Frontlink appeal period lapses

On 11 March, the SRO confirmed that the appeal period had lapsed on the Supreme Court’s Frontlink decision. This means that the Supreme Court appeal from the VCAT decision will stand.

The decision, published on 11 February 2016 (Frontlink Pty Ltd v Commr of State Revenue [2016] VSC 25) deals with the GAIC and has significant implications to the administration of section 201RF(b) of the Planning & Environment Act 1987( Vic) (P&EA).

Property Council members may recall that in May 2015, VCAT decided that a road widening subdivision was not undertaken for the sole purpose of providing transport infrastructure because it was also being undertaken for the purpose of residential land development.  The VCAT decision was controversial, not least because it validated a very narrow reading the Commissioner (SRO) had been giving to section 201RF(b).

Section 201RF(b) is important because it is one of the few mechanisms within the P&EA under which a landowner can excise from a GAIC-pregnant title land area earmarked in a PSP for State infrastructure use.  If the section is given a narrow reading, then the opportunity for a landowner to implement an excluded subdivision and reduce the GAIC liability on an affected title to a level that was intended under the legislation is severely curtailed.  A landowner is then left to pay GAIC on land that will not be utilised for residential subdivision purposes and will instead be used by the State and its receiving agencies for State infrastructure purposes.

In a significant win for landowners, developers and the property industry at large, Croft J of the Supreme Court held that the VCAT decision (and by implication the Commissioner’s approach towards section 201RF(b)), proceeded on a “fundamentally erroneous basis” and “misconstrued the relevant statutory provisions”.  In finding that the taxpayer’s road widening subdivision was undertaken for the sole purpose of providing transport infrastructure, Croft J held that “the fact that the road widening subdivision was entered into in order to bring about the [larger] residential subdivision does not make the residential subdivision a purpose of the road widening subdivision”.    

Because of the way in which section 201RF(b) is used by landowners and developers in practice to limit the incidence of GAIC on affected titles, the decision has far reaching implications for the SRO, MPA and the Government at large.  We look forward to working closely with Government on their next steps.