Blackmore Design Group Pty Limited v Manly Council

Land and Environment Court (NSW)|2014-10-09|Before: Biscoe J

Stanton Dahl Architects v Penrith City Council [2010] NSWLEC 156 The Village McEvoy Pty Ltd v Council of the City of Sydney [2009] NSWLEC 1214 Waterland Blue Mountain Natural Water Pty Ltd v Blue Mountains City Council [2006] NSWLEC 537 Williams v Spautz [1992] HCA 34, (1992) 174 CLR 509 Category: Separate question Parties: Blackmore Design Group Limited (Applicant) Manly Council (Respondent) Representation: COUNSEL: J Reid (Applicant) T To (Respondent) SOLICITORS: Sattler & Associates (Applicant) Maddocks (Respondent) File Number(s): 10551/14

Judgment 1Two matters are before the Court for determination in this Class 1 appeal against Manly Council's refusal of a development application. The first is an uncontested, separate and preliminary question as to whether, as Council contends, the proposed development is prohibited. Council's notice of motion was filed on 3 September 2014 and the order for the separate question was made on 18 September 2014: Blackmore Design Group Limited v Manly Council [2014] NSWLEC 151. The second matter is a notice of motion by the applicant filed on 11 September 2014 for leave to amend to overcome the prohibition.

