Balnaves Foundation Pty Ltd v Minister for Planning

The Class 4 Proceedings

1. Balnaves is the proponent of development application 313/2015 ("the DA") lodged with the Council on 20 July 2015. The DA sought approval for alterations and additions to an existing residential flat building in Dover Heights.
2. On 15 March 2016 the Council granted development consent to the DA ("the consent").
3. Condition 13 of the consent required Balnaves to pay a monetary contribution of $181,000 towards the cost of affordable housing and was in the following terms: 13. AFFORDABLE HOUSING CONTRIBUTION - PAYMENT IN ACCORDANCE WITH STATE ENVIRONMENTAL PLANNING POLICY (AFFORDABLE RENTAL HOUSING) 2009 The Affordable Housing Contribution is as follows: (a) Pursuant to clause 51(2) of State Environmental Planning Policy (Affordable Rental Housing) 2009, the applicant must provide a monetary contribution towards the provision of affordable housing as the proposed development will or is likely to reduce the availability of affordable housing within the area. (b) The contribution of $181,000 payable for the provision of affordable housing under s94G(3)(b) [sic] of the Environmental Planning and Assessment Act 1979 for the purpose of mitigating the loss of low-rental accommodation proposed by the subject DA, shall be paid in one complete payment to Waverley Council prior to the issue of a Construction Certificate.
4. The parties agreed that the reference to "s94G(3)(b)" in condition 13 was in error, with the correct reference being "s 94F(3)(b)" of the EPAA.
5. On 20 June 2017 Balnaves' solicitor wrote to the Council stating that "the Waverley local environmental plan does not authorise a condition to be imposed under Section 94F of the Act. Accordingly, Condition 13 is invalid." Thus, at the very latest, Balnaves knew as at 20 June 2018 that the invalidity of the condition was an issue. Balnaves did not, however, commence Class 4 judicial review proceedings at this point in time.
6. Rather, on 13 July 2017 Balnaves decided to lodge an application to modify the consent pursuant to s 96(1A) of the Environmental Planning and Assessment Act 1979 ("EPAA"). Amongst other things, the modification application sought the removal of condition 13 from the consent on the ground that that condition had been invalidly imposed.
7. On 8 November 2017 the Council approved the modification application in part, but refused to remove condition 13.
8. On 13 November 2017 the General Manager of Balnaves wrote to the Council's Development Assessment Manager requesting a written explanation as to why the Council had rejected the application to remove condition 13.
9. On 14 November 2017 the Council's Development Assessment Manager wrote to Balnaves stating that the Council had formed the opinion that condition 13 had been lawfully imposed and referred to the operation of cl 15A of the Environmental Planning and Assessment Regulation 2000 ("the Regulation").
10. Clause 15A of the Regulation states as follows: 15A Transitional provision relating to affordable housing Until the commencement of Part 5B of the Act (to be inserted by Schedule 3 to the Environmental Planning and Assessment Amendment Act 2008), section 94F (3) (b) of the Act is to be construed as if the reference to a condition authorised to be imposed by a LEP (which before the commencement of Schedule 1 to that Act included a reference to a condition authorised to be imposed by a regional environmental plan) were a reference to a condition authorised to be imposed by a SEPP or a LEP.
11. The Council stated in its letter that the proposed Pt 5B in Sch 3 of the Environmental Planning and Assessment Amendment Act 2008 ("the 2008 EPA Amendment Act") had not commenced, and therefore, cl 15A of the Regulation and cl 51 of the State Environmental Planning Policy (Affordable Rental Housing) 2009 ensured that condition 13 complied with s 94F(3)(b) of the EPAA.
12. Section 94F of the EPAA relevantly states as follows: 94F Conditions requiring land or contributions for affordable housing (1) This section applies with respect to a development application for consent to carry out development within an area if a State environmental planning policy identifies that there is a need for affordable housing within the area and: (a) the consent authority is satisfied that the proposed development will or is likely to reduce the availability of affordable housing within the area, or (b) the consent authority is satisfied that the proposed development will create a need for affordable housing within the area, or (c) the proposed development is allowed only because of the initial zoning of a site, or the rezoning of a site, or (d) the regulations provide for this section to apply to the application. (2) Subject to subsection (3), the consent authority may grant consent to a development application to which this section applies subject to a condition requiring: (a) the dedication of part of the land, or other land of the applicant, free of cost to be used for the purpose of providing affordable housing, or (b) the payment of a monetary contribution to be used for the purpose of providing affordable housing, or both. (3) A condition may be imposed under this section only if: (a) the condition complies with all relevant requirements made by a State environmental planning policy with respect to the imposition of conditions under this section, and (b) the condition is authorised to be imposed by a local environmental plan, and is in accordance with a scheme for dedications or contributions set out in or adopted by such a plan, and (c) the condition requires a reasonable dedication or contribution, having regard to the following: (i) the extent of the need in the area for affordable housing, (ii) the scale of the proposed development, (iii) any other dedication or contribution required to be made by the applicant under this section or section 94.
