1 The decision of the Responsible Authority is varied council regarding its requirements in respect of conditions 26 and 27 of permit130/04A to provide that the value of the construction of Linsell Boulevard Stage 2 (the section of road between the constructed Linsell Boulevard Stage 1, at Rochester Road, to Narre Warren-Cranbourne Road) and the construction of Linsell Boulevard and Narre-Warren-Cranbourne Road to a standard agreed between the applicant and the Responsible Authority in consultation with VicRoads is to be fully offset against present and future development contributions to be made by the applicant pursuant to the development contributions plan for Local Structure Plan 3 Cranbourne East.

2. The engineering plans Drawings 1342/21A2/1-16 for Linsell Boulevard Stage 2 submitted by the applicant to the Responsible Authority are approved.

Chris Wren SC and Marita Foley of Counsel, instructed by Phillips Fox. The called as witnesses:

• Rob Milner, Town Planner, Coomes Consulting Group Pty Ltd.

• Henry Turnbull, Traffic Engineer, Traffix Group Pty Ltd

1 This case concerns the operation of development contributions plans under the Planning and Environment Act 1987. A dispute has arisen between Casey City Council and a major land developer, Dennis Family Corporation, over whether the council's obligation to provide infrastructure for which levies are collected under a development contributions plan is restricted to the amount of funds in the development contributions plan account.

2 After examining the nature of development contributions plans and the responsibilities arising under them, we have found that the council must provide the infrastructure included in a development contributions plan irrespective of its cost or the amount of levies collected.

3 This is a case that is likely to have serious implications for the council because its development contributions pan is under funded and the amount of levies the plan will raise will not cover the cost of the infrastructure included in the plan. Nevertheless, this fact does not entitle the council to effectively "double dip" by collecting levies from developers and then making them provide infrastructure that the levies are supposed to fund. If developers are to provide infrastructure which is included in a development contributions plan, they are entitled to have the value offset against both present and future levies payable under the development contributions plan.

4 Cranbourne East is one of the major urban growth corridors of Melbourne. The applicant, Dennis Family Corporation, is a major land owner and developer in the area. The Hunt Club is a large residential and mixed use estate currently being developed by Dennis Family Corporation at Cranbourne East. The residential component of The Hunt Club Estate will ultimately result in more than 1600 households of varying densities and dwelling types. In addition, a commercial centre at the north west corner of the site, a retirement village, a school and a district sports ground are planned for the estate.

5 Residential development of the Hunt Club Estate is being undertaken in stages. Linsell Boulevard is a major east-west arterial road and is effectively the northern boundary of the Hunt Club Estate. Construction of part of Linsell Boulevard has occurred (stage 1 being the section between Rochester Parade and Broad Oak Drive) in accordance with previous planning permits. Eventually, Linsell Boulevard is planned to connect Narre Warren-Cranbourne Road to the west and Berwick-Cranbourne Road to the east.

6 This case is about development contributions. To fund the infrastructure required by this growth area, the council has approved a series of development contributions plans. A Development Contributions Plan Overlay applies to the Cranbourne East area and the development contributions plan for the Cranbourne East area is the Local Structure Plan 3 (LSP3) Cranbourne East Contributions Plan dating from 1999. Linsell Boulevard and the intersection of Linsell Boulevard with Narre Warren-Cranbourne Road are both items of infrastructure included in the development contributions plan to be funded 100% by the plan.

7 The dispute in this matter concerns construction of stage 2 of Linsell Boulevard (the section west of stage 1) and the intersection of Linsell Boulevard and Narre Warren Cranbourne Road. The dispute arises in the context of permit no. P130/04A which allows the subdivision of stages 27-33 (inclusive), 37, 38 and 40 of the Hunt Club Estate. Conditions 26 and 27 of the permit require that road and traffic works are to be "provided and constructed" to the satisfaction of the Responsible Authority.

8 Conditions 41 and 42 of the permit require payment of development contributions (levies) under the development contributions plan for the Cranbourne East area (Local Structure Plan 3 Cranbourne East Contributions Plan).

9 The extent of works required to satisfy conditions 26 and 27 has been the subject of considerable negotiations between the Dennis Family Corporation and council, those negotiations continuing right up to the first day of the hearing. Whilst the parties have been able to reach agreement about the standard of works in relation to the provision of infrastructure, they have been unable to agree on the appropriate allocation of the costs of the provision of that infrastructure.

10 Essentially, the council seeks to require Dennis Family Corporation to build the road intersection at its own expense and to pay levies under conditions 41 and 42 of the permit whilst reimbursing the cost of the works at 50% of the funding allocated in the development contributions plan. Dennis Family Corporation submits that it should be reimbursed in full for the total cost of construction of Linsell Boulevard and the intersection[1] by the council in either cash or, to the extent that there are insufficient funds in the development contributions plan account, by way of offsets against future lots to be created within the Local Structure Plan 3 Cranbourne East Area, which is the area covered by the development contributions plan. From the applicant's perspective, the fine tuning of the standard of road works and intersection is of less importance than the funding issue.

11 The council submits that its obligations to reimburse the applicant are limited to the funds available in the development contributions plan account. It says that it is not obligated to provide the infrastructure identified in the development contributions plan. Rather, it is only obligated to pay for it to the extent that it can be funded by the development contributions plan. Offsets can only be provided in respect of the particular permit in question. It says there is no basis upon which the council can be forced to use funds other than those collected in the development contributions plan to pay for works contemplated under the development contributions plan. To the extent that there are insufficient funds available, it says that if a developer wishes to bring forward development in advance of provision of infrastructure being able to be provided under the development contributions plan, it will need to pay for doing so and fully fund those works brought forward itself. The council says that development contributions (levies) relate only to the parcel of land which is the subject of the relevant planning permit and the works required as a consequence of that planning permit.

PROBLEMS WITH THE DEVELOPMENT CONTRIBUTIONS PLAN

12 The dispute in this matter stems from some serious problems with the development contributions plan.[2] It is no secret that the development contributions plan is seriously underfunded. The underfunding has arisen because calculations were based on a lot yield of 15 dwellings per hectare whereas the council has required this to be reduced in practice to 12 dwellings per hectare. The other reason for the under funding is that the development contribution plan adopted the General Consumer Price Index for Capital Cities as the inflation index. This index has proved inappropriate in that it has no relationship to civil engineering road building costs or land costs.[3]

13 The other problem with the development contributions plan is that it fails to specify in any degree of detail the staging of infrastructure. The overall implementation of the plan is envisaged to be 20 years, starting in 1996. The staging of the infrastructure is stated to be dependent on:

•

Rate of growth;

•

Changes in traffic volume;

•

Land acquisition processes;

•

Funding availability.[4]

14 Schedule 4 to the Development Contributions Plan Overlay in the Casey Planning Scheme specifies 20 years in respect of distributor roads and traffic management works in the column headed "Time of Provision (Years After Beginning of Development)". The council relies upon this to support its argument that it has no obligation to provide the infrastructure included in the development contributions plan before this 20 year period. It argues that if the applicant (or any other developer) wants infrastructure provided before then it should pay for the cost of bringing forward this infrastructure itself and must provide the infrastructure that is "needed" by specific permits.

15 The simple fact of the matter is that there are not enough funds in the development contributions plan account to pay for the construction of stage 2 of Linsell Boulevard and the intersection of Linsell Boulevard and Narre Warren-Cranbourne Road. It is for this reason that the council not only wants Dennis Family Corporation to pay the levies due in accordance with the development contributions plan but also to provide and pay for construction of stage 2 of Linsell Boulevard and the intersection with Narre Warren-Cranbourne Road with only a limited reimbursement from the development contributions plan account for these works. As Mr Appudurai said:

On one view of the applicant's position, if adopted, the DCP will be bankrupted; at the least, leaving little or no funds for other infrastructure items in the DCP.

16 The situation is serious for the council. However, whilst it has been known for some years that the development contributions plan is under funded and outdated, the council has failed to act to amend it.

