Bowers v Northern Beaches Council and Anor

Land and Environment Court (NSW)|2022-02-02|Before: Robson J

Judgment

By summons filed 1 April 2021, the applicant, James Bowers, seeks declaratory and mandatory injunctive relief in Class 4 (Judicial Review) proceedings in relation to a development consent granted by Northern Beaches Council ('Council') on 22 January 2021 for development comprising a "caretaker's flat" on industrial zoned land being Lot 6 in DP 1521 and known as 5 Chard Road, Brookvale, owned by the second respondent, Grigull Custodian Pty Ltd ('Grigull Custodian').
The matter proceeded to hearing before me on 2 February 2021. Mr Bowers, a qualified solicitor, who does not presently hold a current practicing certificate, appeared without legal representation. Ms L F Sims of counsel, appeared for Council and Mr M F Fozzard of counsel, appeared for Grigull Custodian.

Background

The primary background facts are relatively uncontentious and are summarised as follows.
On 23 June 2020, a development application was lodged by Danien Beets of Marsden Design, seeking development consent for "minor alterations to form a caretakers flat in an existing industrial premises" ('proposal'). The land is zoned IN1 General Industrial under the Warringah Local Environmental Plan 2011 ('LEP').
The proposal involves alterations and additions to an industrial building to facilitate a one-bedroom caretaker's residence and the provision of a 35m² open roof-top terrace. Caretaker's residence is not defined in the LEP and residential accommodation is prohibited in the IN1 General Industrial zone.
The development application, which included a Statement of Environmental Effects dated June 2020 ('SEE') and an Operational Plan of Management dated October 2020, followed pre-lodgement attendances by representatives of the Grigull Custodian upon Council. Consequent upon the development application being notified, an objection dated 21 July 2020 prepared by Plan Matters, a town planning practice, and a further objection dated 27 July 2020 prepared by Bartier Perry Lawyers, were lodged on behalf of Mr Bowers. Each contains detailed submissions in relation to Mr Bowers' objections. Bartier Perry Lawyers' submission contains a legal analysis of the proposal culminating in a view that because residential development is prohibited in the IN1 General Industrial zone and the proposed caretaker's flat is not ancillary to any permissible development, the proposal constitutes prohibited development. Each objection also raises a concern in relation to "current unauthorised use" wherein it is noted that part of the existing building is being used as a residence without development consent (this unlawful use is also acknowledged in the SEE that accompanied the development application).
On 17 August 2020, Council requested further information from Grigull Custodian in relation to the proposal and on 26 October 2020, further supporting documentation was provided to Council. On 27 November 2020, amended plans (including detailed responses to the objections that had been lodged on behalf of Mr Bowers) were also provided to Council. Included in this further material provided to Council was a detailed submission from DG Briggs and Associates, solicitors and town planners, dated 29 October 2020, responding to the material in the submissions of Plan Matters and Bartier Perry Lawyers.
From 4 to 18 December 2020, the development application (referring to the amended plans) was re-notified and further objections were made by each of Plan Matters and by Bartier Perry Lawyers on behalf of Mr Bowers on 17 and 19 December 2020 respectively.
In December 2020 and January 2021, further information was provided to Council by Grigull Custodian and after the preparation of a detailed Development Application Internal Assessment Report dated 18 January 2021 ('Assessment Report'), which considered and concluded that the caretaker's residence is "ancillary" to the industrial uses on the land, the development application was determined under delegated authority by the grant of consent subject to conditions on 22 January 2021.
Five conditions of the development consent have been raised in the submissions of the respondents. Condition 1 provides that the development is to be undertaken generally in accordance with the amended plans and an updated Operational Plan of Management dated 5 January 2021 prepared by Grigull Custodian, which provides the general operational management requirements and responsibilities that relate to the various tenancies on the premises, and details the role and responsibilities of the caretaker, including a requirement that the caretaker's residence is to provide for accommodation for a full-time caretaker to manage the various uses undertaken upon the premises by various businesses and to maintain the property. Similarly, Condition 2 provides that the caretaker's residence may only be occupied by persons working on the premises who are permanently involved in the daily role of caretaker of the premises. Condition 6 provides for amendments to all approved plans, including on title, to refer to the caretaker's residence. Condition 19 provides that a positive covenant is to be created on the title of the land requiring the proprietor to restrict the occupancy of the caretaker's residence to a person working on the premises and performing the role of caretaker and that the subject premises are not to be occupied as a "dwelling" which is independent of the industrial use of the property. Finally, Condition 23 provides that the owner of the premises is to keep and maintain a register of the occupation of the caretaker's residence at all times and for the life of the consent.

