Supreme Court clarifies obligation to consider social and economic effects of planning scheme amendments

Dustday Investments v Minister for Planning & Melbourne City Council [Dustday] represents the first judicial consideration of the current section 12(2) of the Planning and Environment Act 1987.

Section 12(2) was amended in 2013 to mandate that a planning authority take into account the social and economic effects of a planning scheme amendment.

This potentially adjusted the previous approach taken by Planning Panels to heritage matters, namely that it is generally not appropriate to consider factors other than heritage significance when considering a proposed Heritage Overlay, with factors such as economic considerations regarded as relevant to a permit application.

The exact impact of this amendment has been the subject of speculation within the industry.

The proceeding arose following a Planning Panel recommendation and Council resolution to adopt Amendment C207 to the Melbourne Planning Scheme – applying a Heritage Overlay to a North Melbourne Warehouse that Dustday Investments (the Building) wished to demolish.

Dustday Investments sought a declaration from the Supreme Court that the planning panel’s recommendation, and the May 2014 Council resolution, to adopt the Amendment were affected by legal error and therefore invalid. Its primary argument was that the Planning Panel had misdirected itself by considering that the social and economic factors flowing from the imposition of a Heritage Overlay on a building in poor condition could only be relevant where the poor condition made demolition inevitable.

Dustday Investments also advanced an alternate ground - that the Planning Panel made a finding for which there was no evidence and therefore acted unreasonably or irrationally. It further contended that the Council resolution was affected by legal error by virtue of it adopting the Planning Panel recommendation.

The Supreme Court confirmed that the report and recommendations of a Planning Panel are subject to judicial review but ultimately rejected Dustday’s arguments. It held that the Planning Panel’s approach tying consideration of social and economic factors to inevitable building demolition was not a reviewable a statement of law but rather a description of the weighting the Planning Panel afforded to the competing merits of the amendment.

The Supreme Court also utilised similar reasoning in rejecting Dustday Investments’ alternative ground. It found that the Planning Panel gave extensive consideration to Dustday Investments’ submissions regarding the Buildings condition and prospects for conversion but found them ‘to be wanting’.

The Court also accepted that a Planning Panel analysis would be more circumscribed than the assessment that would take place later in the planning process, for instance where a permit application is on foot. It noted that the ‘assessment of costs associated with restoration and adaptive reuse of a heritage building in poor condition is crucially informed by an understanding of the overall scheme of development, including the nature of the proposed use, and the likely costs and returns.’ The Court foreshadowed a Planning Panel giving greater emphasis to costs if a re-use proposal was able to be examined at the time of the panel hearing.

Dustday confirms that planning authorities continue to enjoy a wide discretion to weigh competing considerations at the planning scheme amendment stage, with section 12(2) simply imposing an obligation to give consideration to social and economic effects when assessing the merits of an amendment.

It may therefore be difficult to successfully persuade a panel not to impose a Heritage Overlay at the amendment stage, in the absence of a re-use proposal for the site.  

For more information contact:

Greg Tobin
Principal
Harwood Andrews
T: 03 5225 5252
E: gtobin@harwoodandrews.com.au