13. On 15 November 2017 Balnaves' solicitors wrote to the Council asserting that cl 15A of the Regulation was not valid because that clause was inconsistent with s 94F(3)(b) of the EPAA. Therefore, there was no power under s 157(1) of the EPAA to make cl 15A of the Regulation.
14. Section 157(1) of the EPAA provides that: 157 Regulations (1) The Governor may make regulations, not inconsistent with this Act, for or with respect to any matter that by this Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act and, in particular, for or with respect to: (a) any function conferred by this Act on any person, or (b) requiring information, particulars, returns and statistics to be furnished to the Secretary by councils and the time and mode of furnishing and the manner of verifying them, or (c) the form, time, manner and mode of giving notices under this Act, or (c1) the content, form, erection, maintenance and removal of signs relating to the carrying out of development or persons involved with the carrying out of development, or (d) obligations on persons regarding fire safety, or (d1) temporary structures, or (d2) entertainment venues (including in connection with the existing use of premises), or (e) the purposes, objectives, provision and maintenance of affordable housing, including: (i) means for determining whether a household is a very low income, low income or moderate income household (for example, by reference to income statistics produced by the Australian Bureau of Statistics), and (ii) means for determining affordable housing costs payable in respect of affordable housing (for example, by reference to percentages of household income), and (iii) enabling the Minister by order to determine matters relating to affordable housing (including the matters referred to in subparagraphs (i) and (ii)), or (f) procedural matters in relation to the making of local environmental plans, or (g) the documents to be provided to, and the matters to be notified to, a consent authority, council or certifying authority under this Act.
15. Section 159 of that Act further states: 159 Savings, transitional and other provisions Schedule 6 has effect.
16. Clause 1(1) of Sch 6 of the EPAA is in the following terms: Schedule 6 Savings, transitional and other provisions Part 1 Preliminary 1 Savings and transitional regulations (1) The regulations may contain provisions of a savings or transitional nature consequent on the enactment of the following Acts: … Environmental Planning and Assessment Amendment Act 2008
17. According to Balnaves, because condition 13 was not authorised to be imposed by a local environment plan (in this case the Waverley Local Environmental Plan 2012, which was silent in this regard), cl 15A of the Regulation could not operate to authorise the imposition of condition 13 of the consent insofar as it was inconsistent with s 94F(3)(b).
18. A further letter was sent by Balnaves' solicitors on 17 November 2017 to the Council advising that it would commence proceedings in the Court if the Council did not issue a revised consent with condition 13 removed by 20 November 2017.
19. On 24 November 2017 Balnaves' solicitors sent another letter to the Council referring to a telephone conversation that had taken place that day between them and a Council officer and stated that Balnaves would be commencing proceedings in Court to resolve the dispute.
20. On 4 December 2017 Balnaves paid the affordable housing levy of $181,000 imposed under condition 13 to the Council on a without prejudice basis.
21. On 4 May 2018 the Class 1 appeal was filed in the Court against the decision of the Council not to remove condition 13 from the modified consent. In the meantime, Mr Chris McEwen SC and Mr Scott Nash of counsel had been instructed. They provided advice that condition 13 was invalid.
22. On 31 May 2018 the Class 4 summons was filed.
23. On 2 August 2018 the parties agreed to discontinue the Class 1 appeal with no order as to costs on the basis of an undertaking that if successful in the Class 4 proceedings, the levy would be repaid to Balnaves.
24. The sole question arising in these proceedings was stated succinctly in the Minister's submissions, namely, was the former cl 15A of the Regulation, which provided for the circumstances in which a condition could be imposed by a consent authority in a development consent requiring a monetary contribution for affordable housing (condition 13), authorised by ss 157 and 159 and cl 1(1) of Sch 6 of the EPAA. Balnaves contended that it was not due to inconsistency with s 94F(3)(b) of the EPAA, whereas the Minister submitted that it was.
25. It should be noted that although actively participating in the application to extend time to commence proceedings (by stating that it neither consented to nor opposed the application), the Council has filed a submitting appearance, save as to costs, with respect to the relief claimed in the summons.

