How the Environmental Audit Overlay applies to the commencement of a sensitive use on an upper level of a subdivided multi-storey office building

20 February 2020

The recent decision of Almia Pty Ltd v Port Phillip CC (Red Dot) [2020] VCAT 163 (Almia) assists the Tribunal, Councils and EPA Victoria (EPA) in determining ‘land’ for the purposes of an audit for a sensitive use within the Environmental Audit Overlay (EAO).


On 7 August 2019 Almia Pty Ltd (Almia Pty Ltd) applied to the Tribunal for a declaration under section 149A(1)(a) of the Planning and Environment Act 1987 (PEAct) concerning the interpretation of clause 45.03-1 Environmental Audit Overlay of the Port Phillip Planning Scheme (Scheme). Specifically, declarations as to the relevant ‘land’ to which EAO requirement applies and, by implication, the relevant segment of the environment to be assessed.

Almia Pty Ltd owns level 11 (Land) a separate strata title within the building at 222 Kings Way, South Melbourne (Site). The Land is zoned Mixed Use Zone (MUZ) and affected by an EAO. Almia Pty Ltd proposes to use the Land for residential purposes. A planning permit is not required for the change to a residential use, nor for works associated with the change of use under the MUZ. However, under the EAO, before a sensitive use commences (in this case a residential use), a certificate of environmental audit must be issued for the land, or an environmental auditor must make a statement that the environmental conditions of the land are suitable for the use.

The purpose of the EAO is stated in clause 45.03 to be ‘to ensure that potentially contaminated land is suitable for a use which could be significantly adversely affected by any contamination’.

EPA argued that ‘land’ referred to in the EAO requirement comprises the whole of the land in or under the building, and the scope of the environmental audit requires an assessment of soil and/or groundwater contamination on land under the building not owned by Almia Pty Ltd. Almia Pty Ltd argued that ‘land’ referred to in the EAO requirement is limited to the separate title to the upper level (which it owned and where the residential use will commence).

Almia went before Deputy President Mark Dwyer on 31 January 2020.

Tribunal’s findings

The Tribunal noted that zones and overlays apply in a spatial context that includes the strata of land above ground. Land is defined by the PEAct, in summary, to include land, buildings and various interests in land. The Tribunal noted that a lot is a separate parcel of land which excludes common property. Therefore, the lot which makes up the Land is separate from the land in other subdivided lots within the strata plan, and from the land at ground level (including common property).

In considering how the EAO applies to the stratum of land about ground level, at paragraph 28 the Tribunal noted that:

“I consider that the wording of the clause must be taken to mean that before a sensitive use commences on a particular parcel of land, a certificate or statement must be provided for that same parcel of land. There are a number of reasons for preferring this interpretation.”

The Tribunal at paragraph 1 made the following declarations in favour of Almia Pty Ltd:

“In the present case, the relevant ‘land’ where the sensitive use will be commenced (i.e. a change from an office use to a residential use), and for which an environmental audit or statement must be provided, is Level 11, 222 Kingsway South Melbourne (being the land comprised in certificates of title Volume 10388 Folios 182, 183, 184, 185 and 387).”

Case for regulatory review

EPA had previously adopted the position taken by Almia Pty Ltd in this case and supported the approval by a previous auditor who issued an audit for residential use of level 9 of the building. However seemingly due to changes in personnel and a change of approach EPA did not support the audit being limited to the relevant title and were insistent on soil and groundwater tests. This was in the context of a fully developed site used for offices and residential use with no works at ground level. It is also important to note that EPA audit guidelines did not recognise this type of situation.

The Tribunal noted that there was a case for regulatory review due to the fact that:

“As this decision reflects, Councils and the EPA have adopted different interpretations at different times as to how the EAO should be applied to the commencement of a sensitive use on an upper level of a subdivided multi-storey building. The EAO itself provides no guidance on this issue, nor the opportunity for discretion in anomalous cases.”

The Tribunal therefore directed that a copy of this decision be forwarded to the Minister for Planning, and the EPA, to consider whether any regulatory clarification (i.e. the operation of the EAO) is required.

The effect of the Almia decision on future applications for sensitive uses within the EAO

The Tribunal found in favour of Almia Pty Ltd and held at paragraph 41 that:

“…For the purpose of the EAO and clause 45.03-1 of the planning scheme, the ‘land’ for which an environmental audit or statement must be provided is the relevant parcel of land (commonly identified by title or lot) within which the sensitive use will be commenced.”

The effect of this decision is to clarify a historic issue which had previously been dealt with by the Tribunal (e.g. Architype Australia Pty Ltd v Yarra CC (Red Dot) [2010] VCAT 497 where Member Martin noted that one interpretation of the EAO “could lead to some extreme results that the average person would probably regard as disproportionate and absurd”.

The Alima decision now provides clear guidance to EPA and councils that:

“In a multi-storey building in an area covered by an Environmental Audit Overlay, where the building has been subdivided, the ‘land’ for which an environmental audit or statement must be provided may comprise a stratum of land in a separate title or lot above ground level, rather than all of the land in or under the building.”

How can we help?

HWL Ebsworth has advised on many planning and environment matters, involving all aspects of planning and development and issues affecting contaminated sites. Our market leading knowledge in this sector enables us to deliver value for clients beyond the provision of legal services, regardless of business type or any given project phase.

To discuss this decision and how it may affect your business, please do not hesitate to contact us.

This article was written by Mark Bartley, Partner and Nicholas Bradley, Solicitor.

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