In a keenly anticipated judgment, the Court of Appeal has handed down its decision in the Toowoomba Regional Council v Wagner Investments infrastructure charges case. Both parties had a measure of success, with the Court upholding Wagner Investments challenge to the trunk stormwater charges but determining Council’s approach to the assessment of trunk transport charges was valid, meaning it was entitled to levy charges in that category.

Key points:

The Court of Appeal’s judgment contains the following key points:

  • Levying the charge: There must be a link between the development and the trunk infrastructure in the form of additional demand placed on the network to justify the levying of infrastructure charges. The Court of Appeal reinforced that this additional demand must be over and above what the current uses of the subject land generate. The concept links back to the term “additional demand” used in section 636 of the Sustainable Planning Act 2009 (SPA), noting that section 120 of the Planning Act 2017 (Planning Act) now uses the term “extra demand”.
  • Calculating the charge: There is no requirement for a Council to calculate the levied charge by reference to actual additional demand generated by the development (provided there is some additional demand). The appropriate infrastructure charge for additional demand generated by the development is reflected in the “broad brush” application of the adopted charge (that is, the gross floor area (GFA) based approach used in Council’s charges resolutions, rather than a site-specific assessment).
  • Limits on the charge: There is an entitlement to issue an Infrastructure Charges Notices (ICN) for development at both the material change of use (MCU) and reconfiguring a lot (ROL) stage. However, at the time of payment, a check is required to ensure that the maximum charge has not been exceeded. In practice, this will mean consideration must be given to appropriately applying credits depending on which ICN has been paid first.

Background

To understand the Court of Appeal’s decision, it is useful to first revisit the decision of the Planning and Environment Court (P&E Court) at first instance. In the P&E Court, Wagner Investments successfully challenged a number of ICNs issued for a range of development approvals at the Brisbane West Wellcamp Airport and Wellcamp Business Park – a site located approximately 15km west of Toowoomba’s central business district. Our alert on that case can be found here.The P&E Court ordered that:

  • stormwater charges levied in the ICNs be set aside;
  • the appeals concerning trunk transport charges levied for certain uses be returned to Council, for further consideration and assessment; and
  • charges levied in connection with an approval for reconfiguration of a lot (where there was also an existing approval for material change of use) also be set aside.

For the challenge to the stormwater component of the charges, the P&E Court determined that there was no basis for a charge as there was no trunk stormwater infrastructure provided or planned for the subject development. The P&E Court determined that there was no trunk stormwater infrastructure located downstream from the development and that Westbrook Creek (which Council had pointed to as trunk infrastructure) was not specifically identified in either Council’s PIP or the LGIP as trunk infrastructure. The Court also accepted evidence that all stormwater impacts were mitigated on site.

For the transport component of the charges, the P&E Court accepted the argument advanced by Wagner Investments that there was a disconnect between the GFA used to calculate the charge for certain uses and actual impacts (or demand) on the transport network that would be generated by that development. The judge concluded that, because the Council’s charges resolution called for a charge “based on an assessment of use and demand” for “specialised uses”, what that required was a “meaningful attempt to calculate or estimate the demand on transport trunk infrastructure each of those uses might generate, rather than the adoption of the broad brush GFA approach adopted by the Council.”

Finally, for the ROL charges, the P&E Court concluded that there was no rational link between the reconfiguration of the land and the estimated additional demand Council argued would be placed on the transport trunk infrastructure network. – that is, that the act of subdivision would not generate demand on trunk roads. Notably, an ICN had also been issued with respect to a material change of use approval over the same land. The judge concluded that “the levied infrastructure charge could not sensibly be said to be based on a reasonable estimate of likely additional demand placed upon trunk infrastructure that would be generated by this (ROL) approval”.

Challenge in the Court of Appeal

In the Court of Appeal, Council argued there were a number of legal errors in the P&E Court’s decision including that:

  1. in allowing the appeals relating to stormwater infrastructure charges, the primary judge erred by misconstruing the Council’s Planning Scheme by failing to recognise Westbrook Creek as trunk infrastructure and, by assuming that, a charge would be invalid if particular infrastructure could not be identified;
  2. in considering the transport charges, the judge misconstrued the term “based on an assessment of use and demand” and fell into error by concluding it was unreasonable to adopt GFA to calculate infrastructure charges for certain uses; and
  3. the judge erred in concluding that no additional demand would be created by a subdivision of the land.

