors of the Bonleaf Land;

(iv) TPSC was required to provide to occupiers and visitors to the Bonleaf Land free and unimpeded access over the TPSC land in accordance with the access arrangement on the plans endorsed under the 2008 Bonleaf Permit;

(v) the 2014 Bonleaf Permit was substantially in accordance or consistent with the s 173 Agreement; and

(b) whether the Tribunal was obliged to direct that the 2014 Bonleaf Permit not be granted.

45 TPSC accepted that although a s 173 agreement must be taken into account by the Tribunal where appropriate pursuant to ss 60(1A)(i) and 84B(2)(h) of the PE Act,[30] this did not preclude the Tribunal from granting a permit that was inconsistent with a s 173 agreement.

46 However, TPSC argued that the critical error made by the Tribunal was finding that the grant of the 2014 Bonleaf Permit was supported by s 173 Agreement. TPSC said that the Tribunal made this error because it misconstrued the s 173 Agreement, in particular clauses 4, 5, 9 and 21.

47 TPSC contended that the Tribunal erred in law in its construction of the s 173 Agreement and then having departed from the proper construction, the Tribunal necessarily erred in its application to the proposal.

48 In essence, TPSC contends that on a proper construction of the s 173 Agreement, Bonleaf can only develop its land generally in accordance with the 2008 Bonleaf Permit and in no other form, TPSC having acted on the TPSC Permit. TPSC argued that as the 2014 Bonleaf Permit was different in many respects, in particular, the level of intensity, number of apartments and the location of car parking in the basement, the proposed development was not generally in accordance with the 2008 Bonleaf Permit.

49 TPSC submitted that there were two key construction errors relating to the obligations arising from clauses 5 and 9 of the s 173 Agreement.

50 For the reasons which follow, I do not accept that the Tribunal misconstrued the s 173 Agreement nor misapplied it to the proposal before it.

Principles of Interpretation Applicable to a s 173 Agreement

51 The principles of construction of a contract according to legal principles are conveniently set out in the High Court decision of Mount Bruce Mining Pty Ltd v Wright:

The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.

Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations.

Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption "that the parties ... intended to produce a commercial result". Put another way, a commercial contract should be construed so as to avoid it "making commercial nonsense or working commercial inconvenience".

These observations are not intended to state any departure from the law as set out in Codelfa Construction Pty Ltd v State Rail Authority (NSW) and Electricity Generation Corporation v Woodside Energy Ltd. We agree with the observations of Kiefel and Keane JJ with respect to Western Export Services Inc v Jireh International Pty Ltd.[31]

52 The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context including the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract, and purpose.

53 In construing the s 173 Agreement, the fact that the agreement was based in, and arose from, the power to enter into such agreements pursuant to ss 173 and 174 of the PE Act is an important consideration. The statutory framework for s 173 agreements forms part of the context in which the agreements are made and informs its construction as well as potentially dictating its operation.[32] A s 173 agreement plays an important role as one of a number of instruments available for achieving the objectives of planning in Victoria. The planning objectives of the PE Act are sought to be achieved by a s 173 agreement, like planning permits under a scheme, and the scheme itself.[33]

54 The s 173 Agreement is not one which can be properly said to be one which is entirely of a private commercial intent and benefit. The s 173 Agreement is an agreement which arose from the provisions of the PE Act,[34] within the framework of an amendment to the Kingston Planning Scheme, and the expectations of the Council that certain planning outcomes would be achieved. The s 173 Agreement was also for the mutual benefit of the parties.

55 Consequently, an interpretation which does not bear in mind the enduring planning considerations embedded in the s 173 Agreement for the provision of traffic infrastructure, shared access arrangements and shared car parking considerations would not be consistent with the construction principles.

56 The 'Background' set out in the s 173 Agreement records the fact that the Council is the Responsible Authority under the Kingston Planning Scheme and also the Planning Authority pursuant to the PE Act for the purposes of Amendment C81. It records that the Council has prepared Amendment C81 which, when approved, will amongst other things, rezone the TPSC Land and the Bonleaf Land and apply a Design and Development Overlay (Schedule 20) to the parties' land.