Evidence

In support of his claim, Mr Bowers read two affidavits sworn by him and filed 28 May 2021 and 4 January 2022. Council tendered a bundle of documents comprising extracts from Council's file including documents supporting the development application, records of attendances and internal Council consideration and assessments, as well as material and objections received after public notification of the proposal. The bundle also included various correspondence from Mr Bowers recording his concerns in relation to the conduct on the premises and Council's conduct in relation to his concerns.

Summons and points of claim

Given the nature of the evidence relied upon and the submissions made by Mr Bowers and each of the respondents, it is convenient to detail Mr Bowers' pleaded claims. The summons filed 1 April 2021 provides relevantly as follows: "ORDERS SOUGHT 1 A declaration that Northern Beaches Council has failed to consider or properly consider the DA 2020/0725 lodged by Grigull Custodian Pty Limited on 30 June 2020 for the proposed development at Lot 6 DP 1521, 5 Chard Road, Brookvale, NSW, 2100. 2 A declaration that the development consent issued on 22 January 2021 to Grigull Custodian Pty Ltd is invalid. 3 An order that Council issue an order for the demolition of illegal building works at 5 Chard Place, Brookvale NSW 2100. 4 Costs. DETAILS OF DECISION 1 The decision maker was Northern Beaches Council. 1 [sic] The decision to be reviewed was the approval of a DA for a caretaker's flat on industrial land. 2 A declaration that the notice of determination issued 22 January 2021 to Grigull Custodian Pty Limited is invalid. 3 The plaintiff seeks relief from the whole of the decision. GROUNDS 1 The DA was affected by fraud in that Gerd Wolfgang GrigulI has lived at the premises illegally since May 2017 with no caretaker, and by the presumption of continuance intends to continue to live there in breach of the DA under JR with no caretaker. 2 The use of a caretaker's flat is not ancillary: Chan v Bayside [Council [2020] NSWLEC 1684]."
The points of claim filed 7 June 2021 provides as follows: "1 I repeat the contents of the summons. 2 The DA and determination are tainted by fraud. Gerd Wolfgang Grigull, the managing director, alter ego and directing mind of the Second Respondent, has lived on the premises illegally, and not as a caretaker, since mid 2017 with apparent impunity and intends to continue to do so. Per JRS Forbes Justice in Tribunals 2019 Federation Press, Sydney, at page 74, listing the various grounds of legal error at # 7 is "Fraud inducing or affecting the decision "Fraud unravels everything": Lazarus Estates Ltd v Beasley 1956 1 QB 702 at 712 per Denning LJ. A classic example is Roncarelli v Duplessis 1959 16 DLR 2d 689". See for an example of fraud tainting the planning process the UK case: Secretary of State v Welwyn Hatfield Borough Council 2011 UKSC 15 (2 page press summary attached). Ken Handley, Actionable Misrepresentation 2014 Lexis Nexis paragraph: "8.11. Fraud by corporation. A corporation is in the same position as any other principal, and may be liable for fraud. If a corporation is used by its directing mind as a vehicle for fraud, its liability is primary and not vicarious" and see the cases cited in the footnotes thereto (see 2 pages attached - Annexure "A"). 3 It can be inferred that the First Respondent Council has acted in bad faith in approving the DA. 4 The DA does not meet the legal requirements for ancillary use conveniently summarised by Commissioner Bish in Chan v Bayside. Expert report to follow."
Mr Bowers' two abovementioned affidavits can be summarised as follows. The first, filed 28 May 2021, stated that Gerd Wolfgang Grigull "is and always has been the managing director" of Grigull Custodian and another company, Greenwich Fabrication Pty Ltd. Mr Bowers posited that Grigull Custodian purchased the subject premises and lodged a development application for "storage" and that Mr Grigull is often absent from the premises due to commitments operating his fabrication company. The second, filed 4 January 2022, annexed one of the approved plans (a site plan) from Council's files annotated by Mr Bowers to show his understanding of the total area that can be passively surveilled from the caretaker's residence, being 2.85% of the total site area which he annotated as being 2,022m². This plan was admitted noting that Mr Bowers does not purport to be an expert witness.

