court reporter in this issue... contact us... Summary of Cases... page 2 Useful Links and Definitions... page 3

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1 court reporter ISSUE 7, 2011 land and environment contact us... Local Government and Shires Associations of NSW tel: (02) fax: (02) GPO Box 7003 Sydney 2001 Level 8, 28 Margaret St Sydney NSW 2000 Free subscription: Subscribe to receive the Land and Environment Court Reporter directly by on the LGSA website at: Maddocks The Associations would welcome any feedback or suggestions relating to future editions of the Land & Environment Court Reporter by to the Associations Legal Officer: Frank Loveridge at in this issue... Summary of Cases... page 2 Useful Links and Definitions... page 3 Hurstville City Council v Dong Zing Group Pty Ltd... page 4 Motto Farm Pty Ltd v Port Stephens Council... page 4 Alexander v Yass Valley Council... page 6 Meriton Apartments v Council of the City of Sydney... page 8 Liverpool City Council v Main Homes Pty Ltd... page 9 The material contained in the Land and Environment Court Reporter is of the nature of general comment only. No reader should rely on it without seeking legal advice.

2 2 summary of cases... This issue looks at case studies taken from November 2011, which includes: An application made by a council to enforce a brothel closure order. An appeal against a refusal of council to change the use of part of an existing restaurant within an existing motel for a hotel. A challenge to the grant of development consent to a multi unit residential development. An appeal against a council s refusal to modify a development consent to reduce a monetary contribution payable pursuant to Section 94 of the EP & A Act. Amendments to plans prior to endorsement to remove a dedication of land as a public reserve which was inconsistent with the development consent. Feedback on the Land and Environment Court Reporter is welcome. To provide your comments or suggest topic areas, please contact the LGSA s Legal Officer, Frank Loveridge on or frank.loveridge@lgsa.org.au.

3 3 useful links... Local government, planning, environment and related law: Land and Environment Court website: Australasian Legal Information Institute: Commonwealth Development Assessment Forum: NSW Attorney General s Department - Land and Environment Court: Case Law NSW: Environment Australia, Environmental Protection Biodiversity Conservation Act: Environment Protection Biodiversity Conservation Act - subscription to EPBCA group: Environment and Planning Law Association NSW: Development and Environmental Professionals Association: Urban Development Institute of Australia: Property Council: Housing Industry Association: Department of Infrastructure, Planning and Natural Resources: Planning NSW: Environment Australia: EnviroNET Australia: Environmental Protection Authority (NSW): EDONet: Natural Heritage Trust: NSW Agriculture: NSW National Park and Wildlife Service: Planning Institute of Australia: Sustainable Energy Development Authority (SEDA): definitions... Subpoena - a document by which a court compels a person to attend a court to give evidence or to produce documents within that person s possession. Forensic purpose - relating to the matter before the court and not for other reasons. Existing use rights - rights under Planning Legislation to continue previously lawful activities on land which would no longer be permitted following the introduction of changes to environmental planning instruments. Procedural fairness - this term is interchangeable with natural justice and is a common law principle implied in relation to statutory and prerogative powers to ensure the fairness of the decision making procedure of courts and administrators. Development means: (a) the use of land, and (b) the subdivision of land, and (c) the erection of a building, and (d) the carrying out of a work, and (e) the demolition of a building or work, and (f) any other act, matter or thing referred to in section 26 that is controlled by an environmental planning instrument, but does not include any development of a class or description prescribed by the regulations for the purposes of this definition. Development Application means an application for consent under Part 4 of the EP&A Act to carry out development but does not include an application for a complying development certificate.