Leave to amend 15In order to overcome the fact that the development as currently proposed is prohibited, the applicant moves to amend its development application under cl 55 of the Environmental Planning and Assessment Regulation 2000 (EPA Regulation) to rely on two amended ground floor plans A0.01 issue D and A1.02 issue D. The amended plans re-label the three residential apartments on the ground floor as "commercial units" and eliminate words on the existing ground floor plan A1.02 issue A indicating use for a residential purpose (such as "bed" and "living/dining"). 16Council opposes leave to amend including on the ground that the proposed amended development is an original application that does not engage the Court's power to permit amendment under cl 55 of the EPA Regulation. 17Clause 55 provides: 55 What is the procedure for amending a development application? (1) A development application may be amended or varied by the applicant (but only with the agreement of the consent authority) at any time before the application is determined. (2) If an amendment or variation results in a change to the proposed development, the application to amend or vary the development application must have annexed to it written particulars sufficient to indicate the nature of the changed development. (3) If the development application is for: (a) development for which concurrence is required, as referred to in section 79B of the Act, or (b) integrated development, the consent authority must immediately forward a copy of the amended or varied application to the concurrence authority or approval body. 18In Radray Constructions Pty Ltd v Hornsby Shire Council [2006] NSWLEC 155, (2006) 145 LGERA 292 at [6]-[10] Jagot J said: [6] In Ebsworth v Sutherland Shire Council Talbot J summarised the various approaches that have been taken to applications to amend plans. One limit on the power available under cl 55 has been consistently recognised-that the Court has no jurisdiction to entertain an original development application. The criteria used to determine whether an amendment converts an application the subject of appeal into an original application, however, has varied (see, for example, Ebsworth v Sutherland Shire Council at [33]). [7] At [40] in Ebsworth v Sutherland Shire Council, Talbot J observed that: It is my view that Regulation 55 is beneficial and facultative and intended to facilitate the making of amendments on two accounts. Firstly to enable the applicant for consent to respond to any issues identified by the council or objectors and secondly to encourage a consent authority to solicit a better outcome. A broad approach to the application of Regulation 55 is therefore appropriate. [8] I also consider that a broad approach to both the scope and application of cl 55 is appropriate. Clause 55 enables any application to be amended or varied with the agreement of the consent authority at any time prior to determination. An amendment or variation, as cl 55(2) contemplates, may result in change to the proposed development. The extent of change able to be authorised by agreement of the consent authority or by the Court exercising that function on appeal (and which does not result in the conversion of the application into an original application) will depend upon the facts of the particular case (including, for example, the nature of the site and the nature and characteristics of the proposed development). [9] The availability of the power is to be determined having regard to the beneficial and facultative nature of the provision. That is, I consider that cl 55 ought to be construed so as to give "the widest interpretation which its language will permit" (Bridge Shipping Pty Limited v Grand Shipping SA and Another [1991] HCA 45, (1991) 173 CLR 231 at 260-261 per McHugh J referring to Holmes and Another v Permanent Trustee Company of New South Wales Limited and Others [1932] HCA 1, (1932) 47 CLR 113 at 19 per Rich J). [10] The question whether the power should be exercised in a particular case (that is, should the Court, exercising the functions of the consent authority agree to the amendment or variation sought) is also to be answered having regard to the beneficial purpose of the provision. The factors relevant to that question will vary depending upon the circumstances in which the application is made (including, for example, the time at which the application is made and the reasons for making the application). 19In Association for Better Living and Education Inc v Wyong Shire Council [2014] NSWLEC 96 the applicant contended without contest, and I acknowledged, that a proposed development prohibited in a certain zone might be amended so that use of buildings was limited to a permissible use: at [10(a)]. 20In the present case, the development application was expressed to be for a mixed use development, which it was. In my view, the proposed amended application is also for a mixed use development, but the proportion of residential uses has reduced and the proportion of commercial uses has increased. Council disputes that the proposed amendment is still for a mixed use development. The Dictionary of the LEP includes the following definitions: commercial premises means any of the following: (a) business premises, (b) office premises, (c) retail premises. mixed use development means a building or place comprising 2 or more different land uses. residential accommodation means a building or place used predominantly as a place of residence, and includes any of the following: (a) attached dwellings, (b) boarding houses, (c) dual occupancies, (d) dwelling houses, (e) group homes, (f) hostels, (g) multi dwelling housing, (h) residential flat buildings, (i) rural workers' dwellings, (j) secondary dwellings, (k) semi-detached dwellings, (l) seniors housing, (m) shop top housing, but does not include tourist and visitor accommodation or caravan parks. shop top housing means one or more dwellings located above ground floor retail premises or business premises. Note. Shop top housing is a type of residential accommodation-see the definition of that term in this Dictionary. 21The LEP's Land Use Table for Zone B2 Local Centre lists the uses permitted with consent. They include "commercial premises" and "shop top housing". "Mixed use development" is not specified as a permitted use in any zone in the LEP. Council submits that it is therefore an innominate, prohibited use. That is right as a generality. However, development of a building, such as the subject building, for the two permitted uses in Zone B2 of commercial premises and shop top housing is permitted yet falls within the definition of mixed use development, and is therefore a species of mixed use development. 22The proposed amendments constitute a change to the use of three areas on the ground floor from residential to commercial. Council submits there are consequences arising from this change that convert the development to an original application, which it is beyond the Court's power to allow under cl 55 of the EPA Regulation. In particular, Council says that the shortfall of parking provision under the Manly Development Control Plan 2013 (DCP) has substantially increased, that there has not been any increased provision for waste management, and that further assessment by Council is required in a number of respects. Council cites three cases in which leave to amend was refused on the basis that the proposed amended development application was an original application: Hanna v Council of the City of Ryde [2010] NSWLEC 1094; The Village McEvoy Pty Ltd v Council of the City of Sydney [2009] NSWLEC 1214; and Waterland Blue Mountain Natural Water Pty Ltd v Blue Mountains City Council [2006] NSWLEC 537. 23I do not accept the submission. In my opinion, the amendment proposal is essentially to change the proportion of residential use and commercial use, and the consequences and further assessment are insufficient to convert the application into an original application. Whether a proposed amendment under cl 55 is an impermissible original application tends to be highly fact specific. On analysis, the alleged "substantial" increase in parking shortfall under the DCP turns out to be modest: less than one parking space. The need (if any) for increased waste management has not been explored in evidence. The three cases cited by Council are distinguishable on their facts. In Hanna the proposed amendment to a dual occupancy development application proposed that at least 50 percent of the dwellings would be used for affordable housing, which was a new use requiring assessment under a different assessment regime. In The Village McEvoy it was proposed to amend a development application for a mixed use development in very substantial ways, in two categories. First, amendments to the physical dimensions and structure of the building envelope. Secondly, changes to the uses for tenancy of units including introduction of a child care centre, educational establishment and high-technology industrial, gymnasium and medical centre. The first category was held not to fall outside the Court's power to allow an amendment. The second category was held to fall outside that power as it resulted in an original application. Waterland was decided in a very different context (development approval for the extraction of water) and turned on its own facts. 24Council also submits that the proposed amended description "commercial units" for the three ground floor apartments is so broad as to be too uncertain to be permitted by way of amendment, since "commercial premises" are defined in the LEP to mean any of business premises, office premises and retail premises. However, Council did not contest the applicant's submission that if development consent were to be granted, a possible and appropriate way of dealing with this would be by a condition along the lines that each individual use (within the broad description) requires separate development consent. 25I conclude that there is power to allow the proposed amendment under cl 55. 26On the assumption that there is power, Council submits that the Court should exercise its discretion under cl 55 and refuse the amendment application because: (a)The amendment has been brought forward only to meet the prohibition issue. (b)The amendment, if permitted, would lead to a less meritorious proposal because it exacerbates the under-provision for carparking and, it appears, inadequate waste management. As I have earlier observed, the increased under provision for carparking appears to be less than one car space and the extent (if any) of inadequate waste management has not been explored in the evidence. I do not regard these merits matters as sufficient to exercise the discretion against the applicant. (c)An increase in the amount of parking may have additional consequences for the depth of basement and associated excavation and impacts on the groundwater table, involving additional assessment by Council and potential referral of the application to the NSW Office of Water, as integrated development requiring an aquifer interference approval under s 91(3) of the Water Management Act 2000: s 91A(2) of the Environmental Planning and Assessment Act. The premise of this contention appears dubious, to say the least, because, as I have earlier observed, the increase in the amount of required parking under the DCP is less than one car space. (d)Absence of supporting information or assessment about the consequence of the changed use leads to a greater burden on Council by way of re-assessment or further assessment. There may be some weight in that proposition. However, the burden would appear to be similar if the amendment were refused, such that the applicant had to lodge a new development application with Council. (e)Absence of supporting information or assessment is not conducive to facilitating public participation. I think that Council processes or Court processes should disclose whether or not there is any further relevant information. (f)Council submits that an inference is available and should be drawn that the amended application is a "sham"; that is, that the applicant ultimately intends the actual use of the ground floor commercial units not to be a commercial use. That is said to be because: (a) the changes in the amended plans re-label the residential use to a commercial use unaccompanied by any substantive changes in configuration; (b) the spaces remain easily adaptable to residential use; (c) statutory modification machinery is available to re-convert the commercial units to residential apartments; and (d) the applicant stated in its statement of environmental effects accompanying the development application that more commercial space is not viable in this location. The allegation of a sham is similar in seriousness to an allegation of abuse of process or bad faith. The onus on Council to show that this is a "sham" is a heavy one: Williams v Spautz [1992] HCA 34, (1992) 174 CLR 509 at 529 (abuse of process due to a predominantly improper purpose); Maule v Liporoni [2002] NSWLEC 25, (2002) 122 LGERA 140 at [104]-[106] per Lloyd J (bad faith). I am not satisfied that an inference of a sham should be drawn. The suggested possible future conversion of the proposed commercial unit back to residential would result in a prohibited development under the existing planning regime. It is difficult to see why an inference of a sham is assisted by the possibility of invoking statutory modification machinery in the future under a different planning regime. If that were to occur and if there were power, it would be a matter for Council (or the Court) to determine on the merits whether the modification should be approved. 27In my view, the discretion to allow the amendment should be exercised in the applicant's favour.