Relevant Legal Principles Extending Time to Commence Proceeding

1. Rule 59.10 of the UCPR states as follows: 59.10 Time for commencing proceedings (1) Proceedings for judicial review of a decision must be commenced within 3 months of the date of the decision. (2) The court may, at any time, extend the time for commencing proceedings fixed by subrule (1). (3) In considering whether to extend time under subrule (2), the court should take account of such factors as are relevant in the circumstances of the particular case, including the following: (a) any particular interest of the plaintiff in challenging the decision, (b) possible prejudice to other persons caused by the passage of time, if the relief were to be granted, including but not limited to prejudice to parties to the proceedings, (c) the time at which the plaintiff became or, by exercising reasonable diligence, should have become aware of the decision, (d) any relevant public interest. (4) This rule does not apply to proceedings in which there is a statutory limitation period for commencing the proceedings. (5) This rule does not apply to any proceedings in which the setting aside of a decision is not required.
2. The factors that the Court must have regard to in exercising its discretion were recently examined by me in Wingecarribee Shire Council v Uri Turgeman trading as Uri T Design [2018] NSWLEC 146 (at [33]ff, especially at [34]). They were applied more recently in Sydney Advantage Investments Pty Ltd v Deep River Group Pty Ltd T/as Precise Planning [2018] NSWLEC 151 (at [49]-[50] per Moore J). They are adopted, without express repetition, for the purposes of this application.

The Length of the Delay

1. The length of delay is, on any view, grossly excessive - well in excess of two years after the date upon which the Council granted the consent subject to conditions, including condition 13.
2. Having said this, in Deep River Group the delay was also over two years and the Court nevertheless extended time to commence proceedings on the basis that there was an arguable case; the delay was neither intentional nor unreasonable in the circumstances of that case; and the balance of the competing prejudices was tipped in favour of the applicant for the extension of time.

Prospects of Success

1. It was agreed by the parties that the case articulated in the summons was fairly arguable. Having regard to the question for determination stated above and in light of the matters raised in the submissions, this is unarguably correct.

Prejudice to the Parties

1. There was no prejudice to any party on the evidence before me. This was conceded by the Minister and Balnaves. The $181,000.00 the subject of the impugned condition has been paid to the Council pending the outcome of the Class 4 proceedings.
2. Having said this, there is equally no evidence that if time is not extended Balnaves would suffer any prejudice other than the loss of $181,000.00. It has the benefit of an otherwise valid consent.

Public Interest

1. I repeat what I said in Uri (at [50]): It should be reiterated that there is a strong public interest in requiring that proceedings are brought within a reasonable time so that the proper business of government and the reasonable interests of affected parties are not unjustly prejudiced.
2. Against this is a clear public interest in permitting the extension of time in order to determine whether the Council had the power to impose condition 13 and mandate payment of the affordable housing contribution by Balnaves.
3. It is further noted in this regard, that the parties were, immediately prior to the application, ready to argue the matter to finality. In other words, legal costs had already been incurred that would have been wasted had the extension of time not been granted. This would have not have served the public interest.