57 L.1 of the 'Background' sets out the arrangements in relation to the future construction, use and ongoing maintenance of the car park and access roads and the paving areas beyond the boundaries of the TPSC Land and the Bonleaf Land, the construction and funding of new access arrangements, including traffic signalisation devices to the Bonleaf Land and the TPSC Land from the Nepean Highway, monetary contributions towards local roadworks, integrated vehicle and pedestrian access arrangements and shared car parking arrangements on both the Bonleaf Land and TPSC Land.

58 L.2 notes the achievement of advancement of the objectives of planning in Victoria and the objectives of the planning scheme are also part of the agreement.

59 L.3 refers to giving effect to the requirements of the proposed planning permits referred to in F and G of the 'Background' of the s 173 Agreement.

60 Under clause 2.7 of the s 173 Agreement, the introductory clauses are deemed to be part of the s 173 Agreement.

61 The s 173 Agreement does not provide that the use and development of the TPSC Land and the Bonleaf Land be constrained entirely by the proposed form of use and development represented by the TPSC Permit and 2008 Bonleaf Permit. This is clear by reference to the following provisions:

(a) clause 4.1 provides that the access arrangements depicted on any plans approved pursuant to planning permit number KP 374/08 and otherwise to the satisfaction of VicRoads and Council;

(b) clause 5.1 and 5.2 provide for the car parking spaces being available at all times unless 'prior written consent of Council' is obtained;

(c) clause 9.1 which, subject to clauses 9.2 and 9.3, requires the development to be generally in accordance with the use and development depicted in the plans endorsed under permit numbers KP 375/08 and KP 374/08 for a period of seven years;

(d) clause 9.2 which provides that on certain conditions 'Council may consent to a change to the development as required to be maintained under clause 9.1';

(e) clause 9.3 provides that, notwithstanding clauses 9.1 and 9.2 but subject to clause 10, 'any part of the Activity Centre Land' .... 'may be used for an alternative use specified in section 1 of the Business 1 zone provided any other requirements of the Planning Scheme and this Agreement are met'; and

(f) 'Development' is defined to include not only the development represented by the TPSC Permit plans and 2008 Bonleaf Permit plans but construction and works carried out pursuant to any planning permit issued by the Council in respect of the Bonleaf Land or TPSC Land.

62 The overall intent and purpose of the s 173 Agreement is that the Bonleaf Land and TPSC Land would be redeveloped in an integrated way. Therefore, given the overall intent and purpose of the s 173 Agreement and the specific terms as set out above, I do not accept that the form of the use and development on the Bonleaf land after 26 October 2016 must only be in the form proposed in the 2008 Bonleaf Permit plans.

63 In any event, I accept the Tribunal's factual assessment of the comparison of the conceptual plans which accompanied the 2008 Bonleaf Permit application with the 2014 Bonleaf Permit proposal and the Tribunal's conclusion that with respect to the specific clauses dealing with integrated pedestrian and vehicle access (clause 4) and shared car parking (clause 5), that Bonleaf's 2014 proposal was generally in accordance with Bonleaf's 2008 proposal in those respects.

64 As I have already noted, the Tribunal found as a matter of fact that the concept plans which accompanied the 2008 Bonleaf Permit application did not provide for ground-level car parking in the manner alleged by TPSC. Further, the Tribunal found on its assessment that car parking as proposed in the 2014 Bonleaf Permit application was appropriate and suitable to achieve the planning objectives relevant to the application and was not inconsistent with the intent of the shared car parking arrangements pursuant to clause 5 of the s 173 Agreement. These are factual findings and the planning merits assessment effectively deals with the underlying complaint of TPSC in respect of the obligation of shared car parking arrangements.

65 In addition, it is also my opinion that, for the reasons already set out at paragraphs 62 to 63, after 26 October 2016 there is no obligation by reason of clause 9 of the s 173 Agreement that the development of the Bonleaf Land must be in precisely the terms proposed by the 2008 Bonleaf Permit.

66 As stated, I do not accept a construction which imposes a limitation that the car parking spaces must be provided as depicted on the endorsed plans that were to be in accordance with the plans submitted with the 2008 Bonleaf Permit application.

67 Clause 5.2 refers to the requirement for the car parking on Bonleaf's land to be provided 'upon the completion of Development of the Bonleaf land under planning permit number KP374/08'. No development ever occurred under that permit. No plans were ever submitted pursuant to that permit application for endorsement and that permit has lapsed.