Costs of the separate question 28Council seeks its costs of the separate question, and on an indemnity basis, at least from 16 September 2014 when it purported to make a Calderbank offer. 29Rule 3.7 of the Land and Environment Court Rules 2007 provides in respect of proceedings in Classes 1 and 2 and certain proceedings in Class 3 of the Court's jurisdiction (being its merits review jurisdiction): 3.7 Costs in certain proceedings ... (2) The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances. (3) Circumstances in which the Court might consider the making of a costs order to be fair and reasonable include (without limitation) the following: (a) that the proceedings involve, as a central issue, a question of law, a question of fact or a question of mixed fact and law, and the determination of such question: (i) in one way was, or was potentially, determinative of the proceedings, and (ii) was preliminary to, or otherwise has not involved, an evaluation of the merits of any application the subject of the proceedings, (b) that a party has failed to provide, or has unreasonably delayed in providing, information or documents: (i) that are required by law to be provided in relation to any application the subject of the proceedings, or (ii) that are necessary to enable a consent authority to gain a proper understanding of, and give proper consideration to, the application, (c) that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings, (d) that a party has acted unreasonably in the conduct of the proceedings, (e) that a party has commenced or defended the proceedings for an improper purpose, (f) that a party has commenced or continued a claim in the proceedings, or maintained a defence to the proceedings, where: (i) the claim or defence (as appropriate) did not have reasonable prospects of success, or (ii) to commence or continue the claim, or to maintain the defence, was otherwise unreasonable. 30The applicant submits that there should be no order as to costs of the separate question because Council filed its notice of motion at the same time as it filed its Statement of Facts and Contentions contending for the prohibition; and that if the applicant's motion had been heard and granted first, that would have avoided embarking on the separate question. Given r 3.7(3)(a), I do not think that this consideration should lead to no order as to costs. 31In my opinion, having regard to r 3.7(3)(a) and the circumstances the applicant should be ordered to pay the Council's costs of the separate question, at least on the ordinary basis. 32Council submits that the applicant should pay its costs of the separate question on an indemnity basis, at least from 16 September 2014. Council relies on pre-hearing correspondence between the parties' solicitors, in which Council made an offer that the applicant in effect capitulate by agreeing that the separate question be answered in the affirmative and that the applicant pay Council's costs of its motion to date. In a letter of 16 September 2014, Council said that if the offer were not accepted, then the offer may be relied upon in connection with an application for costs, including costs on an indemnity basis, on the principles in Calderbank v Calderbank [1975] 3 All ER 333. 33The applicant responded that if its notice of motion to rely upon amended plans were not successful, it would submit to an order that the development proposal is prohibited. In a subsequent letter the applicant said that its motion to amend may mean that there is no utility in determining Council's notice of motion, that Council's motion was filed with its Statement of Facts and Contentions without prior notice to the applicant, and that any costs wasted in this process result from Council's premature filing of its notice of motion. 34The principles in Calderbank justify a court in taking into account, on an application for indemnity costs, the non acceptance of an offer which makes clear that the fact of its non-acceptance may be deployed as a basis for seeking such a special costs order: AF Concrete Pumping Pty Ltd v Ryan & Ors [2014] NSWCA 346 at [74]. 35In Edelbrand Pty Ltd v H M Australia Holdings Pty Ltd (No 2) [2012] NSWCA 217 at [9] the Court of Appeal approved the following statement of principle in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37] per Giles JA: The making of an offer of compromise in the form of a Calderbank letter...where the offeree does not accept the offer but ends up worse off than if the offer had been accepted, is a matter to which the court may have regard when deciding whether to otherwise order, but it does not automatically bring a different order as to costs. All the circumstances must be considered, and while the policy informing the regard had to a Calderbank letter is promotion of settlement of disputes an offeree can reasonably fail to accept an offer without suffering in costs. In the end the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure. 36Calderbank offers are a creation of the common law, developed in the context of civil litigation where costs ordinarily follow the event. That is a very different costs regime from that which applies to this Court's merits review, public law jurisdiction under r 3.7 of the Land and Environment Court Rules. 37There have been cases involving consideration of r 3.7 and Calderbank offers: Monaghan v Holroyd City Council [2009] NSWLEC 112, (2009) 167 LGERA 321; Stanton Dahl Architects v Penrith City Council [2010] NSWLEC 156 at [23]; and Pyntoe Pty Ltd v Valuer-General of NSW (No 2) [2012] NSWLEC 231 at [46]-[48]. I questioned whether Calderbank principles have room to operate in compulsory acquisition proceedings in Class 3 of the Court's jurisdiction in Al Amanah College Inc v Minister for Education and Training (No 4) [2012] NSWLEC 26 at [10]-[17], and Reysson Pty Ltd v Roads and Maritime Services (No 2) [2012] NSWLEC 91 at [10]. 38Assuming that Calderbank principles have a role in development appeals in Class 1 of this Court's jurisdiction, I consider that the applicant's position expressed in the pre-hearing correspondence to which I have referred was not unreasonable. Its position was that its amendment application should be determined before determination of the separate question since that would avoid incurring the costs of the latter, but that if the amendment application were lost then the separate question should be determined in the affirmative. Accordingly, I decline to order indemnity costs on Calderbank principles.