Issues

Leaving aside concerns expressed in relation to the form of the claims, the parties in their submissions accept that the key questions are first, whether Council's decision to grant development consent (and/or the development application itself) was "affected by fraud" or bad faith; and second, whether the development the subject of the development application (or, more particularly, the caretaker's residence component thereof) is permissible development that is, whether the proposed use as a caretaker's residence is ancillary to the use of the premises for the purpose of industrial use.

Council's decision was tainted by fraud or bad faith

Before considering the parties' submissions, it is appropriate to make some preliminary observations. Taking into account that Mr Bowers, despite having been a solicitor since 1987, presents his claim without legal representation, it is clear (considering Mr Bowers' pleadings, written and oral submissions and the evidence upon which he sought to rely, some of which I have considered as submissions only) that Mr Bowers' primary claim, at its highest, is that Grigull Custodian, which he submits is the "alter ego and directing mind" of Gerd Wolfgang Grigull (who is one of two directors and shareholders of Grigull Custodian) has "acted fraudulently" by using (or allowing its director to use) the premises "illegally" since mid-2017; and further, in failing to disclose this fact at the time the development application was made (or at any other relevant time). Further, Mr Bowers submits that Grigull Custodian "acted fraudulently" (or committed "a fraud on the Council") in "intending" to continue to use the premises in breach of the development consent - which I interpolate to mean that the premises will not (and were not intended to be) used for the purpose for which development consent was granted. Finally, again as I understand Mr Bowers' position, it is alleged that Council "acted in bad faith in approving the development application" in circumstances where it was aware that Grigull Custodian acted in the manner noted above.