4 4 Hurstville City Council v Dong Zing Group Pty Ltd [2011] NSWLEC 1287 These proceedings related to an application made by the Council to enforce a Brothel Closure Order issued to the Respondent on 21 January In making the orders sought by the Council, the Court was required to consider the issues outlined in section 121ZS of the Environmental Planning and Assessment Act 1979 (NSW). Facts: The Respondent was the registered proprietor of the premises. The Council issued an order pursuant to s121b of the Act directing the respondent to cease using the premises for the purposes of a brothel or massage parlour; the provision of sexual acts or sexual services in exchange for payment; and the provision of massage services in exchange for payment. The 121B order was issued in circumstances where consent had not been obtained for the uses outlined. The Order was issued on 21 January 2011, and specified a 28 day compliance period. On 26 May 2011 the Council s solicitors notified the Respondent that Council had evidence that the premises were still being used for the purposes of a brothel in breach of the Order, and that the Council was proceeding to file an application under s121zs seeking the closure of the brothel. At the hearing, Council indicated that it only sought orders that the utility companies cease providing their services for a period of 3 months. Findings: In determining whether the orders sought by the Council should be made, the Commissioner indicated her satisfaction that: the Respondent was the owner of the premises, that the use of the premises for a brothel or a sex services premises is a use which requires development consent under the relevant zoning and that there is no such consent; and that the premises had been used as a brothel after the date for compliance with the brothel order. The Commissioner was satisfied that the Respondent had failed to comply with the brothel closure order issued by Council. The Commissioner then went on to consider the 6 matters for consideration set out in s121zs(6). It was held that the effects of the failure to comply with the brothel order was the continuation of an unauthorised use of the premises which is opposed by the Owners Corporation of the Strata Plan and which has impacted on neighbouring businesses. Further, the Respondent had consented to the making of the utilities order and the impact of the making of that order would be a cessation of the unauthorised use. There was no evidence that the making of the order would detrimentally effect the health or safety of a person or the public. The Court also noted the consistent attempts of Council to have the unauthorised use ended and found that circumstances existed that warranted the making of the utilities order. The Court therefore ordered that the provider of water or electricity to the premises must cease to provide those services for a period of 3 months from the date of judgment. Motto Farm Pty Ltd v Port Stephens Council [2011] NSWLEC 1293 This was an appeal against the refusal of Council to change the use of part of an existing restaurant within an existing motel for a hotel. The motel complex comprised 80 accommodation units, three function rooms, a restaurant, a swimming pool and some recreational facilities. The motel fronted the Pacific Highway, and the surrounding land comprised of a residential development, an industrial development, with a motel, high school and two caravan park within the locality of the site. The site was zoned rural agriculture under Council s LEP. Issues: Council raised a number of contentions regarding the development, including that the proposed development was not permissible under Council s LEP zoning of Rural Agriculture, was not consistent with zone objectives, and would have unacceptable amenity impacts on nearby residential dwellings.

5 5 Council also queried whether the development would have unacceptable social impacts on the area as an additional outlet for the sale of alcohol (particularly given its proximity to a nearby high school, and a vulnerable population in two caravan parks), its location on a busy road, and whether the development would have unacceptable economic impacts on the location. Evidence in this respect was given by a social researcher, a civil engineer, and a town planner. Determination: The Commissioner dismissed the appeal, finding that although the development of a hotel was a permissible use, the matters for consideration, particularly the social impact on the locality, outweighed the right to operate a hotel on the site. Reasoning: The Commissioner found that the development was permissible under the Council s LEP. Part of the zoning required that any hotel must be in conjunction with a tourist facility, stating that to be a tourist facility an establishment must provide primarily for tourist accommodation. The Commissioner also accepted that there was a sufficient connection between the motel and the proposed hotel, as the two would share a building, have common management, provide the opportunity for motel patrons to use hotel facilities, and importantly, the hotel would operate in conjunction with the motel. The Commissioner then explored Council s other contentions, noting that although there was a risk that the hotel could have an unacceptable impact on the area, this needed to be weighed against the legitimate right to operate a hotel on the site. Considerations in favour of the development included: Economic Impact: The evidence supplied by Council, indicating