17 One view of the council's shifting position during the course of negotiations with Dennis Family Corporation regarding the standard of works to be carried out and their timing may be that the council does not want the "ultimate" version of works to be carried out at this stage. This would crystallize its obligation to pay for them and would impede its ability to charge later developers for this cost following amendment of the development contributions plan.

18 On the other hand, Dennis Family Corporation has been unwilling to bring the matter to a head before now. Its focus has been on rolling out development of the Hunt Club Estate. It has seemingly "papered over the cracks" in the administration of the development contributions plan in an attempt to keep the momentum of permits, subdivisions and works progressing. It has failed to challenge some of the conditions included in permits, which it might have, and has instead been willing to modify permits and reach agreements with the council on an ad hoc, undocumented basis. We were surprised, when taken through the trail of emails, correspondence and other documentation at the hearing, as to the general laxity in administration and legal arrangements surrounding discussions between the parties, including the arrangements made about undertaking works, issuing statements of compliance, amending permits and other agreements.

19 The crunch has finally come and the outcome of this decision will carry significant financial implications either for the council or the applicant (not to mention other developers).

20 This case turns on how the scheme relating to development contributions found in Part 3B of the Planning and Environment Act 1987 operate. The key issues in this matter concern:

•

How "offsets" or "credits" are to be handled under a development contributions plan when a developer provides work services or facilities in kind?

•

Who is responsible for providing the works services or facilities included in a development contributions plan?

•

What happens when funds collected under a development contributions plan are inadequate to cover the cost of the works services or facilities included in a development contributions plan?

•

When should work services or facilities be provided when there is no staging provided for in the development contributions plan or the timing specified is no longer appropriate?

•

Is the council entitled to "double dip" by collecting levies under the development contributions plan and then requiring a developer to provide in whole or in part the work services or facilities included in the development contributions plan?

21 Once these "big picture" issues are resolved, our findings can be applied to the specific circumstances involved in this dispute.

22 During the course of the hearing we were provided with a great deal of information about the correspondence and negotiations between Dennis Family Corporation and the council. This information demonstrated that the council has shifted its stance in relation to the treatment of construction of Linsell Boulevard and the application of offsets in relation to the acquisition of land for Linsell Boulevard.

23 With respect to the acquisition of land for Linsell Boulevard, it was paid for partly in cash from the development contributions plan account and partly by the creation of offsets against future subdivision levies. With respect to stage 1 of Linsell Boulevard, council required construction to the "ultimate" standard specified in the development contributions plan (four lane divided carriageway). Dennis Family Corporation prepared plans, tendered the works and had them carried out. The council paid in full for the actual construction cost from the development contributions plan account. The council then approved stage 2 engineering plans for a duplicated roadway and later approved Dennis Family Corporation calling tenders for the construction for the duplicated stage 2, before modifying its requirements about the standard of construction required and the way in which the works were to be provided.

24 Whilst this information and the chronology of events establishes the context of the dispute, we agree with Mr Appudurai that, strictly, the content of negotiations between the applicant and the council are not relevant to the Tribunal's consideration of this application. The council now says that the quantum of payments made to the applicant in respect of both the construction of stage 1 of Linsell Boulevard and the acquisition of land for it were not in accordance with the development contributions plan and the Planning and Environment Act, especially section 46Q(2). But, whether the council has or has not acted in accordance with the Act previously is not determinative of how it should act now.

25 In addressing the issues identified above and reaching our conclusions we have adopted a purposive approach to our interpretation of the legislation and planning scheme. We have looked at the history of development contributions plans and the way they have been governed by successive versions of the Planning and Environment Act. We have looked at the Development Contributions Guidelines published on the DSE website, which are intended as a "guide for the appropriate and practical application of the development contributions system".

26 We consider that such an approach is supported by section 35 of the Interpretation of Legislation Act 1984 which provides as follows:

In the interpretation of a provision of an Act or subordinate instrument -

(a) a construction that would promote the purpose or object underlying the Act or subordinate instrument (whether or not that purpose or object is expressly stated in the Act or subordinate instrument) shall be preferred to a construction that would not promote that purpose or object; and

(b) consideration may be given to any matter or document that is relevant ....

27 The Planning and Environment Act was most recently amended with respect to development contributions by the Planning and Environment (Development Contributions) Act 2004, which introduced amendments to Part 3B and sections 62(5) and 62(6) relating to what conditions can be put on permits. In this respect, it is relevant to note that the purpose of the Planning and Environment (Development Contributions) Act 2004 is to amend the Planning and Environment Act 1997 -

(d) to alter the provisions relating to conditions on planning permits for the provision of, or payment for, works, services or facilities.

28 We acknowledge that courts have been reluctant to use extrinsic material to create an ambiguity in legislation where otherwise the words are clear.[5] The issue of whether a purposive approach should be adopted and whether we should have regard to this extrinsic material is relevant because Mr Appudurai in his submissions regarding the correct interpretation of sections 62(5) and 62(6) of the Planning and Environment Act 1997, was extremely critical of Member Martin in his decision of Springhaven Property Group v Whittlesea CC[6]. Member Martin considered the meanings of these sections and in doing so referred to the Minister's second reading speech on the Planning and Environment (Development Contributions) Act 2004 and the Development Contributions Review, which led to this Act and the amendments it made to the principal Act.

29 In our view, Mr Appudurai's criticisms do not detract from the authority of Springhaven or Member Martin's analysis of the meanings of sections 62(5) and 62(6). His reference to this extraneous material is in addition to, and by way of reinforcement of, his primary analysis.

30 In the present case Mr Appudurai urged upon us an interpretation of sections 62(5) and 62(6) (which we shall address in detail later) that in our view raise an ambiguity about their construction. However, we consider it is Mr Appudurai who has raised the possibility that there is an ambiguity in the meaning of these provisions. We therefore consider that this is exactly the sort of situation that section 35 of the Interpretation of Legislation Act 1984 is intended to apply to. Where there are alternative constructions, it is relevant to identify and understand the purpose of the object underlying the Act. In any event, we consider that in dealing with a matter as complex as development contributions, where the legislation establishes a framework of authority supplemented by detailed guidelines about implementation and operation, we consider it is very important to have regard to such guidelines and "extraneous" material to properly understand the system being set up under the legislation.

31 To that end, we consider it is relevant to have regard to the history of the legislation and development contributions generally, and to the material which is publicly available and intended by the government to be consulted by councils, developers and infrastructure agencies. The purpose of this material is to explain the development contributions system and to provide a context for the legislative provisions in the Planning and Environment Act 1987.[7]

HISTORY OF DEVELOPMENT CONTRIBUTIONS AND LEGISLATION

32 A defining case in the history of development contributions is the Eddie Baron case. This case established that there is no inherent reason why a planning condition involving a money payment cannot be valid. But if a development levy is to be validly imposed, it was held that four criteria must be met:

The need created by the development and the measures to satisfy the need must be adequately identified.

The payment or levy must be a fair and reasonable apportionment of the cost of implementing the need satisfaction measures.

The responsible authority should implement procedures to ensure that the money collected cannot be used for any purpose other than that for which it was levied and which clearly show how, when and where the money collected is spent.

There must be a reasonable nexus between the development and the need satisfaction measures.

33 With respect to nexus, the Eddie Barron case held that the nexus between a proposed subdivision and the community facilities to be provided (for which a levy is imposed) is not confined to the question of whether the facilities will be physically used by all the residents of the subdivision or whether the subdivision alone generates the need for the facilities, but must be looked at as part of any wider planning framework. Where a subdivision forms part of a wider planning unit and where it has been established that social and physical infrastructure will be needed by that larger unit then it is sufficient if the nexus is established between the facilities and that wider unit.

