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Case Note: Amending Section 173 Agreements and 'in-principle' decisions

26 November 2019

In Kinchington Estate Pty Ltd v Wodonga City Council [2019] VSC 745, the Supreme Court considered the nature of decisions made under s 178A(3) of the Planning and Environment Act 1987 (Act) on whether agree in principle to a proposal to amend or end a Section 173 Agreement.

Kinchington Estate Pty Ltd (Kinchington) had recently acquired land with a Section 173 Agreement (the Agreement) registered on title. They applied to Wodonga City Council (Council) to delete two clauses from the Agreement. Council subsequently notified Kinchington pursuant to s 178A(3) that it did not agree in principle with the request to amend the Agreement (the decision). Kinchington sought reasons for this decision under s 8 of the Administrative Law Act 1978 (AL Act), a request Council also refused.

The dispute was heard in the Supreme Court of Victoria where Kinchington argued Council was acting as a ‘tribunal’ when it made the decision as it was bound by the rules of natural justice. Council disputed the assertion that the decision was an exercise of statutory power, and contended that if it was, it was not bound by the rules of natural justice and was not required to provide reasons under the AL Act.

The Court rejected the argument that the decision was not an exercise of statutory power, highlighting that the entire s 173 agreement framework is a creature of statute and it would be nonsensical to argue that decisions under s 178A(3) were not similarly confined by statute.

The Court also rejected Council’s contention that the decision was not a ‘decision’ for the purposes of the AL Act on the basis that it did not affect Kinchington’s legal rights. The Court found that an amendment to the Agreement would have affected Kinchington’s rights to develop their land and the refusal to give in principle support to the proposal impacted those rights.

Finally, the Court rejected Council’s contention that natural justice was not required to be observed and as such it was not acting as a ‘tribunal’ when it made the decision under s 178A(3). The Court was not satisfied that the statutory scheme underpinning s 178A(3) explicitly excluded natural justice. A clear statement to this effect is necessary to defeat the presumption that the common law will rectify any omission in the application of natural justice to the exercise of a statutory power, something the Court could not find in the Act.

Ultimately, the Court found Council was acting as a ‘tribunal’ for the purposes of the AL Act in making the decision under s 178A(3), and ordered it to provide reasons for its refusal to Kinchington.

This decision highlights that Councils should be mindful that the source of the discretion in s 178A(3) is entirely statutory and natural justice must be afforded to the parties when deciding on whether to agree to support a proposal in principle to amend or end an agreement. Councils should also be aware that any decision they make under s 178A(3), while unlikely to be subject to merits review, may be judicially reviewable and will need to be furnished by reasons upon request.

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