economic cost impacts such as the cost of lost gaming machine revenue through taxation, did not support a finding that the proposed development would have an adverse economic impact on the locality. Zone Objectives/Amenity Impacts: Council s submission that the proposed development was an intensification of the use of the property, and had the potential to impact on the rural character of the area was unlikely, and the proposed development would not unacceptably impact on increased traffic movement, car parking, and anti-social behaviour. The development would therefore be consistent with the zone objective of rural agriculture. However, despite the hotel being a permissible use, these factors were outweighed by social impacts and other economic impacts, including: Social Impact: The important factor was the hotel s proximity to the two caravan parks. The Commissioner reviewed the evidence given by the social researcher, noting that although a hotel by nature could potentially impact adversely on any locality, the occupants of the caravan parks were clearly a disadvantaged and vulnerable group within society. The Commissioner also accepted the evidence of the social researcher that the residents of the caravan parks were likely to use the hotel. The Commissioner went on to state that although the existence of certain land uses in proximity to a hotel, or the identification of vulnerability to alcohol harm was not automatically a basis for refusal of a consent, in this case, the likely social impacts were so unacceptable as to warrant the refusal of the application. A secondary reason for refusing consent was the fact that the hotel would be established in an area that did not currently have any hotels and suffered little or no alcohol related crime, given the demonstrated relationship between alcohol and alcohol related crime. Pedestrian Safety: The concern regarding proximity and access issues between the hotel and the caravan parks, including the potential impact on pedestrian safety. This was particularly relevant given the proximity to the disadvantaged groups within the caravan park and their lack of vehicle availability (as evidenced by a survey provided by Council). The Commissioner ordered that the development application for the change of use be refused.

6 6 Alexander v Yass Valley Council [2011] NSWLEC 148 In this case, Mr Alexander challenged the grant of a development consent by Council for a multi-unit residential development in Yass. Part of the land to which the development consent related was owned by Council, who had entered into a contract to sell it to the applicant for the development consent. Mr Alexander s challenge was on the basis of apprehension of bias and the failure to consider heritage issues. Mr Alexander failed on both grounds. Facts: Mr Alexander owned land on Rossi Street, Yass adjoining the proposed development site. The proposed development site comprised two lots, one owned by the applicant for the development consent (the Second Respondent to the proceedings, who filed a submitting appearance) (Developer) and the other by Council. In May 2008 the Developer offered to purchase the Council land from Council subject to Council approving a development application for a multi-unit development upon the two lots. The contracts for the sale of the Council land to the Developer included a number of special conditions relating to the development application, including: the contract was subject to development approval by Council for a multi-unit residential development on the site; the Developer agreed to lodge and development application with Council and to use all reasonable endeavours to pursue efficiently the applications and approvals ; either party was entitled to terminate the contract by written notice any time after 1 August 2009 if the development application was not determined or refused by this date (although another clause enabled extension of time for performance; and if the contract was terminated based on the failure to obtain development consent, the deposit paid by the Developer was to be refunded. In April 2009 the Developer lodged a development application for the multi-unit residential development on the site. The development application acknowledged that Council had a pecuniary interest in the development by reason of being the owner of one of the lots which was the subject of the application. The development application was assessed by Council s heritage advisor, and following amendments, by the Yass and District Historical Society, both of which raised serious concerns regarding the proposal. There were a number of delays associated with the determination of the development application. This was caused in part by the filing of amended plans and partly by the fact that, given Council s pecuniary interest, Council had asked another local Council to peer review the application. Council granted consent for the development application in October Apprehension of Bias: Mr Alexander identified the following three circumstances which were said to establish a conflict of interest giving rise to an apprehension of bias Council s ownership of part of the land the subject of the development application; Council was a party to the contract for the sale of the land which was conditional on the grant of development consent; and certain communications from Council officers to the Developer, including one which suggested that the development application would be determined even if a peer review report from a neighbouring