34 At the time of the Eddie Barron case section 62 of the Planning and Environment Act 1987, which deals with what conditions can be put on permits, contained the following provisions:

62(2) The responsible authority may include any other condition that it thinks fit including

(h) a condition that specified works, services or facilities which the responsible authority considers necessary as a result of the grant of the permit be provided or paid for in any one or more of the following ways -

(i) be provided on or to the land or other land by the a applicant; or

(ii) be paid for in whole or in part by the applicant; or

(iii) be provided on or to the land by agreement between the owner of the land or applicant and any Minister, referral authority, public authority or council providing the works, services or facilities;

35 It is worth noting that the Tribunal decided the Eddie Barron case pursuant to the general condition making power under section 62(2) of the Act rather than specifically under sub-section (2)(h). In this respect it stated:

....whether a condition is purported to be imposed pursuant to Sections 62(2)(h) or pursuant to the general condition making power, the same criteria will apply.

36 In 1995 the Planning and Environment Act 1987 was amended to include Part 3B, which deals with development contributions. Sections 46H - 46Q establish a system whereby councils may include in their planning schemes one or more development contributions plans for the purpose of levying contributions for the provision of works, services and facilities. A development contributions plan may provide for the imposition of a development infrastructure levy and/or the imposition of a community infrastructure levy in relation to the development of land in the area to which the plan applies. If there is an approved development contributions plan in a planning scheme which provides that a development infrastructure levy is payable in respect of the development of any land, then the responsible authority must include a condition in a planning permit for that development requiring payment of the levy.

37 Although not stated explicitly in Part 3B of the Act, it was assumed that approved development contributions plans would be based on the principles of need, equity, accountability and nexus enunciated in the Eddie Barron case.

38 Codifying the application of development contributions was intended to satisfy concerns held by the development industry about the unconstrained requisition of development contributions by councils. It was also intended to provide certainty to councils that, once they had justified the basis of a development contributions plan by an amendment to their planning scheme, the plan could not subsequently be challenged at appeal.

39 In support of Part 3B, and to reinforce the above intentions, the following changes were made to Section 62 of the Planning and Environment Act 1987, which came into operation on 1 June 1997, eighteen months after introduction of Part 3B. Section 62(2)(h) was deleted from the Act. Sub-sections (5) and (6) were added to Section 62 and they provided follows:

(5) In deciding to grant a permit, the responsible authority may-

(a) include a condition required to implement an approved development contributions plan; or

(b) include a condition that specified works which the responsible authority considers necessary as a result of the grant of the permit -

(ii) be paid for wholly by the applicant or partly by the applicant where the remaining cost is to be met by any Minister, referral authority, public authority or council providing the works.

(c) a condition requiring services or facilities to be provided in accordance with an agreement under section 173.

(6) The responsible authority must not include in a permit a condition requiring a person to pay an amount for or provide services or facilities other than -

(a) a condition required to implement an approved development contributions plan; or

(b) a condition requiring services or facilities to be provided in accordance with an agreement under section 173.

40 Notwithstanding the introduction of Part 3B to the Planning and Environment Act 1987 (and inclusion of the Development Contributions Plan Overlay in the VPPs), few councils implemented approved development contributions plans within the meaning of the Act. The Minister for Planning set up a review of development contributions, which consulted widely with local government and the development industry during the period 2000-2003. The Development Contributions Review was intended to examine the system in practice and identify improvements which could be made to facilitate the better use of development contributions plans.

41 Many councils continued to collect development contributions by means of planning permit conditions, which required developers to enter section 173 agreements for their payment. This practice was challenged in the Supreme Court case of Curry v Melton Shire Council.[8]

42 The facts in Curry were that Melton Shire Council had an adopted DCP, but it had not been incorporated in the Melton Planning Scheme and thus was not an "approved" DCP under the Act. A condition on a planning permit for the subdivision of certain land into 208 lots required the owner to enter a Section 173 Agreement to pay development contributions in accordance with the adopted DCP.

43 Justice Balmford held that the condition was invalid. Because the DCP was not an approved plan under the Planning and Environment Act 1987, Section 62(5)(a) did not empower the making of the condition, nor was the condition otherwise authorised by Section 62(5)(b). This meant that the general ability to impose a condition requiring an owner to enter a Section 173 agreement pursuant to section 62(2)(f) of the Act was not open ended. It was limited to matters that are otherwise authorised or valid.

44 In her judgement Balmford J drew attention to the differences between sub-sections (5) and (6) of section 62 and the repealed sub section (2)(h). The point was made that paragraph (5)(b) had a much more confined operation than paragraph (2)(h) had had. Thus under sub-paragraph 62(2)(h) (ii) it would have been possible to impose a condition providing for the payment to be shared between the applicant and one or more other subdividers, but that was not so under sub-paragraph 62(5)(b)(ii). In addition, whereas sub-paragraph 62(2)(h) had permitted a condition for the provision of "works, services or facilities", sub-paragraph 62(5)(b) was confined to "works".

45 Thus the Curry decision was read as suggesting that the only way in which development contributions for off-site infrastructure could be required was under an approved DCP. Further, it appeared to limit the ability of a planning permit to require any off-site works to those situations where a direct nexus could be established between the development and the works, and where the works would be paid for solely by the developer or partly by the developer and partly by an authority.

Christian Brothers Vic Pty Ltd v Banyule City Council

46 The circumstances surrounding the repeal of section 62 (2)(h) and the nature of a council's ability to impose conditions were also examined in the Victorian Civil and Administrative Tribunal case of Christian Brothers Vic Pty Ltd v Banyule City Council.[9] The Tribunal in that case reached the conclusion that the general power of responsible authorities to impose permit conditions on the basis of common law tests of validity was acceptable notwithstanding the repeal of Section 62(2)(h). On this point the Tribunal said:

[87] In my view King Ranch type conditions can still be imposed like other conditions that satisfy the common law tests. The power to impose them pre-existed paragraph (h). If Parliament had intended to make them unavailable it could and should have said so explicitly by inserting a provision saying that they cannot be imposed and, presumably, dealing with the continued validity or otherwise of such conditions in existence that were valid when imposed. I think it improbable, when the context of the repeal of paragraph (h) is considered, that the Parliament had any intention to abolish the availability of King Ranch type conditions, or that its attention (or the attention of the Parliamentary draftsperson) ever went to such a question. If it was intended it should have been said, rather than that it should be implied that the power to impose such conditions has been removed by the repeal of paragraph (h).

47 The decision in Curry v Melton CC cast doubt on the lawfulness of permit conditions requiring developers to pay for offsite works, even if those unanticipated works were not able to be included in a development contributions plan, and that an approved development contributions plan prepared in accordance with Part 3B of the Act was the only means by which development may be required to contribute to any offsite works or onsite or off site community infrastructure.

48 The case of Christian Brothers v Banyule CC found that, in introducing Part 3B, Parliament did not intend to remove the powers to impose payment conditions for off-site works which are clearly warranted by the development in question (following the principles set out in King Ranch). However the case turned on the distinction between works (there was no reference to works in section 62(6) of that time) compared to a contribution to services or facilities (which were expressively recognised in section 62(6)).

49 The two cases however created doubt about the power of councils to mitigate offsite impacts through conditions and this was one of the issues that the Development Contributions Review sought to address. In the document, A new Development Contributions System for Victoria (May 2003),[10] it was stated:

The Government has recognised through the Review consultation process that the current legislative provisions relating to planning permit conditions requiring payments for, or provision of, infrastructure are confusing and ambiguous. A number of recent decisions in both the Supreme Court and the Victorian Civil and Administrative Tribunal have shown this to be the case.

The Government also recognises that not all infrastructure requirements can be anticipated and included in a DCP. There should be some ability for responsibility authorities and referral authorities, in certain circumstances, to levy or require developers to provide infrastructure where it could not be reasonably provided for in a DCP.

Section 62 of the Planning and Environment Act 1987 may need to be amended to clarify the use of planning permit conditions that require payments for, or the provision of, infrastructure, or infrastructure to be provided, in order to mitigate the impacts of the permitted use and development where:

•

That infrastructure could not have been reasonably anticipated and included in a DCP, and

•

The works, services, or facilities are required as a result of the specific use and development.

As with any planning permit condition, such conditions can be ultimately subject to review at VCAT, and responsible authorities will be required to justify their valid application.