68 Clause 5.2 addresses what is to occur upon the completion of development on the Bonleaf Land. The clause does not address how the completion is to occur. The clause addresses the sharing of car parking after the 'Development' is completed. Clause 5 uses the term 'Development', the defined term in the s 173 Agreement. The 'Development' proposed may be consistent with the plans which accompanied the 2008 Bonleaf Permit application or some other plans for development on account of the broad definition of 'Development' being construction and works carried out pursuant to any planning permit issued by the Council in respect of the Bonleaf Land or TPSC Land.

69 More than seven years have elapsed since the s 173 Agreement was entered into and, as a consequence, any limitation on the form of the development being tied to the proposed plans associated with the 2008 Bonleaf Permit has lapsed.

70 Clause 5 does not address the design or location of car parking spaces explicitly. It is directed to the sharing of car parking spaces. There is no limitation in the s 173 Agreement which requires any car parking constructed on the Bonleaf Land to be provided at ground level. L.1 of the 'Background' refers to 'integrated vehicle and pedestrian access arrangements between the Bonleaf Land and ... [TPSC] Land' and 'shared car parking arrangements on both the Bonleaf Land and the ... [TPSC] Land', but it does not prescribe by clause 5, or in any other clause within the s 173 Agreement, that the car parking must be at ground level.

71 To form a view consistent with TPSC's construction requires additional words to be read into clause 5 of the s 173 Agreement. Clause 5 does not require the car parking to be provided 'as depicted on the endorsed plans that were to be generally in accordance with the plans submitted with the 2008 Bonleaf Permit application' as TPSC argued.[35]

72 I do not accept that it is necessary for the Tribunal to rely on this interpretation of consent by the Council and the interpretation of clause 5.2. As previously expressed, I do not accept the restrictive interpretation argued by TPSC.

73 TPSC's construction of clause 5.2 is inconsistent with the terms and purpose of the s 173 Agreement because clause 9 of the agreement contemplates that development may occur under a permit other than the 2008 Bonleaf Permit.

74 TPSC argued that even if the s 173 Agreement was brought to an end by consent, alternative arrangements were still required to be made for the parking obligation pursuant to clause 21 of the s 173 Agreement. It was submitted that this was because each parcel of land was dependent upon the existence of the parking rights over the other parcel of land. TPSC contended that it was at least implicitly accepted by the Tribunal that the Bonleaf proposed development was inconsistent with its obligations under clause 5.2 as the Tribunal found that the Council had given its consent to modify Bonleaf's obligation under clause 5.2 by the issuing the Notice of Decision ('NOD').[36]

75 The process for the Council giving consent to change the obligation imposed was said to be flawed because this could not be done merely by issuing a NOD as a result of a planning permit application. TPSC argued that it would be disadvantaged and that it would have been necessary for the Council to give notice to it and give TPSC an opportunity to participate in that decision-making process. TPSC argued that nothing in the material before the Tribunal suggested that when the Council granted the NOD, the Council turned its mind to the modification of clause 5.2 and that there can be no accidental modification.[37]

76 The Tribunal found that this consent requirement was satisfied by the Council's grant of the 2014 Bonleaf Permit.[38] Insofar as it is necessary to rely on this part of clause 5, I accept that the NOD provides the consent. I have concluded this because:

(a) there is no doubt that the Council (and the Tribunal on review) was aware of the terms of the s 173 Agreement;

(b) TPSC participated in the planning permit application process as an objector (and the Tribunal on review) and raised the issue of the shared car parking arrangement as well as other matters directly arising from the s 173 Agreement;

(c) the Council made an assessment of the adequacy of the car parking provision, as did the Tribunal, and was satisfied as to the adequacy of the car parking arrangements and consistency with the s 173 Agreement on the facts;

(d) no form or process for consent is provided for in the s 173 Agreement; and

77 Consequently, I do not agree that this contention is valid and insofar as it is necessary for the NOD to stand as consent by the Council under clause 5 or 21, I accept that it is such a consent.

78 TPSC challenged the finding made by the Tribunal that under the s 173 Agreement, Bonleaf was entitled to develop the Bonleaf Land in a way that was 'quite different' from the development contemplated in the 2008 Bonleaf Permit.

