I believe there's a road rule that basically obligates a motorist to pass a cyclist with a clearance of at least one metre.
However, I can't see a matching rule that obliges a cyclist to pass no closer than one metre from a motor vehicle.
Does this mean that if a cyclist is closer than a metre to a car, most likely because they're trying to pass a car that is stationary or moving slowly in a line of traffic, and the car then drives off, that the driver has technically committed an offence?
I think the rule is a bit of common sense and its to protect the rider. You won't see police out with a measuring tape. On a regular road road, cars should give the space and bicyclists should want to have as much space as possible.
However, I ride through Melbourne & surrounds and its sometimes impractical for a car and a bicycle to be 1m apart at all times. The biggest obstacle for me is getting doored from parked cars so I try and ride 1.5m from parked cars. That at times puts me very close to the 1m mark however its fairly safe as the traffic is mostly slow. Prime example OP, of cars passing within 1m as well as bicyclists passing within 1m in this mapview of Gertrude St. Fitzroy
The Amy Gillett Foundation has been pushing for 1 metre passing distance, VicRoads also recommends this but I don't think it is law except for in Queensland: http://www.qld.gov.au/transport/news/features/cycle-safe/ind…
By law motorists must give: a minimum of 1 metre when passing cyclists in a 60km/h or less speed zone, at least 1.5 metres where the speed limit is over 60km/h.
For cyclists "you must not overtake another vehicle on the left if it is not safe to do so"… but I don't know where that leaves the situation you describe.