Under the reformed system, it is intended that councils and other authorities will continue to be able to impose planning permit conditions on developments to provide infrastructure on or to the site, so that infrastructure servicing the individual development, normally provided by developers (for example, on site roads, on site drainage, access to the site, etc) will not required [sic] to be incorporated into a DCP.

50 This "purpose" or "object" underlying the Planning and Environment (Development Contributions) Act 2004 was repeated in the Minister's second reading speech where he said in relation to clarifying the use of planning permit conditions to require the provision of offsite infrastructure in defined circumstances:

The government has recognised that the current legislative provisions relating to permit conditions requiring payments for or provision of infrastructure are confusing and ambiguous.

Section 62 of the Act is to be amended to clarify that councils and referral authorities have power to recover, by planning permit conditions, the cost of the impact of individual development where a need for works, services or facilities is necessitated by the development.

This option ensures that, where development impacts cannot be reasonably anticipated and strategically planned for in advance through a development contribution plan, there is the ability for the off-site impacts directly attributable to the development to be addressed through permit conditions. For example, a fast food restaurant locating in an established area may generate a need for off-site traffic management works that would not otherwise have been required or anticipated.

However, it should be understood the permit conditioning provisions should not undermine the principle that development contributions applying to multiple landowners should be collected via development contribution plans.

51 In our view, it is quite clear that these comments relate to the specified purpose in the 2004 Act -

(d) to alter the provisions relating to conditions on planning permits for the provision of, or payment for, works or services or facilities.

52 The Planning and Environment (Development Contributions) Act 2004 amended the principal Act by substituting for sections 62(5) and 62(6) the following provisions which are now included in the Planning and Environment Act 1987.

(5) In deciding to grant a permit, the responsible authority may -

(a) include a condition required to implement an approved development contributions plan; or

(b) include a condition requiring specified works, services or facilities to be provided or paid for in accordance with an agreement under section 173; or

(c) include a condition that specified works, services or facilities that the responsible authority considers necessary to be provided on or to the land or other land as a result of the grant of the permit be -

(iii) provided or paid for partly by the applicant where the remaining cost is to be met by any Minister, public authority or municipal council providing the works, services or facilities.

(6) The responsible authority must not include in a permit a condition requiring a person to pay an amount for or provide works, services or facilities except -

(a) in accordance with sub-section (5) or section 46N; or

(b) a condition that a planning scheme requires to be included as referred to in sub-section (1)(a); or

(c) a condition that a referral authority requires to be included as referred to in sub-section (1)(a).

53 Part 3B of the Planning and Environment Act 1987 (sections 46H - 46QC) sets out the legislative framework for development contributions and development contributions plans.

54 Section 46I provides that a planning scheme may include one or more development contributions plans "for the purpose of levying contributions for the provision of works, services and facilities". It is clear from section 46I that the purpose a development contributions plan is to fund the provision of works, services and facilities. It does this by providing that a development contributions plan may impose a development infrastructure levy and/or a community infrastructure levy.[11]

55 Section 46K sets out the content of a development contributions plan. This includes the works, services and facilities to be funded through the plan, including the staging of the provision of those works, services or facilities,[12] and the plan must specify the proportion of the total estimated cost of the works, services and facilities which is to be funded by levies.[13] It must also specify the Minister, public authority or council to whom or to which the levies are payable (the "collecting agency");[14] and any Minister, public authority or municipal council that is to be responsible for the provision of the works, services or facilities for which the levies are payable (the "development agency").[15] A development contributions plan may specify the same person to be both the collecting agency and a development agency.[16]

56 Sections 46N and 46Q deal with collection of levies and reinforce the purpose of the development contributions plan as a funding mechanism by placing an obligation on a developer to pay the amount of the levy to the relevant collecting agency or to enter into an agreement with the relevant collecting agency to pay the amount of the levy within the time specified in the agreement.[17] This obligation is imposed by way of a condition in the permit authorising development in respect of which a levy is payable. These sections create an obligation to pay the levy, not an obligation to carry out or provide the works, services or facilities in the development contributions plan.

57 Nevertheless, whilst the obligation on a developer is to pay the levy, the relevant collecting agency may accept the provision of land, works, services or facilities in part or full satisfaction of the amount of levy payable.[18] This does not change the obligation, which is to pay. It simply provides options for payment.

58 Section 46Q sets out responsibilities of municipal councils. A council must keep proper accounts of any amount of levy paid to it as a collecting agency or a development agency under this Part. When a council is paid an amount of levy as a collecting agency it must forward to the development agency any part of the levy that is imposed for the carrying out of works, services or facilities by or on behalf of that development agency. The council to which an amount of levy is paid as a development agency must apply that amount only for a purpose relating to the provision of works, services and facilities in respect of which the levy was imposed; and in accordance with the approved development contributions plan[19]. Section 46Q also deals with situations regarding the refund of levies where a development does not proceed or the amount has not been expended within the period required by the approved development contributions plan.

59 There is nothing in Part 3B that suggests the amount of levies collected or which are in an account, in any way limits a council's responsibilities as a development agency for the provision of the works, services or facilities for which the levy is payable. A council's responsibilities under Part 3B are to keep accounts of any amounts of levy paid to it. It does not deal with the council's responsibilities as a development agency (or the responsibility of other development agencies) to provide the works, services and facilities. It simply says that these are the only things that the funds can be spent on or applied to.

60 The amendments to part 3B in 2004 introduced the new requirement that a development contributions plan must specify who is the collecting agency and who is the development agency. This made explicit the distinction between a council's obligations to collect levies and its responsibilities to actually provide the works, services or facilities. Although the same person may be both collecting agency and development agency, the roles are different and each role carries separate obligations and responsibilities. The council's responsibilities as a development agency to provide the works, services or facilities therefore do not arise under part 3B of the Planning and Environment Act or under the development contributions plan itself. Its responsibilities for the provision of infrastructure arise from its local government role. Likewise the responsibility of other development agencies arise under their respective roles as defined by legislation.

61 This essential distinction between the responsibility of councils (and others) to provide infrastructure compared to their ability to collect contributions from development to help pay for the provision of infrastructure was recognised in the Eddie Baron case. In examining the nature of development levies, the Tribunal said:

A development levy is a monetary contribution, or a contribution in kind through undertaking works, to the public sector by an individual involved in the land development conversion process. Such contributions are for the purpose of funding infrastructure, the need for which has arisen as a direct result of development taking place.

In this context infrastructure refers to all physical facilities and services required to create a workable community with an acceptable standard of health safety and amenity for all residents.

- Major Community facilities (eg Hospitals, Schools, Public Housing)

- Minor Community Facilities (eg Infant Welfare Centres, Pre-School Community Centres etc)

Taken together, this physical and social infrastructure has come to be regarded as "necessary' for a workable community with an acceptable standard of health, safety and amenity.

A major difficulty which has always been faced by local government is the need to meet funding obligations at the time facilities are required. In the past this has often led to a lag between development taking place and the provision of facilities. The level of funding at various levels has also often influenced the standard of facilities.[20]

62 Thus the essence of a development contribution or levy is that it is a monetary contribution (which may be satisfied by a contribution in cash or in kind) towards the provision of works, services or facilities by the public sector, be this a municipal council or other development agency. The responsibility for the provision of works, services or facilities rests squarely with the municipal council or other body as development agency. A development contributions plan is simply the means by which the development contribution or levy is calculated and justified, which and sets out other administrative arrangements and details.

63 The responsibility for the provision of infrastructure remains with the council in its local government role, and once an approved development contributions plan is included in the planning scheme the council is committed to the provision of the infrastructure included in it and for which levies are payable. This is supported by reference to the Development Contributions Guidelines. Thus under the heading "What are the principles of the DCP" the Guidelines state:

A DCP imposes a binding obligation on the infrastructure provider to provide the infrastructure by the date or criteria specified in the DCP.

64 Under the heading "What infrastructure projects can be included in a DCP?" the Guidelines state:

A DCP may include infrastructure to be provided by a council or State Government agency. Basic utilities, such as water supply and sewerage, provided by servicing authorities under their own legislation cannot be included in DCP.

