If you get a copy of VSB14 it sets out the NCOPs which are what Vicroads have signed off on, you will see that there has always been a weight to cubic capacity formula which uses the unladen weight of the heaviest sedan version of the model in question to calculate the cubic capacity in ccs. This in an HQ worked out to be 451 cubic inches, so yes the 427 is the largest allowed in an HQ. If your engineer has only just "discovered" this I think you need to look for someone with a better understanding of the regulations.
https://infrastructure.gov.au/roads/.../vsb_ncop.aspx
Here is the link to the Dept of Transport site and has all the NCOPs in the form of VSB14 which has about 20 parts. I have been studying these and the 2nd and 3rd generation ADRs since starting the build of my ICV motorbike in 2007
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