council was not received. In general terms, Mr Alexander contended that Council had a conflict of interest between its duties under the Environmental Planning and Assessment Act 1979 as a consent authority and its interest as the registered proprietor of the Council land the subject of the Developer s development application, and that this conflict of interest created an apprehension of bias. Council accepted that these circumstances did give rise to a potential conflict of interest, but disputed that it was a disqualifying interest which gave rise to an apprehension of bias. The question, therefore to be determined by Justice Pain, was whether a fair-minded observer might reasonably apprehend that the Council might not bring an impartial mind to the determination of the development application as required. In considering this question, her Honour noted that the knowledge to be attributed to a fair-minded observer of the circumstances of a case involve three concepts the general understanding the fair-minded observer is deemed to have; the information ascribed to the observer; and that attribution is to decide whether there is a real possibility that he

7 7 or she would apprehend that Council had a closed mind when assessing the development application. Justice Pain considered that the circumstances which the fair-minded lay observer would be taken to know would include matters likely to be known by the general public together with a general appreciation for how local Councils operate, including broad knowledge of their different functions. She stated that the matters which should be attributed to the observer would include that Council and the Developer had entered into the contract for the sale of the land, that its terms included that finalisation was conditional on development consent being granted and that either party could terminate the contact if the consent was not granted. Council s assessment report of the development application as well as the peer review report by the neighbouring Council were also assumed to be known. Justice Pain however held that particular communications between Council officers and the Developer regarding the status of the development application should not be considered information known to the fair-minded lay observer as it was not demonstrated that they were known to the councillors who approved the development application. Upon this background, Justice Pain rejected Mr Alexander s claim of apprehension of bias for the following reasons: the contract did not fetter Council s discretion in the development application process; the contract expressly included a provision enabling either party to terminate the contract if the development application was refused; Council dealt with the perceived conflict of interest by having a peer review report prepared by a neighbouring Council. This report concluded that the grant of consent was appropriate; and there was no obligation on Council to refer the development application to an independent hearing and assessment panel or a joint regional planning panel. Failure to consider a mandatory relevant consideration heritage issues There was no dispute that heritage issues were a mandatory relevant consideration for the development application and that they were considered by Council when it granted development consent. The specific failure claimed by Mr Alexander was that Council was misled by the Assessment Report so that it failed to consider a heritage matter raised in both independent heritage advices, namely the undesirability of the two storey appearances of the development. The officers of Council had received written advices from two independent heritage consultants who had both recommended, among other things, that the development should not appear as two-storey buildings from Rossi Street. After the second heritage advice was received, the officers of Council decided that they would not request the developer undertake further redesign of the development to comply with this particular recommendation. The Assessment Report, recommending approval of the development application stated the following in relation to heritage particular concerns of the independent heritage advisor related to the height of units 13 and 14 ; the Developer had redesigned the townhouses in order to incorporate the changes suggested by the heritage advisors; and the conditions proposed addressed all heritage issues raised by the advisor, prior to the issue of a construction certificate. Both heritage advices were attached to the Assessment Report which went before Council. Justice Pain dismissed Mr Alexander s claim that Council had failed to give proper, genuine and realistic consideration to the matters referred to in the heritage advices for the following reasons there was no obligation on the Council officers to adopt the advice of the independent heritage consultants. The officers had acted within their power to determine that no further modification or redesign was required. The whole of the heritage material before Council must be considered. The Councillors were to be presumed to be aware of the material before them, which included both independent heritage advices. This ground was really an argument about the merits of how heritage issues were considered and sought for the Court to undertake an impermissible evaluative review of the merits. Conclusion: Justice Pain held that Mr Alexander had not succeeded in either of the grounds of challenge. The summons was therefore dismissed.