Reasons for the Delay

1. The reasons for the delay are considerably more troubling and if I was confined to this factor, I would have readily declined to extend time. On any view the delay is unreasonable.
2. First, no explanation for the delay between 15 March 2016 (the date consent was granted) and 20 June 2017 - 16 months - was given by Balnaves. By 20 June 2017, at the very latest, Balnaves knew that it was required to challenge the validity of condition 13.
3. Second, that it did not do so by the filing of Class 4 proceedings is important because by this date Balnaves was already well out of time within which to commence judicial review proceedings.
4. However, in Uri the Court observed the following (at [43]-[44]): 43. The Court has approached the analysis of the reasons for the delay in commencing the proceedings by considering whether the actions which caused the delay were "not unreasonable" in the circumstances of the case. A state of perfection is not required. 44. Importantly, when considering delay the Court has frequently analysed the unreasonableness of the delay on the basis of intention. The Court has made a distinction between "intentional or contumelious" delay (that is, delay caused by "deliberate inaction" or an intentional decision to delay), as opposed to delay which is merely the result of a "bona fide mistake or blunder", mere "oversight" or delays caused by seeking to clarify rights and trying to solve the matter without litigation.
5. One explanation appears to be that Balnaves misguidedly believed that an application to modify the consent to, amongst other things, remove condition 13 was the most appropriate course, and when this was unsuccessful, that it should appeal the Council's refusal to grant the modification application as sought by way of an appeal in Class 1 of the Court's jurisdiction. I note that this appeal was filed within time.
6. It is unclear if the failure to file the Class 4 proceedings within time was due to an error by Balnaves' legal representatives. There was no evidence in this regard.
7. The correspondence exchanged between the parties outlined above does, however, indicate that Balnaves was seeking to resolve the matter absent litigation, albeit well after the time limit imposed by r 59.10 of the UCPR had expired. Nevertheless, genuine (although wholly misguided insofar as an absence of power by the Council to impose condition 13 was unlikely to be amendable to resolution by negotiation) attempts were made by it to avoid commencing proceedings in this Court.
8. Equally, there was no evidence before the Court that the delay was intentional or that the use of the modification application and the subsequent Class 1 appeal was a device to circumvent the time limit contained in r 59.10 of the UCPR. Had there been any suggestion whatsoever that this was the case, this application would have been disposed of quickly and adversely to Balnaves.
9. Finally, and for the sake of completeness, there was no evidence that the Minister raised the need for an extension of time until the filing of the response to the summons, despite the Minister having been involved in the dispute from an earlier date. Having said this, the obligation remained at all times on Balnaves to bring its application in time.
10. While I find that the delay was unreasonable in all the circumstances of this application, I do not find that the delay was intentional nor do I find that it was sufficiently unreasonable that this factor alone warrants the refusal of the application for an extension of time to commence proceedings.

Conclusion

1. The matter is very finely balanced. I would have readily refused the application were it not for the lack of prejudice to the respondents; their lack of opposition to the application; the readiness and expectation of the parties that the matter would be finally heard today; and because the delay, although unreasonable, was not intentional and the Class 1 proceedings were not being used as a device to circumvent the time limit in r 59.10.
2. Therefore, in the hopefully never-to-be-repeated circumstances of this case, I am reluctantly of the opinion that it is an appropriate exercise of the Court's discretion to grant an extension of time to commence proceedings to 31 May 2018 (the date of the filing of the summons).

Costs

1. Because an indulgence is sought by Balnaves, it should pay the costs of the respondents of the application to extend time. The parties did not argue to the contrary (Uri at [71]).

Orders

1. In conformity with the reasons given above, the orders of the Court are that: 1. the time for the commencement of these proceedings is extended to 31 May 2018; 2. Balnaves is to pay the respondents' costs of the extension application; and 3. the exhibits are to be returned upon the publication of this judgment on Caselaw.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 September 2018