79 TPSC argued that on its proper construction, clause 9.1 operated in the following way:

(a) any development must be 'generally in accordance with' the plans provided to the Council with the applications for the 2008 Bonleaf Permit and the TPSC Permit;

(b) if, and only if, neither development proceeds within seven years of the making of the s 173 Agreement then both Bonleaf and TPSC are free to develop the Bonleaf Land and TPSC Land in any manner they see fit (subject to obtaining appropriate permits); and

(c) if any one of Bonleaf or TPSC carries out its development in accordance with its permit, then the obligation on the other party remains in force.[39]

80 TPSC argued that this construction is required as a matter of commercial common sense and to give efficacy to the s 173 Agreement, the purpose of which was to provide for the integrated development of the Thrift Park Activity Centre as confirmed by the recitals.[40]

81 Reliance was also placed on clause 21 to support this argument. Clause 21 provides that upon the termination of the s 173 Agreement in respect of one parcel of land, certain obligations must remain in place including pedestrian and vehicle access (clause 4.1), car parking (clause 5) and the funding of traffic works to give effect to the integrated development (clause 14).[41]

82 TPSC argued that it would be inconsistent with clause 21 if the obligations to carry out a development in accordance with the existing plans had come to an end.[42] TPSC argued that the Tribunal's reading down of clause 9.1 so as to exclude obligations such as those found in clauses 4, 5 and 10 does not work because those clauses are tied to the original plans, the original 2008 Bonleaf Permit and the TPSC Permit.

83 I do not accept the above reasoning. For the reasons I have already stated, I do not accept that the proper construction of the s 173 Agreement (as a whole) and the key provisions lead to the conclusion that the only form of development that could be approved by a permit was limited to the form of development in the 2008 Bonleaf Permit application.

84 I agree with the Tribunal where it stated that even though there were no plans endorsed or approved under the 2008 Bonleaf Permit, the s 173 Agreement contemplated that development could occur under a different permit.[43]

85 The Tribunal's findings were directed to the fact that development could no longer occur under the 2008 Bonleaf Permit, there having been no plans endorsed under that permit prior to its expiry. The Tribunal found in its merits assessment that the car parking arrangements in the current Bonleaf proposal were not dissimilar to the 2008 Bonleaf Permit plans.[44]

86 Clause 9.1 makes clear that the obligation to use and develop the land in accordance with plans endorsed on the 2008 Bonleaf Permit is for a period of seven years. After that, a different form of development may ensue.[45]

87 I find that there was no error in the Tribunal's interpretation of clause 9, being that after 26 October 2016, both the Bonleaf Land and the TPSC Land may be used or developed for other purposes or in other ways provided that any other requirements of the Kingston Planning Scheme and the s 173 Agreement are met. [46]

88 In conclusion, I do not accept the construction and effect of the s 173 Agreement as argued by TPSC.

89 It was open to the Tribunal to conclude, on the proper construction of the s 173 Agreement, that the use or development of the Bonleaf Land could be 'for something quite different' to that contemplated in the 2008 Bonleaf Permit as long as the obligations of an ongoing nature specifically set out in the s 173 Agreement were met. These ongoing obligations include the integrated vehicle and pedestrian access arrangements associated with the Bonleaf permit as required by clause 4, the sharing of car parking on the Bonleaf Land and the TPSC Land to be made available to visitors of the respective parties and the general public pursuant to clause 5 and the restriction on leasable floor area as set out in clause 10.[47]

90 Having properly construed the terms of the s 173 Agreement and having properly applied those terms with respect to access and car parking arrangements, the Tribunal correctly found that the requirements of shared car parking and access were generally consistent with the 2008 Bonleaf Permit. In these circumstances, the Tribunal was not obliged to direct that the 2014 Bonleaf Permit be refused.

[1] TPSC Pty Ltd v Kingston CC [2016] VCAT 1221 (8 August 2016).

[2] P2542/2015 application under s 82 of the Planning and Environment Act 1987 ('PE Act') by TPSC to review the decision to grant a permit; P2673/2015 application under s 80 of the PE Act by Bonleaf to review conditions in a permit; P636/2016 application under s 149A of the PE Act by TPSC for declarations about the expiry of a s 173 agreement; P817/2016 application under s 149B of the PE Act by TPSC for a declaration concerning an in-principle agreement pursuant to s 178A(1) of the PE Act and P818/2016 application under s 149(1)(b) of the PE Act by TPSC to review a failure to consent to a request under a s 173 agreement.