8 8 Meriton Apartments Pty Ltd v Council of the City of Sydney [2011] NSWLEC 1294 This case was an appeal against the Council s refusal to modify a development consent to reduce a monetary contribution payable pursuant to section 94 of the Environmental Planning and Assessment Act (EP&A Act). The key question in this case was whether the monetary contributions condition was unreasonable as it used a benchmark date of 2001 to determine the net demand for public amenities and services generated by the development. Facts: The development consent in issue in the proceedings was for a development within the suburb of Victoria Park and included a condition requiring a monetary contribution of $5,418, This monetary contribution had been determined in accordance with the City of Sydney Development Contributions Plan 2006 (Plan). Meriton Apartments sought to modify this condition to reduce the contribution payable by including a credit of $265, for a past workforce. The claim for a past workforce arose by virtue of the site being used by the British Motor Company (BMC) between 1948 and 1974 and the Commonwealth Department of Defence from 1976 to At its maximum, it was estimated that between 5,000 to 5,500 workers were employed on the site by BMC in the early 1970 s. The site had been vacant since The Contributions Plan: Under the Plan, as the site was vacant in 2001, its former population was not deemed to exist and therefore no credit was included for a past workforce in the determination of the monetary contribution. Meriton Apartments claimed that using the 2001 census figures as a benchmark date to determine existing populations for a site was arbitrary, unreasonable and unfair. Council submitted that the Plan was based on ensuring contributions for the demand for public services and amenities generated by the population in 1996, 2006 and It was not based on a demand for community services in a general sense generated by a workforce which ceased to exist on the site nearly 40 years ago. That is, the historical population of the site did not generate a demand for the specific public amenities and services to be provided by the Plan. In response, Meriton Apartments submitted that the historical worker population had demands, whether or not these had been met, and that it was unreasonable not to permit a credit for this historical population only because it had existed on the site prior to an arbitrary cut-off date. Consideration: Commissioner Tuor considered that in order to determine whether the benchmark date for past workforces was unreasonable, the Court must consider whether the condition reflected the extent to which the development would or would likely require the provision of or increase the demand for public amenities and public services within the area. Meriton Apartments referred to previous decisions of the Court regarding the Plan, where a credit for past workforces had been granted by the Court notwithstanding that the sites were vacant in Based on these decisions, Meriton Apartments submitted that it was entitled to believe that it was likely to succeed and, if the Court were to not follow these previous decisions, that it should give clear reasons for not doing so. Particular attention was given to the Court of Appeal decision of Meriton Apartments Pty Ltd v Council of the City of Sydney [2011] NSWCA 17 (Mertion No 3), where a credit for the historical workforce of a site that had also formally been part of the BMC land had been granted. Mertion Apartments claimed that the Commissioner was bound to follow this decision. However, Commissioner Tuor noted that the Court of Appeal s determination was confined to questions of law regarding whether the Commissioner at first instance had considered an irrelevant matter, and had not made a determination regarding the benchmark date. As such, it was open for the Commissioner to apply a different reasoning and reach a different conclusion to that reached by the Commissioner at first instance in Meriton No 3. Held: Commissioner Tuor concluded that it was not unreasonable for the Plan to use 2001 census date as the benchmark date to determine if a past workforce can be deemed to exist on a site. In reaching this conclusion, the Commissioner accepted

9 9 the opinions of Council s expert that: it is not unreasonable for a contributions plan to adopt a cut off date for the purpose of determining the existing demand for public services generated by a development; it is not unreasonable that there be a correlation between a date that determines existing population for demand assessment and utilising the same date to determine the deemed population of a particular site for the purpose of establishing net demand (as was the case with the Plan). It would be preferable for the Plan to recognise the peak population of a site during the period of 1996 to 2006, rather than rely solely on the 2001 census data as both these dates were used for the demand assessment. However, nothing turned on the above concern as the site was vacant at all times between 1996 and Commissioner Tuor also noted that there was a need for a degree of flexibility in applying to benchmark date to ensure that a workforce population which had recently departed a site prior to be benchmark would still be recognised, but only if it could be demonstrated that it would have generated a demand for the specific public amenities and services to be provided by the Plan. Meriton Apartment s appeal was therefore dismissed. Liverpool City Council v Main Homes Pty Ltd [2011] NSWLEC 174 In this case a developer received Council endorsement for a plan of subdivision but amended the plan prior to endorsement to remove a dedication of land as a public reserve (inconsistent with the development consent) without drawing this amendment to Council s attention. Council succeeded in obtaining orders that the development was not carried out in accordance with development consent and that the developer transfer the relevant land to Council as a public reserve. This case highlights the importance