Mr Bowers' submissions

In relation to his claim that Council's decision was tainted by fraud or bad faith, Mr Bowers submits as follows: 1. Despite these (judicial review) proceedings raising a "very serious fraud case", neither respondent has called evidence to meet Mr Bowers' contention that Council's determination of Grigull Custodian's development application was tainted by "fraud" based upon his allegation that Mr Grigull, a director of Grigull Custodian, has lived at the premises illegally, and not as caretaker, since mid-2017 "with apparent impunity" and intends to "continue to do so". Mr Bowers submits that in this circumstance, he is entitled to rely upon the rule in Jones v Dunkell (1959) 101 CLR 298 which permits an inference that evidence not called by a party would not have assisted that party. 2. Mr Bowers submits that the conduct of Mr Grigull living at the premises illegally since mid-2017 (in that he has "never been a caretaker"); and second, that he intends to continue to live there, leads to the clear inference that both the development application and the grant of development consent were "affected by fraud". 3. Mr Bowers submits that the obligations to address the inference he submits arises from the material he has marshalled, are particularly important given that Council is a public authority and a model litigant. 4. Mr Bowers provides the Court with summary note of Welwyn Hatfield Borough Council v Secretary of State for Communities and Local Government (2011) UKSC 15 ('Welwyn Hatfield Borough Council') and an extract from a legal text, Spencer Bower & Handley, Actionable Misrepresentation (5th ed, 2014, Lexis Nexis) at 8.11, dealing with "fraud by a corporation" and submits that Mr Grigull (by his conduct) has used Grigull Custodian as a vehicle for fraud and directs the Court's attention to the facts in Welwyn Hatfield Borough Council, where the (UK) Supreme Court dealt with a situation where a local council had been deceived by an applicant when making a planning application to construct a hay barn for grazing and haymaking which in fact involved an external appearance of a permitted barn but was a fully fitted out dwelling house with garage, living room, study, and bedrooms. In circumstances where the local council had been unaware that the building was constructed as, or was being used as, a dwelling house, the court held that the conduct was a positive deception in matters integral to the planning process and was directly intended to undermine that process. 5. Mr Bowers points to his correspondence to Council of 8 August 2020, where he records that he had brought to Council's attention the "illegal occupation" of the premises for some years and that Council had not taken any action pursuant to his earlier complaints in relation to Grigull Custodian (and the illegal use of industrial land as a residence since 2017). Mr Bowers submits he has never had a proper response from Council in relation to his complaints in relation to what he maintains was the past (and continuing) unlawful use of the premises. He also submits that past conduct either by Grigull Custodian (or by Mr Grigull) also involved unlawful works including the installation of an illegal shower and other related works.
In relation to his claim, that the proposal is not ancillary to industrial development and therefore, impermissible, Mr Bowers submits: 1. Council's decision to grant development consent was unlawful in that the material accompanying the development application and the material which was before Council at the time the decision to grant development consent was made, "does not meet the legal requirements for ancillary use". 2. The decision of the High Court in Lizzio v Ryde Municipal Council (1983) 155 CLR 211; [1983] HCA 22 ('Lizzio') and this Court's consideration of principles where ancillary use relates to a caretaker's residence in Chan v Bayside Council [2020] NSWLEC 1684 ('Chan v Bayside') at [45]-[62] (Bish C) are useful to his argument. While accepting that Commissioner Bish's decision involved merit consideration, Mr Bowers submits that this Court would accept that, having regard to the location of the caretaker's residence on the roof of the existing industrial development, the fact that the design of the caretaker's residence omits any windows to the primary living area and that because the windows to the bedroom and kitchen overlook a vehicle ramp and towards a single storage area, there is no "passive surveillance opportunity" to any other areas of the premises and, as such, Council could not have been satisfied that the proposal was ancillary to an industrial use. 3. Mr Bowers points to the site plan of the approved development referred to at [16] above, which he had annotated in order to direct the Court's attention to the window and other openings to show what he submits is the limited possibility for surveillance, as being determinative that the proposal was not a caretaker's residence. 4. Mr Bowers submits that the material he relies upon in relation to the "fraud" claim, being the fact that Mr Grigull has lived at the premises illegally and not as a caretaker since mid-2017, and the fact that Council was aware of this fact at the time it considered the development application, is further evidence that the material accompanying the development application does not meet the legal requirements for ancillary use and in these circumstances, considered together, he submits that Council's decision was perverse.
Overall, Mr Bowers emphasises that in these proceedings, at least at the time of the hearing, both Council and Grigull Custodian admitted that a person had unlawfully occupied the premises for a period before development consent was granted. He submits that Council's awareness at the time of granting development consent of the unlawful occupation of the premises as a residence itself demonstrates that (as provided in the points of claim) Council "has acted in bad faith in approving the 'DA'".