A Ministerial Direction made under section 46M(1) of the Act identifies what may be funded from a development infrastructure levy.

65 The Development Contributions Guidelines[21] also deal with establishing an accounting and payment tracking system. Under the heading of "What are the council's financial responsibilities for a DCP?" the Guidelines state that once the DCP is in the planning scheme, the council is responsible for the financial management of the DCP. What this involves includes:

•

Monitoring and reporting on the financial aspects of the DCP on an annual basis in council's annual report.

•

Comparing the expected and actual cash flow.

•

Advising council well in advance about expected expenditure for an infrastructure project in the DCP.

•

Advising council well in advance when additional funds will be necessary from other sources to provide the infrastructure item.

66 This clearly indicates that levies are simply a contribution towards the council's responsibility (as development agency) to provide the infrastructure, and the council may need to supply funds from other sources in addition to funds in the development contribution plan account towards the provision of such infrastructure.

67 The Development Contributions Guidelines envisage an accounting and payment tracking system that will operate very much like a bank account allowing for credits or offsets to be provided to a developer. Thus under the heading of "What should the accounting and payment tracking system deliver?" the Guidelines state that the accounting and payment tracking systems must be capable of:

•

Recording when works are provided by the developer in lieu of payment of a levy.

•

Allowing for up front payment for an infrastructure project by one developer and reimbursement as other payments are made over time.

•

Presenting on an annual basis what levies have been collected for the year per DCPO Schedule area and what funds have been spent delivering infrastructure projects.

68 Finally, in respect of monitoring and reviewing the DCP, the Development Contributions Guidelines provide that a council has a responsibility to monitor the DCP on an annual basis and to review the DCP every three years as part of the review of the planning scheme. The annual monitoring of the DCP will involve:

•

Tracking the financial aspects of the DCP including levies collected and spent, cash flow, unspent funds etc.

•

Identifying the need for additional funding from other sources if the funds collected through the DCP are not enough to provide an expected infrastructure project in the DCP.

•

Requesting budget for capital expenditure in the upcoming 12 months period.

•

Comparing the actual cost of infrastructure projects compared to the expected cost specified in the DCP.

69 In our view, when the provisions of Part 3B of the Act are read in conjunction with the Development Contributions Guidelines, it is quite clear that once an infrastructure item is included in a development contributions plan, the council is responsible in its role as development agency to provide that item of infrastructure in accordance with the development contributions plan. This means that the infrastructure must be provided in accordance with any staging or timing included in the development contributions plan and the infrastructure must be in accordance with the specifications relating to standards of construction etc set out in the plan. If there are insufficient funds in the DCP account then the council, as development agency, must provide funding from other sources to pay for the infrastructure.

CAN INFRASTRUCTURE INCLUDED IN A DCP BE REQUIRED BY PERMIT CONDITION?

"Double dipping" contrary to nature and purpose of DCP

70 We consider it is self evident from the scheme for development contributions included in the Act, and as explained in the Development Contributions Guidelines, that once an item of infrastructure is included in a development contributions plan a council cannot then require its provision by way of permit condition or a contribution towards the cost of its provision by any means other than provided for in the Act, namely by payment of a levy under the development contributions plan. It is neither fair nor equitable to do so. This was the finding of the Tribunal in Carson Simpson Pty Ltd v Casey CC[22] (known as the Brindalee case). The Tribunal was quite scathing about the council's attempt to "double dip", describing it as an "oppressive and unfair double payment by the company".[23] The Tribunal concluded that: "The levy may be deficient, but it is all that this company is required to contribute under the Development Contributions Plan"[24].

71 The issue in the Brindalee case was very similar to the issue in the present case. Casey City Council does not have sufficient funds in the development contributions plan account to pay for the full cost of construction of Linsell Boulevard to the ultimate standard as set out in the development contributions plan. Because there is a lack of specificity about staging in the development contributions plan, with the only guidance about time of infrastructure provision being 20 years, the council argued in the Brindalee case, as in the present case, that as it is not yet ready to construct Linsell Boulevard and it may be years before it is ready to do so, if the developer wants to proceed with its subdivision it must construct the road at its own expense and contribute the levy representing the share of the road on top of that. In other words, if the developer wants to dictate the timing of the road to enable its subdivision to proceed, there is a price for such convenience, and that price is to pay twice for the road. The Tribunal in the Brindalee case did not accept this. It said:

[35] We are not impressed with this argument. There should only be a price for the early construction of part of Linsell Boulevard if the early construction in fact costs something. It has not been demonstrated that there would be any increased cost to the council or anybody else occasioned by the early construction. On the contrary, it is almost certainly a saving to have it constructed at an earlier, rather than a later stage, having regard to the escalation of costs in relation to road construction and similar works.

[36] Furthermore, it has not been made apparent to us that construction in the near future is inconvenient, inappropriate or out of order. It is not as though it is proposed to advance in time works that could and should otherwise be significantly delayed. In general terms at least, it is true to say that road construction infrastructure is one of the first and foremost form of works needed in relation to the development of an area. Other things might wait until they are needed. They are not likely to be needed unless and until roads enable subdivision and development in the form of houses and people living in houses.

72 We agree with the Tribunal in the Brindalee case. There is a deficiency in the development contributions plan for LSP3 in that in so far as it fails to adequately provide for staging of the provision of infrastructure included in the development contributions plan. We consider that it is appropriate for conditions to be included in a permit to address the staging issues, and to ensure that infrastructure included in the development contributions plan is provided in a timely and orderly way and to service the development approved by a permit. This is, after all, the underlying purpose of a development contributions plan. But this does not mean that a council can hold a developer to ransom by relying on the deficiencies of a development contributions plan to require the developer to pay for the infrastructure twice.

73 If there is a staging schedule for the infrastructure included in a development contributions plan, and if a developer wishes to depart from that staging by bringing forward works to suit its own convenience, then we consider that the additional cost of bringing forward those works would be the responsibility of the developer. But this relates only to the cost of bringing forward the works to provide for them out of sequence; it does not relate to the cost of the works themselves.

74 We consider that any attempts by the council to argue that the construction of stage 2 of Linsell Boulevard or the intersection with Narre Warren - Cranbourne Road are "needed" by the subdivision approved by the Permit, and hence may be legitimately required to be provided by the developer by way of a condition on the permit, entirely misguided for two reasons.

75 First, the construction of Linsell Boulevard is included in the development contributions plan and the percentage to be funded by way of levies is 100% of its cost. The whole purpose of development contributions plans, both as dealt with in the Eddie Baron case and subsequently under part 3B of the Planning and Environment Act 1987, has been based on the notion that the nexus required to be established between the development and the infrastructure -

....is not confined to the question of whether the facilities will be physically used by all the residents of the subdivision or whether the subdivision alone generates the need for the facilities, but must be looked at as part of any wider framework. Where a subdivision forms part of a wider planning unit and where it has been established that social and physical infrastructure will be needed by that larger unit then it is sufficient if the nexus is established between the facilities and that wider unit.[25]

76 The nexus is to be established at the time when the development contributions plan is prepared and approved. Once the development contributions plan has been approved then it is no longer open to a developer to claim that there is no nexus between the development and the infrastructure being funded by the development contributions plan. That is one of the advantages to a council of having an approved development contributions plan - it saves the need to constantly justify the basis of the plan at appeal. But just as an approved development contributions plan works in favour of a council in this respect, so to it works in favour of a developer. It means that once works, services or facilities are included in an approved development contributions plan, a council cannot seek to require the provision of any part of those works, or a contribution towards their provision, again. The council's argument on this issue simply misconceives the fundamental nature of a development contributions plan in this respect. The issue of any nexus between the development and the works is no longer relevant.

77 The second reason why the council's contention is unsupportable is because such conditions are contrary to sections 62(5) and 62(6) of the Act.

Sections 62(5) and 62(6) Planning and Environment Act 1987

78 Section 62 of the Act deals with what conditions can be put on permits. It is a comprehensive section and cross references to other parts of the Act, and the planning scheme. Section 62(1)(a) requires that, in deciding to grant a permit, the responsible authority must include any condition which the planning scheme or a relevant referral authority requires to be included.

