Amendments to Planning Permits in Victoria – Transformation Principle overturned, with a caveat

Written by Mark Beaufoy, Mark Bayliss and Tom Crompton.

The Victorian Supreme Court in Mondib Group Pty Ltd v Moonee Valley City Council [2021] VSC 722 (Mondib Case), has recently overturned a longstanding principle established by VCAT that an amendment of a planning permit cannot amount to a ‘transformation’ of the original permit.

The ‘transformation principle’ was established in a line of VCAT decisions and held that s 72 of the Planning and Environment Act 1987 (PE Act) did not empower amendments to existing planning permits that amounted to a ‘transformation’ of what was allowed under the original permit. 

However, in a decision that may have substantial ramifications for all those who use the Victorian planning system, the Supreme Court found that VCAT’s application of the transformation principle misconstrued the broad permit amendment power in section 72 of the PE Act.

Our analysis of the Supreme Court’s decision in Mondib and the possible practical ramifications for the Victorian planning system follows below.

The facts

In 2016, the Moonee Valley City Council granted a planning permit under the PE Act to Mondib Group Pty Ltd. The permit authorised the development of a multi-storey apartment with ground floor retail in Moonee Ponds. No permit was required for the accommodation use of the apartments.

Mondib applied to amend the permit under section 72 of the PE Act to develop the land as a hotel and a restaurant rather than apartments and retail and to make various associated amendments to permit conditions and the internal and external building layout and design.

The Council refused to grant the amendment and Mondib applied to VCAT for a review of the decision.

VCAT summarily dismissed Mondib’s application for review as ‘misconceived or lacking in substance’ under section 75 of the Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act) on the basis that the amendment would transform rather than amend the original permit.

VCAT identified various amendments to the use and design of the proposal that VCAT considered amounted to an impermissible transformation of the original permit and held as follows:

…the combination of changes proposed leads to a transformation, rather than an amendment of the Permit. The changes to the proposed uses, the changes to the internal layout and external appearance of the building and the modified conditions … [t]he differences in the appearance and layout, and the permit conditions are a product of the change in the purpose of the uses proposed. In my view, the development approved by the Permit is proposed to be changed, and what results is a different permit, as opposed to a modified permit.¹

The Supreme Court appeal and decision

Mondib appealed to the Supreme Court on two grounds, namely that:

1. VCAT incorrectly adopted the concept of ‘transforming the permit’ when construing the words ‘amendment to the permit’ (the latter being the words found in s 72 of the PE Act); and
2. the power for VCAT to summarily dismiss Mondib’s review application was not available, because even if the ‘transformation principle’ was legally correct, the permit application could have been changed to bring it within the scope of the s 72 amendment power.

In upholding ground 1 and deciding that section 72 does not accommodate the ‘transformation principle’, the Supreme Court found that the s 72 amendment power (which was amended in 2004) is intended to be as broad and flexible as possible and that this intention was inconsistent with VCAT’s transformation principle.²

In rejecting the transformation principle, the Supreme Court also distinguished or overruled a line of previous VCAT cases dealing with amendments to planning permits, including Addicoat v Fox (No 2)[3], Bestway,⁴ Coles Property ⁵ and Central Estate Properties.⁶

The Supreme Court queried why VCAT continued to uphold the transformation principle after VCAT in Bestway identified the need for a flexible and resilient planning system and acknowledged there is “nothing more special” about a new permit application compared to an amendment application.

After considering those previous decisions, the Supreme Court concluded that the nature and extent of permit amendments is not a threshold issue relevant to the s 72 permit amendment power, but is just another matter that needs to be assessed as part of the planning merits of the amendment application.

However, in doing so, the Supreme Court also recognised that “to allow a transformative amendment might not be consistent with good planning practice and current controls” and that s 60(1A)(j) of the PE Act still allows Responsible Authorities to consider ‘any relevant matter’ when assessing the merits of an amendment application.⁷

It followed from the above that Mondib’s application for review to VCAT could not have been ‘misconceived or lacking in substance’ and the Supreme Court found that VCAT should not have summarily dismissed it. The Court upheld Mondib’s appeal, found that the proposed amendment was a lawful exercise of the s 72 amendment power and remitted the matter back to VCAT for a hearing of the amendment application on its planning merits.

Key practical implications of the Mondib decision

The transformation principle established by VCAT had created additional legal and procedural risk for permit holders seeking to amend, due to uncertainty about whether an amendment constituted a transformation.

Assuming the Mondib decision survives any further appeal, it represents a fundamental change in the way that s 72 is applied by planning decision-makers. It will provide significant additional procedural certainty for permit holders by ensuring that Responsible Authorities and VCAT must at least conduct a planning merits assessment, rather than simply dismissing or refusing to deal with a transformative amendment application. 

While this increased procedural certainty will be welcomed by permit applicants, given the Supreme Court’s comments that transformative amendments may still be contrary to good planning practice, we expect that some Responsible Authorities may still refuse transformative permit amendments on this basis. However, that will be one of many planning issues to be debated in the context of each amendment. The decision in Mondib strongly supports the proposition that flexibility is paramount when considering the amendment power. It should provide additional certainty and flexibility for permit applicants and developers grappling with Victoria’s planning system.

If you have any queries about the effects of the Mondib decision on planning permit amendments, please contact Mark Beaufoy, Tom Crompton or Hubert Algie.