Minister for Planning ignores heritage council to approve Shell House plans

By Jon Fleetwood & Sean Car

Minister for Planning Sonya Kilkenny has exercised call-in powers to greenlight the redevelopment of the iconic Shell House despite opposition from the Heritage Council of Victoria and the City of Melbourne. 

The decision marks the third ministerial call-in for a redevelopment of a Victorian heritage-listed site in as many years, in a move National Trust executive manager Samantha Westbrooke said, “undermines the integrity of the state heritage register”.

Since 2020, developer Phillip Nominees Pty Ltd has sought to build a new high-rise office tower at 21-25 Flinders Lane between Shell House at 1 Spring St and the century-old Milton House on Flinders Lane, both of which are heritage-listed. 

As part of the $203.5 million plans by Phillip Nominees, which owns 1 Spring St and 21-25 Flinders Lane, a rear section of Shell House designed by world-renowned modernist architect Harry Seidler will be demolished to make way for a shared podium.

The 32-storey office tower will include a bridge connection to Shell House at level 15, two retail tenancies and a café, while Milton House will also be partially demolished to open to the new building. 

Milton House, which was built in 1901 as a private hospital, will undergo a renovation, including internal reconfigurations to provide retail floorspace, and the adjoining public plaza facing Flinders Lane will be redesigned. 

As reported in CBD News, former Minister for Planning Richard Wynne called in the original application in January 2022 after Heritage Victoria refused it in August 2021 – a decision backed by the National Trust and the Australian Institute of Architects. 

At the time, Mr Wynne said he was “particularly concerned about new buildings cantilevering over heritage places” but maintained there was “no plan for the destruction of Shell House.”

In June 2022, Mr Wynne appointed an advisory committee to consider the Heritage Victoria refusals and the amended plans that had been initially supported by the City of Melbourne in April 2022.

Phillip Nominees subsequently resubmitted its plans (named Revision J) for the site, which were lodged with the City of Melbourne for comment on January 16, 2023. The council ultimately opposed the revised application due to several “design regressions”. 

The council raised concerns with the minister’s advisory committee about the reintroduction of a significant cantilever of the tower’s floorplate over Milton House and the Flinders Lane plaza.

Ms Westbrooke told CBD News that information provided to the advisory committee had shown that the City of Melbourne had noted the “obvious significant impacts to the heritage fabric of Shell House and its cultural heritage significance”. 

She added that, “the Heritage Council of Victoria recommended the application be refused, finding the proposal did not accord with, or respect, the registered values of the place.” 

“The rationale for construction of more office space when the way we work is evolving so rapidly is questionable at best, especially as research is showing the need for sustainable reuse of existing buildings rather than new construction in the face of climate change,” Ms Westbrooke said. 

But on June 6, 2024, Heritage Victoria was directed by Minister for Planning Sonja Kilkenny to issue a permit after the advisory committee determined in May last year that “the proposed tower will not affect the heritage significance” of either Shell or Milton Houses.

“The committee concludes the demolition and modification proposed for parts of 1 Spring St and Milton House are acceptable and will not inappropriately affect the cultural heritage significance of either place,” the report read. “The committee accepts the proposed tower will not affect the heritage significance of either place.” 

But in relation to Milton House, the committee noted that the scope of internal works warranted further consideration and recommended that a conservation management plan be prepared and approved “prior to the submission, approval and endorsement of final demolition plans.”

The committee included senior panel member for Planning Panels Victoria Sarah Raso (chair), architect Andrew Hutson, director of Heritage Matters Pty Ltd Dr Timothy Hubbard and planning expert Professor Roz Hansen.

In its review presented to the committee, the Heritage Council said, “The extent of demolition required to facilitate the proposed development will have unacceptable, irreversible, and adverse impacts on the state-level cultural heritage significance of Shell House.”

In recommending that a permit be refused, the heritage council also found that no evidence had been provided to demonstrate that the refusal of the permit applications would affect the economic use of either place.

But developer Phillip Nominees argued “there will be no impact to the design philosophy” and “the demolition and alterations are relatively minor”. 

Ms Westbrooke said the National Trust was disappointed by the approval, stating there had been “a concerning increase of recent ministerial call-ins pre-empting the outcome of appeals before the state’s independent Heritage Council”.

“Decisions about our most important places should not be made behind closed doors,” Ms Westbrooke said. 

This approval sets a dangerous precedent for other state listed sites with refused ‘highest and best use’ development proposals that have also been called-in by the Minister for Planning.

It marks the third ministerial call-in since 2021 along with the redevelopments of the historic No.2 Goods Shed in Docklands and the Bryant & May precinct in Cremorne, both of which were rejected by Heritage Victoria. 

In the 25 years prior to 2021, ministerial intervention for permit decisions at places on the Victorian Heritage Register had occurred only four times. 

Minister for Planning Sonja Kilkenny didn’t respond directly to questions from CBD News, but a government spokesperson highlighted that the minister’s advisory committee had determined that “the site’s modernist tower” and “southern entrance (which includes the Shell Mace sculpture) will not be impacted by the build.”

Lord Mayor Nicholas Reece said the City of Melbourne was “disappointed” that its “many recommendations” had not been included in the final design approved by the minister despite the council’s best efforts. 

“We’ve provided detailed feedback on the proposed plans for Shell House on multiple occasions – both to the developers and the minister,” Cr Reece said. 

“We will be interested to see how this development progresses. It’s important Shell House’s heritage significance is protected and the project delivers excellent design outcomes.”

“Both Shell House and Milton House are a valuable part of the city’s history, with their significance recognised by their inclusion in the Victorian Heritage Register.”

Under the Heritage Act 2017, the Minister for Planning can intervene in a permit application to take over responsibility for issuing a permit and can exercise call-in power under section 109 of the Act in relation to a permit determination that is under review by the Heritage Council of Victoria.

In 2022, the Parliamentary Inquiry into the protections within the Victorian Planning Framework Interim report, noted that a number of stakeholders had made submissions raising concerns with the use of ministerial call-in powers.

The report revealed that stakeholders had found that affected communities and other third parties are excluded from planning processes, call-ins lacked transparency and could be used to circumvent proper strategic planning, raising questions around procedural fairness. 

President of CBD residents’ group EastEnder Stan Capp slammed the development, saying there was “an indefatigable quest to build upon every square metre in our CBD regardless of our history” and that “a better balance is needed”.

“The approval of a development on this site is simply another example of decision makers who prioritise development at the expense of protecting the heritage decisions of people who came before,” Mr Capp said.