79 We note that section 62(1)(a) refers to conditions which the planning scheme requires to be included, whereas a levy under a development contributions plan is both a condition required by the Act, and a requirement under clause 45.06-1 of the Development Contributions Plan Overlay in the planning scheme. To the extent that a condition included under this clause of the planning scheme can include additional matters over and above those required by section 46(N), this is acknowledged in the opening words of section 46N(1) which states: "Without limiting section 62..." Such a condition cannot be contrary to the requirements of the Act but may include additional matters provided for in a development contribution plan.

80 Thus Mr Appudurai is right when he says that "the requirement in s46N(1), that a permit condition which requires the payment of a levy payable under an approved development contributions plan, operates independently of s62 of the Act", and equally when he says, "if a specific provision in the Act makes provision for a mandatory condition there is no need to further authorise that requirement under s62 or any other provision." However, we do not consider that this is what section 62(1) does. Section 62(1) simply makes it clear, in the context of setting out what conditions can be put on permits, that such conditions must be included.

81 Section 62(2) of the Act then sets out a range of other conditions that may be included in a permit as the Responsible Authority thinks fit. They of course are subject to the requirement that they are valid in terms of being relevant, reasonable and certain. The various limbs of section 62(2) are cumulative. They are each separated by the word "and", which means that any or all of these types of conditions may be included, provided they are valid.

82 Section 62(5) deals with conditions that relate to either an approved development contributions plan or a condition requiring specified works, services or facilities to be provided or paid for. The options are set out in paragraphs (a), (b) and (c). Sections 62(5)(a) enables a condition to implement an approved development contributions plan. Section 62(5)(b) relates to section 173 agreements and section 62(5)(c) relates to situations where the works, services or facilities will be provided by the applicant; or paid for wholly by the applicant; or provided or part for partly by the applicant where the remaining cost is to be met by any Minister, public authority or municipal council providing the works, services or facilities. Each of the limbs of section 62(5) is separated by the word "or". This contrasts with use of the word "and" separating the limbs of section 62(2).

83 Section 62(5) therefore covers the options of including a levy under an approved development contributions plan (bearing in mind that this is a mandatory condition that must be included in a permit where relevant); or the provision or payment for infrastructure under a Section 173 agreement;[26] or the provision or payment of works, services or facilities where they are to be provided or paid for wholly by the applicant, or partly by the applicant and partly by a Minister, public authority or municipal council. It does not provide any option for the provision or payment for works, services or facilities where they are to be contributed towards partly by the applicant and partly by other developers.

84 Section 62(6) then provides that a responsible authority must not include in a permit a condition requiring a person to pay an amount for, or provide works, services or facilities, except in accordance with subsection (5) or section 46M; or a condition that a planning scheme requires or a referral authority requires to be included as referred to in subsection 1(a). We would say that this means there is no opportunity to include a condition requiring a person to pay an amount for, or provide works, services or facilities in part, where other contributions to those works, services or facilities will also be required from other persons. In other words, it eliminates the possibility of a de facto development contributions plan that is not an approved development contributions plan in accordance with Part 3B of the Act.

85 Read together, and in the context of the amendments to the Act in 2004 referred to earlier, we consider that omission of the option to enable a condition requiring a person to pay an amount for or provide works, services and facilities that will also be contributed to by payment or provision in part by other persons (other than solely by a Minister, public authority or municipal council) is deliberate. The combined effect of sections 62(5) and 62(6) was to overcome the doubts and deficiencies regarding the ability to impose conditions revealed by Curry v Melton CC and Christian Brothers Vic Pty Ltd v Banyule CC referred to in A new Development Contributions System for Victoria and the Minister's second reading speech for the Planning and Environment (Development Contributions) Act 2004. Together, sections 62(5) and 62(6) make it clear that there is no impediment to imposing a King Ranch type condition on development and that there is no distinction to be drawn between works, services or facilities in this respect. However, King Ranch type conditions, whether imposed by some general condition making power or specifically under the provisions of section 62(2) of the Act, relating to the payment or provision of works, services or facilities, are subject to the limitations imposed by section 62(5).[27] In other words, approved development contributions plans are the only means by which contributions to the provision of works, services or facilities can be obtained from more than one developer. This was the finding also of the Tribunal in Springhaven Property Group Pty Ltd v Whittlesea CC[28]and Naprelac v Baw Baw SC[29].

86 Mr Appudurai argued that the three limbs of each of sections 62(5) and 62(6) must, when considered in the context of the scheme of the Act, be given a cumulative operation notwithstanding that the word "or" (rather than "and") is used in those provisions. He contended that the limbs of the sections are not mutually exclusively alternatives.

87 We acknowledge that there are situations where courts have interpreted sections of Acts separated by the word "or" in the way contended for by Mr Appudurai. We do not accept that such an interpretation should be given in these circumstances where the same works, services or facilities are in issue[30]. We consider that use of the words "and" and "or" in different subsections of the same section (section 62) imply an intent to mean different things. The onus would be upon the person contending that they mean the same thing to justify this by reference to the natural and unambiguous meaning of the section or the purpose or object of the Act as required by section 35 of the Interpretation of Legislation Act 1984. We do not consider that Mr Appudurai in his arguments has done either of these things. We consider that his argument is highly contrived and contrary to the purposive approach we have found it is appropriate to apply in this case.

88 We must admit to finding his argument difficult to comprehend. He appears to be arguing that section 62(5)(a) authorises the inclusion of a condition required to implement an approved development contributions plan itself other than collection of a levy, which is already covered by section 46N. He also seems to be arguing that the terms of section 62(5) do not limit the council to one or other only of the three options listed, but may include a condition requiring both a levy under an approved development contributions plan (under section 62(5)(a)) as well as a condition that specified works, services or facilities that are necessary as a result of the grant of the permit are be provided by the applicant under section 62(5)(c), provided that a person who seeks to act under a permit is given credit for providing works pursuant to paragraph 62(5)(c) when also levied under paragraph (a). Such an interpretation would enable the council to do what it is trying to do here where the council wants the works to be provided by Dennis Family Corporation (Stage 2 of Linsell Boulevard and its intersection with Narre Warren-Cranbourne Road) and it will offset the works against the levies otherwise payable in respect of the land in the Permit but only to the extent of the value of the levies, not the full value of the works.

89 We do not accept this interpretation. We consider it to be contrary to the plain ordinary meaning of sections 62(5) and 62(6) and contrary to the purpose of the 2004 Act which amended them. For the reasons we have set out above, we also consider that such an interpretation is completely at odds with the nature of development contributions plans as included in the Planning and Environment Act 1987 and supported by material such as the Development Contribution Guidelines. (This is material which the government intends shall be used in conjunction with the provisions of the Act to guide users in their understanding of the development contributions system and in the legislative provisions in the Act, and the preparation and administration of development contributions plans.) Finally, we consider that the whole concept of "double dipping", which this interpretation seeks to justify, is at odds with the principles set out originally in the Eddie Baron case, particularly that relating to equity.

90 In paragraph 20 we set out a number of issues that we needed to resolve in order for our findings to be applied to the specific circumstances involved in this dispute. We have set out in some detail the way in which the scheme relating to development contributions found in part 3B of the Planning and Environment Act 1987 operates. We now provide our responses to the other issues we have identified as follows.

91 How are offsets or credits to be handled under a development contributions plan when a developer provides works, services or facilities in kind?

When there is an approved development contributions plan under Part 3B of the Act, the obligation of a developer is only to pay the amount of the levy to the relevant collecting agency. The relevant collecting agency may accept the provision of land, works, services or facilities by the developer in part or full satisfaction of the amount of levy payable.[31] This applies to land, works, services or facilities provided before or after the application for the permit was made or the development is carried out.[32]

92 We interpret this to mean that whenever a developer provides land, works, services or facilities these may be applied in satisfaction of any levy payable under the specific permit, and to the extent that there is any "credit" in value of the land, works, services, or facilities provided over and above the amount of levy payable, that additional value may be credited or offset against a developer's future liability for levies under the development contributions plan.

