The recent Victorian Supreme Court decision of Frontlink Pty Ltd v Commissioner of State Revenue has determined the approach to be taken by the State Revenue Office when deciding whether certain subdivision of land events fall under an exemption category of the Growth Areas Infrastructure Contribution (“GAIC“) scheme.
Justice Croft determined that a strict approach is to be taken, whereby the most immediate and proximate ‘purpose’ of a subdivision is the purpose intended by parliament when statutes refer to the ‘purpose’ of a transaction.
Facts
Frontlink Pty Ltd (“Frontlink“) organised staged subdivisions of a piece of land at 181 Grices Road, Clyde North (“Subject Land“), as part of the Clyde North Precinct Structure Plan. Under the Planning and Environment Act, issuing a Statement of Compliance for a subdivision is an event that triggers GAIC liability, unless it falls under a category of exemption.
At 3:30pm on 28 June 2013, Frontlink received a statement of compliance for subdividing the Subject Land into two parts (“Road Widening Subdivision“). One part created a road reserve on the land while the other was to be further subdivided for residential housing.
At 3:48pm on the same day (18 minutes later), Frontlink was issued with a statement of compliance for a plan of subdivision which provided for the residual parcel of the Subject Land to be broken into 42 residential blocks and superlots (“Residential Subdivision“).
The Commissioner of State Revenue (“SRO“) submitted that the Road Widening Subdivision triggered the first GAIC event, requiring payment of $2,013,127.20 for 23.695 ha of land.
Frontlink argued that the plan of subdivision for the road widening fell under s 201RF(b) of the Act. S 201RF(b) states that if ‘the purpose of the subdivision is solely to provide land for transport infrastructure or any other public purpose’ it is an excluded subdivision from GAIC liability. This would mean that Frontlink was liable to pay $1,900,555.20 on 22.37 ha of land.
VCAT hearing
In the original hearing, the Victorian Civil and Administrative Tribunal (“VCAT“) found in favour of the SRO. The Tribunal considered that in making its GAIC assessment, the SRO must ‘look at the entire circumstances and the entire transaction,’ incorporating all the events that took place on 28 June 2013.
VCAT gave great weight to the fact that the Residential Subdivision occurred a mere 18 minutes after the Road Widening Subdivision, which suggested that the purposes of both subdivisions intertwined. They found that the intention of Frontlink was always to subdivide the residential blocks as well as to provide for road widening and therefore, the ‘purpose’ of the subdivision was not solely to provide for land for transport infrastructure or other public purpose.
Supreme court appeal
In order to correctly interpret the provision of the Act, Justice Croft in the Supreme Court appeal decision found that the critical task was to analyse the meaning of the word ‘purpose’ in this statutory context. Specifically, he asked, ‘which of several possible purposes, each applicable at a different level of generality, is the purpose which is referred to by the legislation?’.
Justice Croft found that in the context of statutory provisions that refer to purpose, the provision required a particular, rather than a general approach including consideration of the relevant transaction in the context of statutory provisions that refer to purpose.
The immediate and proximate purpose of the Road Widening Subdivision was to provide land for transport and infrastructure and as such, was exempt from GAIC liability. Justice Croft noted that while the Road Widening Subdivision may have been entered into for the implementation of the residential subdivision, it did not make implementation of the residential subdivision a ‘purpose’ of the Road Widening Subdivision.
Summary
Under the s 201RA of the Act, an event that triggers GAIC liability includes the issue of a statement of compliance of a subdivision, but does not include an ‘excluded event’.
The strict approach taken by Justice Croft allows for initial subdivisions undertaken for utility installations, transport and schools to be exempted from GAIC liability.
This decision has important ramifications for land owners of areas of land eligible for GAIC. If you are contemplating a subdivision that includes provision for land that falls under the exemption categories, it will be beneficial to undertake such subdivision as a first step to ensure that only the necessary area of land is calculated to form a GAIC liability.
If you think a similar situation may apply to you, please contact us for more detailed advice to ensure that events that are eligible for a GAIC exemption are staged in a certain way to avoid liability for a larger area of land.
We note that it is possible for the SRO to appeal Justice Croft’s decision. HWL Ebsworth will continue to follow this matter and share any changes to the GAIC regime.