[3] [1999] VSCA 117; [1999] 3 VR 331, 335-337 [8]-[17].

[5] Ibid 336 [12]. On 1 May 2018, s 148 of the Victorian Civil and Administrative Tribunal Act 1998 was amended pursuant to s 31 of the Justice Legislation Amendment (Court Security, Juries and Other Matters) Act 2017, introducing a new test for applications for leave to appeal. However, this new test does not apply to the application made in this proceeding.

[7] In addition, some basement car parking was proposed.

[9] At the time of entering into the s 173 Agreement on 26 October 2009, neither the application of Bonleaf nor the application of Fabcot had been determined, but the planning permit applications had been lodged as part of the planning scheme amendment process within s 96A of the PE Act.

[10] Clause 12 of the s 173 Agreement deals with traffic works, which required the relevant developer to undertake various steps before starting the development on its part of the 'Activity Centre Land'.

[11] Clause 14.4 of the s 173 Agreement deals with obligations of the developer in respect of financing traffic works.

[12] Clause 15.3.1 of the s 173 Agreement deals with the requirement for the parties to pay the Council's costs associated with the s 173 Agreement.

[13] Irrelevant parts of cl 21 have been omitted.

[14] Application P2542/2015 brought pursuant to s 82 of the PE Act by TPSC.

[15] Application P2673/2015 brought pursuant to s 80 of the PE Act by Bonleaf.

[16] TPSC Pty Ltd v Kingston CC [2016] VCAT 1221 (8 August 2016), [8].

[21] TPSC Pty Ltd v Kingston CC [2016] VCAT 1221 (8 August 2016), [130].

[30] TPSC Pty Ltd, 'Applicant's Outline of Submissions', Submission in TPSC Pty Ltd v Kingston City Council, S CI 2017 02052, 7 March 2018, [27], [31]. See also Boroondara City Council v Sixty-Fifth Eternity Pty Ltd (2012) 188 LGERA 95, 108 [48]-[49].

[31] [2015] HCA 37; (2015) 256 CLR 104, 116-17 [46]-[52] (French CJ, Nettle and Gordon JJ) (citations omitted).

[32] Secretary to the Department of Economic Development, Jobs, Transport and Resources v MG Pastoral Company Pty Ltd (2016) 214 LGERA 413, 419 [22].

[33] Kameel Pty Ltd v Casey City Council [2005] VSC 23; (2005) 137 LGERA 202, 210 [25].

[34] The purpose of the PE Act, being set out at s 1, is to establish a framework for the use, development and protection of land in Victoria in the present and long-term interests of all Victorians. See also the objectives of planning in Victoria as set out in s 4 of the PE Act.

[35] TPSC Pty Ltd, 'Applicant's Outline of Submissions', Submission in TPSC Pty Ltd v Kingston City Council, S CI 2017 02052, 7 March 2018, [36].

[36] TPSC Pty Ltd v Kingston CC [2016] VCAT 1221 (8 August 2016), [156].

[37] TPSC Pty Ltd, 'Applicant's Outline of Submissions', Submission in TPSC Pty Ltd v Kingston City Council, S CI 2017 02052, 7 March 2018, [43], citing Australian Education Union v Department of Education and Children's Services (2012) 248 CLR 1, 16-17 [34].

[38] TPSC Pty Ltd v Kingston CC [2016] VCAT 1221 (8 August 2016), [150].

[39] TPSC Pty Ltd, 'Applicant's Outline of Submissions', Submission in TPSC Pty Ltd v Kingston City Council, S CI 2017 02052, 7 March 2018, [45].

[43] TPSC Pty Ltd v Kingston CC [2016] VCAT 1221 (8 August 2016), [136]-[137].

[45] Subject to the ongoing obligations set out in cl 9.3, as previously noted.

[46] TPSC Pty Ltd v Kingston CC [2016] VCAT 1221 (8 August 2016), [134].

[47] The ongoing obligations in the s 173 Agreement also include matters in cls 14 and 15.3.1 relating to financial contributions that are not relevant for the purpose of this proceeding.