93 Equally we find that, if a developer provides land, works, services or facilities up front, to the extent that the value exceeds the amount of levies payable by that developer, that value may be reimbursed to the developer by the council over time as other levies under the development contributions plan are collected.

94 We find that the development contributions system as provided for under Part 3B of the Act does not require accounting based solely on individual permits, but rather enables credits or offsets to be applied across all land owned by developer within the development contributions plan area.

95 Finally, we find that the land, works, services or facilities referred to in section 46P must be land, works, services or facilities included in the development contributions plan.

96 Who is responsible for providing the works, services or facilities included in a development contributions plan?

The municipal council, Minister or public authority which is the relevant development agency is responsible for providing the works, services or facilities included in a development contributions plan. A developer is not responsible for providing the works, services or facilities. A developer's responsibility is confined to payment of the levy, although payment may be made in kind or otherwise in accordance with section 46P.

97 What happens when funds collected under a development contributions plan are inadequate to cover the cost of the works, services or facilities included in a development contributions plan?

If funds collected under a development contributions plan are inadequate, the development agency responsible for providing the works, services or facilities must provide funds or resources from other sources in order to provide the works, services or facilities included in the development contributions plan to the standard specified in the plan. This may include amending the development contributions plan to increase the levy payable, although this could not operate retrospectively.

98 When should works, services or facilities be provided when there is no staging provided for in the development contributions plan or the timing specified is no longer appropriate?

99 If there is no staging provided for in the development contributions plan, the development agency should provide the works, services or facilities as they are required by development for which permits are granted. This is part of the overall concept of orderly and proper planning. A municipal council, which is a development agency responsible for providing infrastructure under a development contributions plan, should not approve development in advance of the provision of infrastructure in accordance with the development contributions plan without making arrangements for its provision (by way of permit condition or agreement) or amending the development contributions plan.

100 However, if there is no detail about staging provided in the development contributions plan (as is the case here), we do not consider that of itself would be good grounds for refusing to issue a permit. There may need to be conditions in the permit or agreements reached between the developer and the council (as development agency) regarding the provision of the infrastructure, so long as it is ultimately provided or paid for at the cost of the development agency with the development agency being reimbursed by the collecting agency in accordance with section 46Q.

101 Is the council entitled to "double dip" by collecting levies under development contributions plan and then requiring a developer to provide in whole or in part the works, services or facilities included in the development contributions plan?

No, councils may not "double dip" by collecting levies and requiring the provision of infrastructure included in the development contributions plan. This practice is precluded by the combined operation of section 62(5) and 62(6) for reasons we have set out previously.

102 This application is made pursuant to section 149 of the Planning and Environment Act 1987. It concerns a dispute about the works that the council considers would satisfy the requirements of conditions 26 and 27 in permit P130/04 and the responsible authority's requirements for the provision of the works in dispute, namely construction of stage 2 of Linsell Boulevard and the intersection of Linsell Boulevard with Narre Warren-Cranbourne Road.

103 Conditions 26 and 27 of permit 130/04A provide as follows:

26 Roads must be provided and constructed including the provision of traffic management devices, to the satisfaction of the Responsible Authority.

27 Prior to the issue of a Statement of Compliance for Stages 33-36 as shown on the endorsed plan under this permit, Broad Oak Drive must be fully constructed to provide sealed road access to Linsell Boulevard and construction of the first stage (Part 2) of Linsell Boulevard to provide road access to Narre Warren-Cranbourne Road must have commenced.

104 It is relevant to note that condition 27 originally provided that Linsell Boulevard through to Narre Warren-Cranbourne Road must be fully constructed to provide sealed road access prior to the issue of a Statement of Compliance for the first plan of subdivision under this permit, in addition to full construction of Broad Oak Drive. The amendment to condition 27 of the permit is an example of the ongoing negotiation that has occurred between the council and Dennis Family Corporation regarding the provision of this infrastructure.

105 The council challenged the Tribunal's jurisdiction to consider this application for review under section 149. It submitted that:

•

No relevant decision amenable to review under section 149 of the Act has been made.

•

The question of the approval of the plans is more appropriately a matter for consideration pursuant to an application brought under section 40 of the Subdivision Act 1988, and in any event, in all the circumstances no occasion has arisen which would support such an application to the Tribunal.

•

In so far as this is a dispute about funding and the applicant seeks orders directing that the value of work should be offset against contributions to be levied in the future against the applicant under the development contributions plan, the Tribunal has no jurisdiction. A permit which has yet to come into existence cannot form the subject matter of the proceeding. Accordingly, the Tribunal cannot order that offsets against levies yet to be collected under yet to be granted (or, for that matter, applied for) permits be given.

106 We disagree with council's contentions regarding the Tribunal's jurisdiction. Conditions 41 and 42 of the permit impose the requirement to pay levies under the development contributions plan. Condition 26 is a general condition relating to a provision in construction of roads and traffic management devices to the satisfaction of the Responsible Authority. Part 3B of the Act envisages that there may be entered agreements about various matters relating to the payment of levies and how this may be done, including through the provision of works, services and facilities. We consider that the nature of those agreements and how roads are provided and constructed are caught in the embrace of condition 26. We consider this to be a general condition giving the responsible authority control over these matters and, more importantly, providing a general dispute resolution process for any matters relating to the provision or construction of roads and traffic management devices.

107 Section 149 of the Act provides a general dispute resolution mechanism involving specified bodies and specified persons. Anything in a planning scheme or permit that requires that a matter must be done to the satisfaction of the Responsible Authority triggers the opportunity for an application under section 149. We consider that a broad interpretation should be given to the operation of section 149 to resolve disputes between specified bodies and specified persons.[33] We are satisfied that a dispute exists between the council and Dennis Family Corporation. That dispute relates to the satisfaction of the responsible authority about arrangements for the provision and standard of construction of roads and traffic management devices under condition 26 of the permit. We therefore find that the Tribunal has jurisdiction to consider this application for review under section 149(1)(a) of the Act.

108 Construction of Linsell Boulevard is included in the development contributions plan for LSP3. It is to be funded 100% by the development contributions plan. The standard of construction for Linsell Boulevard under the development contributions plan is specified in the Cranbourne East Development Plan and is to be a four lane divided carriageway.

109 As noted earlier, stage 1 of Linsell Boulevard has been constructed to this standard and paid for by the council in full from the development contributions plan account. Whilst council initially approved plans for construction of stage 2 to the same standard, a recognition that funds in the development contributions account were inadequate to pay for this led to a decision to only approve a standard of construction that would involve construction of the northern carriageway.

110 Whilst there have been various negotiations between the parties over the issue, and Dennis Family Corporation would prefer to see the ultimate version of Linsell Boulevard constructed as part of stage 2, it now accepts that construction of the northern carriageway is adequate from a traffic perspective to serve the Hunt Club Estate, at least in the short to medium term[34]. We therefore accept that at this stage, and in the context of this permit, construction of the northern carriageway of Linsell Boulevard as part of stage 2 is an appropriate standard of construction.

111 What are the implications of this?

112 Our finding is that the council is ultimately responsible for construction of Linsell Boulevard to the standard of a four lane divided carriageway. How and when this is achieved rests with council as the relevant development agency under the development contributions plan (subject to our early comments earlier regarding orderly and proper planning). Therefore, it may decide to proceed with the provision of these works in stages so long as the staged works meet the needs of the development it has approved permits for.

113 The council may reach agreement with Dennis Family Corporation to provide the northern carriageway of stage 2 of Linsell Boulevard in part or full satisfaction of levies payable as provided by section 46P(2) of the Act. Dennis Family Corporation should receive a credit for the value of the works provided and that credit may be offset against levies payable under permit P130/04A and against future levies payable under the development contributions plan. The credit or offset is not limited to simply the amount of levies payable under this permit. Sooner or later, within the 20 year period of the development contributions plan, the council as development agency must provide in full the works in the development contributions plan, which includes Linsell Boulevard, irrespective of whether the amount of levies collected (in money or kind) are sufficient to fully pay for the works. The council will need to fund the remaining cost of the works by other means.

