Red Dot Decision Axicom v Melton City Council VCAT planning decision commercial competitor planning merit and maintaining commercial advantage

The recent decision of the Victorian Civil and Administrative Tribunal (VCAT) in Axicom Pty Ltd v Melton City Council (Red Dot) [2020] VCAT 190 (Axicom) provides helpful statements regarding factors to be considered in deciding whether proceedings lack planning merit and are commenced to maintain a commercial advantage.

Likewise it provides developers and business operators with guidance on the bases for objecting to an application for a planning permit during the permit application process where the proposal, if approved, will be in commercial competition with the objector’s operations.

The decision in Axicom has been given “Red Dot Decision” status.  It has been considered of interest and significance for its interpretation of section 75 of the Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act), the principles of summary dismissal in a planning matter (or striking out a matter) and the question whether an application is devoid of planning merit, lacking in substance and intended to maintain a commercial advantage.

The decision is relevant where a commercial competitor is considering objecting to any type of proposal (e.g. a telecommunications facility as in Axicom, the development and operation of a medical centre or other health facility, a gymnasium or retail business), highlighting that the objection must have merit and substance from a planning perspective.

Can a commercial competitor object to an application for a planning permit?

The answer is yes.

However, while a commercial competitor can object to an application for a permit, it must be one of substance based on proper planning principles to carry weight, to be considered by the responsible authority and avoid the costs associated with being challenged in any proceeding ultimately commenced in VCAT.

In addition, under section 52(2A) of the Planning and Environment Act (1987) a responsible authority may reject an objection, in the planning application process, which it considers has been made primarily to secure or maintain a direct or indirect commercial advantage for the objector.

What was the decision in Axicom?

The Tribunal ordered the proceeding commenced by Axicom (a third party objector) for review of Council’s decision to grant a permit, be summarily dismissed.  The Tribunal found that:

  • the proceeding was misconceived or lacking in substance because it was devoid of planning merit having regard to Axicom’s grounds for review;
  • the proceeding was vexatious and an abuse of process, because it was brought for a collateral purpose and intended primarily to secure and maintain a commercial advantage; and
  • the issues raised by Axicom in its objection and application for review were all objectively unsustainable and bound to fail.

To appeal the decision of VCAT, proceedings have been filed by Axicom in the Supreme Court on 19 March 2020 against Melton City Council and others, in the Trial Division.  We will report on the relevance and outcome of these proceedings as they progress.

What were the facts in Axicom?

In this case Council had made a decision to grant a permit to the company Stilmark Holdings Pty Ltd (Stilmark) for the development of a mobile phone tower comprising monopole, antennas and associated equipment.  Axicom is a commercial competitor to Stilmark and has an existing facility nearby the proposed facility (180 metres).

Vodafone used the Axicom facility but proposed to transfer its facility to the new Stilmark facility, which would result in Axicom losing the tenant of its tower.  Despite this, Axicom argued that its objection to the new Stilmark facility was based on legitimate planning grounds as well as principles under Telecommunications legislation regarding visual amenity and co-location of telecommunications facilities.

Axicom lodged an application for review of Council’s decision to grant a permit to Stilmark, at the Tribunal.  Stilmark sought to have Axicom’s proceedings dismissed,  supported by the Council,  on the basis it was void of planning merit and was intended to gain a commercial advantage.

In reaching the decision referred to above Deputy President Mark Dwyer states at paragraph 61:

….I am satisfied that Axicom is simply seeking under the guise of a town planning objection, to frustrate a competing business from establishing nearby…..

Principles for summarily dismissing or striking out a proceeding in the Tribunal

Whilst VCAT acknowledged that an application for summary dismissal must meet a high bar and such applications are rare in the planning context, in this matter VCAT decided the application for summary dismissal succeeded as the case was unsustainable.

Section 75 of the VCAT Act provides that VCAT may make an order summarily dismissing or striking out all or part of a proceeding that, in its opinion is:

  • frivolous, vexatious, misconceived or lacking in substance; or
  • is otherwise an abuse of process.

In Axicom, VCAT cited the principles relating to section 75, for a proceeding to be dismissed, adopting those set out in previous decisions of VCAT. The general principles include that the matter must be obviously unsustainable in fact or law or, must be bound to fail.  In addition, at the same time the power of VCAT should be exercised with care and it must be very clear the proceeding is hopeless.

In summary, the Tribunal found that there can be a proceeding in these circumstances (third party objector planning reviews) that will be devoid of planning merit, be brought for a collateral purpose by a commercial competitor and be bound to fail, for the purposes of section 75.

Can third party commercial competitors successfully object to an application for a planning permit?

Deputy President Dwyer cites previous decisions of VCAT to support the statements regarding third party objectors who are commercial competitors.  At paragraph 20 he states:

It is clear that a third-party in a town planning matter is not vexatious or an abuse of process just because the objector is a competitor.  It is the planning merits of the objection that are important.

Lessons to be learned

The above statement is important for developers or those with existing operations who wish to object to a proposal by a potential commercial competitor and have an interest as neighbours or in the consistent and orderly decision making under the relevant planning scheme.  It is not out of the question to do so if you or your company is clearly in commercial competition, however the objection must be based on proper planning principles.

Any planning objection must carefully consider the planning merits prior to any objection being made.

At Burke Lawyers, we provide expert legal advice specifically tailored to assist you in purchasing and developing property as well as planning issues that arise as an established business operator seeking to raise legitimate planning concerns about a development proposal that might impact your business. Our all-inclusive approach will ensure you are set up for success by covering the relevant aspects of planning, property, development and commercial matters. To discuss further, please contact Kristy MuhlhanPrincipal, who heads our Property and Property Development Team at Burke & Associates Lawyers on or +61 3 9822 8588.

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