Findings on stormwater

The Court of Appeal determined that Westbrook Creek did fall within Council’s identified stormwater trunk infrastructure. However, that was not the end of the matter. The Court pointed out that the next step in the enquiry was whether Westbrook Creek was stormwater trunk infrastructure that could justify the levying of charges through an ICN for the subject developments.

The Court of Appeal noted that there was no challenge to the primary judge’s finding that none of the trunk stormwater infrastructure situated in Westbrook Creek (or in the Charlton Wellcamp Enterprise Area) was located downstream of the subject developments. As such, there could be no additional demand on the stormwater trunk infrastructure as a result of the developments.

The Court of Appeal therefore upheld the P&E Court’s decision, but reframed the reasoning slightly. Essentially, the Court of Appeal held that there could not be a stormwater infrastructure charge if the development did not place any additional demand upon trunk stormwater infrastructure. The P&E Court had held that there could be no stormwater infrastructure charge if there was no stormwater trunk infrastructure for the development.

Findings on traffic

At the heart of the dispute between the parties was a difference in approaches to the assessment of “additional demand” called up by section 636 of the SPA (the Planning Act now uses the term “extra demand” in the equivalent provisions). Wagner Investments emphasised that section 636 of SPA limited an infrastructure charge to additional demand placed upon trunk infrastructure that will be generated by the development. It contended that Council’s Charges Resolution must be construed in light of that concept, so that when it used the term “an assessment of use and demand” for “specialised uses”, that required Council to carry out an approval-specific assessment of actual demand of the development on the trunk infrastructure. In contrast, the Council’s approach was that the Charges Resolutions did not require an ad hoc assessment of individual applications, but required the Council to select one of the other development categories in its Charges Resolution for the purpose of applying the adopted charge for that category to the “specialised uses” that were the subject of the dispute.

The Court of Appeal determined that Council’s approach was correct. It agreed that, properly construed and read in the context, the “assessment of use and demand” called for by the Council’s Charges Resolution simply required Council to select the appropriate development category (i.e. the use which, in general terms, was comparable to the “specialised uses”) in the Charges Resolution and apply the charge rate for that use. The Court of Appeal concluded that the P&E Court judge had erred by adopting the approach advanced by Wagner Investments, which relied on expert evidence about the relationship between the GFA of the development and the actual demand placed on transport infrastructure.

Rather than remitting the appeals to the P&E Court, the Court of Appeal set the orders of the P&E Court aside and dismissed the appeals, meaning that Wagner Investment’s challenge to the trunk transport charges was unsuccessful.

Findings on ROL

The final point considered by the Court of Appeal was whether a challenge to charges levied at the ROL stage of a development should be upheld.

The Court of Appeal noted that the development involved both reconfiguration of a lot, and an accompanying application for a material change of use. It considered that it was not to the point that, technically, the reconfiguration did not result in any change to the demand on infrastructure networks (as had been observed by the P&E Court). The relevant consideration was that reconfiguration of a lot is one of the trigger points for the issuing of an ICN in relation to that development.

However, the Court noted that Council’s Charges Resolution expressly limited the accumulation of the charges, so that they do not exceed the maximum adopted charge for the development. That meant that, when the time came for payment, a check was required to ensure the maximum adopted charge was not exceeded. In the meantime, there was no error in issuing the ICN in conjunction with the reconfiguration of lot application. It was a simply a question of timing as to which ICN was paid first. Although not specifically addressed in the Court of Appeal’s judgment, this presumably means an appropriate credit should be applied to the charge paid second in time – a point which seems to have been accepted by Council.

Conclusion

The Court of Appeal’s judgment reinforces the importance of “additional demand” (or “extra demand”) as a key concept for infrastructure charging. There must be a link between the development, the trunk infrastructure and the levied charge in the form of “additional demand”. However, the Court of Appeal’s decision in Toowoomba Regional Council v Wagner Investments establishes that there is no requirement to undertake a site-specific assessment of “additional demand”. The scheme set up by SPA (and the Planning Act) adopts GFA as a shorthand method for assessing additional demand, and the appropriate charge can be is imposed by applying this broad brush approach