Council's position

By way of background, prior to addressing Mr Bowers' specific claims, Council points to the detailed background material contained in the bundle of documents and submits that the Court would be aware that the assessment and the determination of the development application included consideration of significant material including a detailed SEE and supporting documentation, as well as legal and town planning submissions made to Council on behalf of both Grigull Custodian and Mr Bowers.
Council also notes that the background material included pre-development application attendances, further correspondence and attendances upon Council officers by representatives of Grigull Custodian, and Council's requests for further material; and moreover, points to Council's detailed Assessment Report in which it is clear that Council was aware of the complaints made regarding the earlier unlawful residential occupation of the premises. Council also points to various conditions of the development consent which govern the use of the caretaker's residence.
In relation to Mr Bowers' contention that the decision to grant development consent was tainted by fraud or bad faith, Council submits: 1. The "fraud" allegation is not properly particularised in that Mr Bowers appears to allege first, that Grigull Custodian itself has acted fraudulently by using the premises illegally since mid-2017; second, that Grigull Custodian has acted fraudulently in "intending" to use the premises in breach of the development consent; and further, that Council itself has acted in bad faith in approving the development application where Grigull Custodian has acted fraudulently. 2. In relation to the allegation of "fraud", there has been no fraud and, in any event, Council has not been deceived because it was aware of the issue of the unlawful use at the time of the development application and that issue had been referred to "Council's Compliance department" for further investigation. Further, the alleged unlawful use was not itself a relevant consideration in relation to the development application. 3. Council submits that Mr Bowers has not produced any evidence of any "intention" on the part of Grigull Custodian to use the premises in breach of the development consent; that the conditions of the development consent limit the use of the caretaker's residence such that it can only be occupied in certain circumstances and by persons working at the premises and who are permanently involved in the daily role of caretaker; and further, whether or not Grigull Custodian is likely in future to use the premises in breach of the development consent is not a relevant consideration in relation to the assessment of the development application. 4. In the above circumstances, the Court would find that Mr Bowers has not established "bad faith" (or fraud) because first, Council was aware of the alleged unlawful use of the premises; second, Council did not consider the unlawful use or likely future unlawful use as relevant in assessing and determining the development application; and third, Council imposed appropriate conditions to ensure that the premises would be used as proposed.
In relation to Mr Bowers' contention that the development the subject of the development application is not ancillary development, Council submits: 1. The legal principles applicable to the characterisation of development are well-known and it is clear from the development application, and the documents accompanying it regarding the nature of the use as a "residence for a caretaker", that Council was satisfied that the purpose of the use of the caretaker's residence was for industrial use, which is permissible in the IN1 General Industrial zone under the LEP. 2. It is clear that Council was satisfied that the proposed use was, in the circumstances, ancillary to the dominant industrial use and not an independent use of the premises because, first, the Operational Plan of Management sets out the role of the caretaker and the operational relationship between the caretaker's residence and the rest of the premises; second, the conditions of consent would limit the use to one that is ancillary to the primary use of the premises for the purpose of industrial use; and third, the caretaker's residence is integrated into the building both in appearance and functionality and would be of a size and scale appropriately proportionate and subordinate to the wider industrial use.

Grigull Custodian's position

Apart from expressing concerns regarding the form of the pleading and submitting that there is no foundation for proposed Order (3) (which seeks "demolition of illegal building works"), Grigull Custodian adopts the submissions of Council and makes further submissions.
In summary, Grigull Custodian submits that the Court would not be satisfied that Mr Bowers has satisfied his onus to prove his case and that no inference could be drawn that would justify or raise any of the known grounds of judicial review in relation to Mr Bowers' claims based upon either fraud or bad faith or the "use of a caretaker's flat not being ancillary development".
In relation to the "fraud" ground, Grigull Custodian submits: 1. The summons and points of claim have not satisfied Pt 59 of the Uniform Civil Procedure Rules 2005 (NSW) ('UCPR') and in particular r 59.4(c), which requires a summons to articulate with specificity the grounds upon which relief is sought, so that the Court and the respondents may assess what issues are likely to arise in circumstances where the points of claim do not enlighten or assist the Court or the respondents as to how or why Mr Bowers alleges that a fraud has been committed, and by whom. 2. Mr Bowers has not made out that the consideration and determination of the development application by Council was affected or tainted by fraud (or bad faith) simply because someone "has lived in the premises since May 2017" and/or that Grigull Custodian (or someone else) "intends to continue to live there in breach of the DA …". 3. Given the facts that Grigull Custodian (or its representatives) attended pre-lodgement meetings with Council and that Council was clearly aware of the previous unauthorised use admitted by Grigull Custodian in the SEE, the Court would be satisfied, first, that to the extent the applicant for the development consent (which in a technical sense was not Grigull Custodian) had no obligation to disclose information irrelevant to the grant of the consent; and second, considering that the primary obligation of an applicant for development consent is to provide material mandated by the Environmental Planning and Assessment Act 1979 (NSW) ('EPA Act') (in particular, s 4.12 of the EPA Act and Pt 6 and Sch 1 of the Environmental Planning and Assessment Regulation 2000 (NSW) ('EPA Regulation')), there is no suggestion that the required material was not provided.
In relation to Mr Bowers' contention that the proposal is not ancillary development, Grigull Custodian submits as follows: 1. In addition to the factual matters raised by Council, Grigull Custodian points to the following five facts. First, the size of the caretaker's residence is 6% of the total gross floor area of the industrial premises and has only one bedroom; second, the location of the caretaker's residence has no separate or independent access and is wholly within, and accessed through, the industrial complex with an internal connecting door with its primary access from the first floor adjacent to the designated caretaker's carparking space; third, the caretaker's residence is accessed only by way of a shared entry way; fourth, the caretaker's residence has windows that face directly into the industrial uses; and fifth, the caretaker's residence services the other uses of the industrial premises by providing security; management of common areas and parking spaces; waste management; and the needs of the other uses comprising a woodwork/cabinet workshop, spray painting facilities, and trade storage facilities. 2. With these facts in mind, and in particular, the manner in which the caretaker's residence is proposed to provide daily support to industrial uses, Council was able to find, as it did, that the caretaker's residence was properly ancillary to, and supported, the industrial uses in the manner anticipated in the development application and that the Operational Plan of Management and conditions of consent ensure that result.