114 We therefore find that the value of works carried out by Dennis Family Corporation in constructing stage 2 of Linsell Boulevard must be offset against the contributions levied upon Dennis Family Corporation under the development contributions plan. This includes present levies payable under the current permit and levies payable under future permits for any other land within the development contributions plan area.

INTERSECTION OF LINSELL BOULEVARD AND NARRE WARREN-CRANBOURNE ROAD

115 Like the standard of construction of stage 2 of Linsell Boulevard, the agreed standard of construction of this intersection has been a moving feast. This intersection is included in the development contributions plan and is to be funded 100%. The ultimate standard required for this intersection would involve complex signalisation, access to the proposed commercial centre on the south east corner of Narre Warren-Cranbourne Road and Linsell Boulevard, and the realignment of Camms Road on the west side of Narre Warren-Cranbourne Road. The realignment of Camms Road involves works in another development contributions plan area. However, the cost of the works in the LSP3 development contributions plan area to the ultimate intersection design standard will cost in the order of $1,500,000.[35]

116 The council has proposed an alternative intersection treatment known as a signalised 'Type C' intersection. It is essentially an interim arrangement that would satisfy traffic needs in the short to medium term, but ultimately most of the works would require to be demolished to enable a construction of the ultimate intersection. The cost of the signalised 'Type C' intersection would be in the order of $800,000, although these works would be redundant in the long term and there would also be a cost associated with the removal of those works.[36]

117 Dennis Family Corporation would prefer to build the ultimate intersection and would be prepared to carry the costs of this until such time as it can be reimbursed. This would benefit its development of the commercial centre on its land on the south east corner of the intersection. However, the council wishes to defer provision of the ultimate intersection and hence crystallising its cost at this time. At least it was inferred at the hearing that this was the reason. There may be other reasons which we are not aware of. However, if the council's attitude towards the provision of the intersection treatment of Linsell Boulevard and Narre Warren-Cranbourne Road is influenced by the council's belief that it is only responsible for the provision of infrastructure to the extent that there are funds available to the development contributions plan account, this belief is misguided.

118 As we have previously found, the council's responsibility is to provide all the infrastructure in the development contributions plan irrespective of its ultimate cost and irrespective of the amount of funds in the development contributions plan account. If there is a shortfall in funds in the account, then the development contributions plan should be amended. It is not the responsibility of Dennis Family Corporation to fund the works required for this intersection because those works are included in the development contributions plan. If it proposes a development that requires works outside the development contributions plan, then the developer may be required to pay for or provide these additional works by way of a condition in the permit. But it is not open to the council to include a condition in a permit requiring the provision of works, services or facilities by a developer where those works, services, or facilities are included in a development contributions plan. The developer is only responsible for payment of the levy under the development contributions plan. Payment of that levy may be made through the provision of land, works, services or facilities as provided for in section 46P in whole or in part. As we have said previously, the value must be offset against levies payable under the development contributions plan by that developer arising from either current or future permits.

119 In the final analysis, there may be no benefit to be gained by the council insisting on a construction of a signalised 'Type C' intersection, because the full value of these works provided must be offset against the Dennis Family Corporation liability for levies under the development contributions plan, notwithstanding the value of the works will be lost when the council is required to provide the intersection in its ultimate form. This is something that the council may wish to consider further.

120 In conclusion, we have decided to make orders in the revised alternative form sought by the applicant. We acknowledge that the forms of the orders sought has varied since the application for review was initially lodged, however we believe that the latest version submitted by the applicant adequately covers the situation. We will order that:

•

The council's requirements in respect of conditions 26 and 27 of permit 130/04A are varied to provide that the value of the construction of Linsell Boulevard Stage 2 (the section of road between the constructed Linsell Boulevard Stage 1, at Rochester Road, to Narre Warren-Cranbourne Road) and the construction of Linsell Boulevard and Narre-Warren-Cranbourne Road to a standard agreed between the applicant and the council in consultation with VicRoads is to be fully offset against present and future development contributions to be made by the applicant pursuant to the development contributions plan for Local Structure Plan 3 Cranbourne East.

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The engineering plans Drawings 1342/21A2/1-16 for Linsell Boulevard Stage 2 submitted by the applicant to the council are approved.

121 We have deliberately not referred to the signalised 'Type C' intersection at Narre Warren-Cranbourne Road and Linsell boulevard because the council may wish to review its opinion regarding the appropriate standard of construction required at this point of time in light of our decision. If the parties cannot agree on the standard under the terms of our order, they may refer any future dispute to the Tribunal again under section 149 of the Act.

[1] We will deal with the standard of construction of both Section 2 of Linsell Boulevard and the intersection of Linsell Boulevard and Narrre Warren/Cranbourne Road later.

[2] In this decision we are referring only to the development contributions plan for Local Structure Plan 3 Cranbourne East. However, we understand that there may be similar problems with respect to other development contributions plans in the Casey Planning Scheme.

[3] These problems were discussed by the Tribunal in Carson Simpson Pty Ltd v Casey CC [2006] VCAT 1725 at [44] - [49]

[4] See development contributions plan for Local Structure Plan 3 Cranbourne East, section 9.

[5] See, for example, the remarks of Chernov J A in Inline Courier Systems Pty Ltd v Walker [1999] 1 VR405 at [37] where he said, "it would be inappropriate to resort to Parliamentary debates in order to seek to create an ambiguity in a section which is otherwise, at least in relative terms, clear."

[6] [2005] VCAT 816

[7] See Department of Sustainability and Environment website, Development Contributions Guidelines: There are 3 documents that together form the Guidelines. We note that the version of the Development Contributions Guidelines on the DSE website is dated June 2003, which is prior to passage of the Planning and Environment (Development Contributions) Act 2004. Nevertheless, the Guidelines have been prepared in anticipation of amendments to the Planning and Environment Act 1987 regarding development contributions and are an outcome of the Development Contributions Review. The Guidelines are part of the package of reforms announced by the Minister for Planning following the Development Contributions Review and summarised in the document published by the Victorian Government Department of Sustainability and Environment in 2003, A new Development Contributions System for Victoria. This document is also available on the DSE website.

[8] [2000] VSC 352

[9] [2001] VCAT 2120

[11] Section 46K

[12] Section 46K(1)(b)

[13] Section 46K(1)(e)

[14] section 46K(1)(f)(a)

[15] Section 46K(1)(f)(b)

[16] Section 46K(3)

[17] Section 46N(1)(c)(d); sections 46O(n)(c) and (2)(c)

[18] Section 46P

[19] Section 46Q(2)

[20] 6 AATR 10 at 17-18

[21] In the third document on the DSE website, "Incorporating the DCP into the planning scheme".

[22] [2006] VCAT 1725

[23] [2006] VCAT 1725 at [32]

[24] [2006] VCAT 1725 at [49]

[25] Eddie Baron Constructions Pty Ltd v Shire of Pakenham 6 AATR 10 at 30

[26] We do not intend to canvas the issues surrounding section 173 agreements. We consider however that they must be entirely voluntarily and contain no element of cohersion. See "Development Contributions Guidelines", "Voluntary agreements", pp 5-6 of the first document on the DSE website.

[27] A contribution to works, services or facilities such a condition are limited to situations where the developer is responsible for them or responsible solely with the council, Minister or public authority.

[29] [2005] VCAT 956

[30] There is nothing to prevent a condition requiring payment of a levy as required by section 46N and another King Ranch type condition requiring the provision of works, services and facilities under section 62(5)(c) in the same permit so long as they relate to different matters.

[31] section 46P(2)

[32] section 46P(3)

[33] See Eco Resorts Aust Pty Ltd v Yarra Ranges SC [2004] VCAT 1190

[34] This was the evidence of Mr Turnbull on behalf of Dennis Family Corporation

[35] Letter Dennis- Price-Miller dated 25 April 2005 to City of Casey

[36] Letter Dennis- Price-Miller dated 25 April 2005 to City of Casey