of Council staffs careful review of amended plans in their entirety and not only those portions of a plan marked by an applicant as an amendment. The case also suggests it is advisable to include specific conditions of consent concerning any land to be dedicated for a public purpose. While notations on plans are legally sufficient for a dedication of land to form part of a consent, specific conditions may prevent later dispute. Facts: The Respondents, Main Homes Pty Ltd, a group of 6 related companies (Main Homes) submitted a development application in 1994 for the subdivision of three lots at Chipping Norton. Of these, one of the lots (Lot 389) was marked on the plan of proposed subdivision as Future Open Space. Following discussions with Council the plan was amended and resubmitted, this time marking Lot 389 as Public Reserve. Council granted development consent for the amended plan, describing the development in the consent as including the dedication of a public reserve. The plan of subdivision required the endorsement of the Council s certificate and the plan of subdivision was submitted to Council for this endorsement in Lot 389 was inscribed with the words Public Reserve in accordance with the development consent and an intention to dedicate the land as a public reserve was noted in the plan s panel for statements of intention. Some days later Main Homes uplifted the subdivision plan from Council to make amendments unrelated to the public reserve dedication. The plan was resubmitted to Council and the unrelated amendments were drawn to Council s attention and marked by hand. In all other respects the amended plan appeared to be a photocopy of the original plan, including the photocopied signature of the surveyor dated as at the date of the original plan. Council staff did not notice that Main Homes amendments to the subdivision plan had removed all reference to the dedication of Lot 389 as a public reserve. Council endorsed the amended subdivision plan and the plan was registered by Main Homes. Creation of public reserves: Under section 49 of the Local Government Act public reserves are created and become Council property where a parcel of land is either: marked as public reserve on a registered plan; or transferred to Council where the

10 10 document of transfer notes that the land is to be a public reserve. Contentions: Main Homes argued that Council s development consent for the subdivision did not require Lot 389 to be dedicated as a public reserve for the following reasons: 1. A condition of the development consent expressly required the dedication of public roads however in contrast no condition of consent expressly required the dedication of Lot 389 as a public reserve ; 2. The first condition required that the development be carried out in accordance with the original development application and the amended plans and this created an inconsistency. On the original plans Lot 389 was marked as future open space and not public reserve ; and 3. The conditions included a reference to the landscaping of open space and this should be interpreted as a reference to the inscription of future open space as noted on Lot 389 in the original development application. Main Homes cited the principal that where two constructions are available, the construction which least interferes with private property rights should be chosen. The Court rejected each of Main Homes grounds and found the description of the development in the consent, and the marking of public reserve on Lot 389 in the plan, clearly required that the land be dedicated as a public reserve. The reference to open space was found to describe the physical state of Lot 389 not its legal status. The Court found that the dedication of the public reserve did not need to be expressly included in a condition of consent as it was plain from the description and attached plan. The court s discretion to grant an order to remedy a breach of a development consent: Main Homes second argument was that the Court has a discretion as to whether or not to remedy a breach of the Environmental Planning and Assessment Act (Section 124) and that the Court should exercise its discretion not to order the transfer of Lot 389 to Council on the following grounds: 1. That Council delayed in bringing the proceedings. The plan of subdivision was registered in 2000 and Council lodged a caveat in 2006 however proceedings were not commenced until 2010; 2. That Council agreed to the breach of the development consent by entertaining a development application for medium density development of Lot 389 in 2002 and would have then been aware that the lot was owned by Main Homes and not Council; 3. That Council s delay caused prejudice to Main Homes in that Main Homes had to paid land tax and Council rates on the property and that amendments to the planning scheme now prevented Main Homes from developing the site. The Court rejected these grounds and found that Council s delay was explainable, that Council had at no stage agreed to the breach of the consent and that any prejudice to Main Homes caused by the delay was attributable to its own behaviour and not the behaviour of Council. The Court found that Council did not become aware of the removal of the public reserve dedication until 2002, and that Council s delay was explainable as Council negotiated from that point on for the transfer to Council of at least a portion of Lot 389. As the on-going discussions were consensual the delay was found not to have unfairly prejudiced Main Homes. After considering the above the Court exercised its discretion to make orders remedying the breach of the development consent by requiring Main Homes to transfer Lot 389 to Council as a public reserve. In so doing, it took into consideration the unsatisfactory conduct of Main Homes in unilaterally deleting references to the public reserve without first obtaining Council approval on this issue. LAND AND ENVIRONMENT COURT REPORTER Published monthly by the Local Government and Shires Associations of NSW GPO Box 7003, Sydney NSW 2001