Costs of the amendment application 39Council seeks its costs of the applicant's amendment application under s 97B of the Environmental Planning and Assessment Act 1979 which provides: 97B Costs payable if amended development application filed (1) This section applies to proceedings if the Court, on an appeal by an applicant under section 97 allows the applicant to file an amended development application (other than to make a minor amendment). (2) In any proceedings to which this section applies, the Court must make an order for the payment by the applicant of those costs of the consent authority that are thrown away as a result of amending the development application. (3) The regulations may provide for circumstances in which subsection (2) does not apply. (4) This section has effect despite the provisions of any other Act or law. 40In this case the amendment is not minor and, in accordance with s 97B(2), I will make an order for the payment by the applicant of the costs of the Council that are thrown away as a result of amending the development application.

Orders 41The order of the court are as follows: (1)The Court answers the preliminary, separate question as follows: The development application seeks consent for "residential accommodation" which cannot be characterised as "shop top housing" and is therefore prohibited on land within Zone B2 Local Centre pursuant to the provisions of the Manly Local Environmental Plan 2013. (2)Grant leave to the applicant to amend the development application by relying on amended plans A0.01 issue D and A1.02 issue D. (3)The applicant is to pay the respondent's costs of the applicant's notice of motion for leave to amend filed on 11 September 2014. (4)The applicant is to pay the respondent's costs that are thrown away as a result of the applicant amending the development application. (5)The exhibits may be returned. 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: 14 October 2014

(2011) 180 LGERA 343

(2013) 201 LGERA 116

(2007) 151 LGERA 400

(2002) 122 LGERA 140

(2009) 167 LGERA 321

(2006) 145 LGERA 292

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