Consideration

It is trite that the grounds of judicial review (at common law) are relatively fluid and not set in stone. At a broad level, the categories for challenging administrative decisions are usually, an excess of power (including jurisdictional error), procedural fairness, and fraud or bad faith. A ground of review based upon fraud requires a focus on how the fraud affects the operation of a particular exercise of a statutory function. Generally a decision will be invalid if a decision-maker is defrauded in the exercise of statutory power, however this requires some aspect of a legislative scheme to be affected by actual fraud or dishonesty.
It is appropriate to make a number of observations in relation to Mr Bowers' first ground, that Council's decision was tainted by fraud or bad faith. First, it is clear, as submitted by each of the respondents, that the allegations of fraud are not properly particularised (UCPR, r 15.3) and while I consider that this is undoubtedly the case, I note that no concern was raised by either of the respondents up until very shortly before the hearing that the summons and the points of claim were drafted without appropriate clarity. Despite this, I consider that, even after reading and hearing Mr Bowers' submissions, and ruling on the respondents' objections to Mr Bowers' evidence, the precise nature of the alleged fraud that has been committed, and by whom, is unclear. Moreover, it is unclear whether Mr Bowers is alleging that the fraud was created or made by the applicant (as agent for Grigull Custodian) for development consent and/or in the circumstances where Council, being aware that there had been illegal residential occupation of the premises, itself acted in "bad faith", which appears to be the essence of Mr Bowers' pleading (in particular, in the points of claim).
I have used the expression "pleading" to describe Mr Bowers' summons and the points of claim. That description is apt for present purposes notwithstanding that this Court is not a court of strict pleading. Fraud is required to be strictly articulated and proven. In judicial review proceedings, it is the Court's practice to require an applicant to frame its claim in "points of claim" as if that document was one to which the principles of pleading apply. While I have attempted to articulate Mr Bowers' claim at its highest, the fact remains that the precise nature of the alleged fraud that has been committed, and by whom, is unclear.
In these circumstances, as outlined at [18] above, I consider that the allegation appears to be that Grigull Custodian (either as the agent or otherwise of Mr Grigull) acted fraudulently by allowing the use of (or by using) the premises unlawfully since mid-2017 and/or that Grigull Custodian has acted, or is acting, fraudulently in "intending" to use the premises in breach of the development consent or in failing to disclose such an intention (included in this may be an allegation including sham); and finally, that Council has acted in bad faith in approving the development application in circumstances where Grigull Custodian has itself acted fraudulently (and Council had knowledge of the previous unlawful conduct).
The use of the term "fraud" and/or related notions of "bad faith" and/or "abuse of power" when considered by courts in relation to stigmatising exercises of powers was considered by the High Court in SZFDE v Minister for Immigration and Citizenship (2007) 232 CLR 189; [2007] HCA 35 ('SZFDE') at [13] as follows: "However, several points should be made here. First, given the equitable nature of their origins described above, principles of public law concerning impropriety in the exercise of statutory powers have not had the focus upon what might be called the "red blooded" species of fraud which engages the common law. Secondly, with respect to references in the public law decisions to good and bad faith and the like, the following observation in a leading English text [William Wade and C F Forsyth, Administrative Law (9th ed, 2004, Oxford University Press) at 416] is in point: 'These add very little to the true sense, and are hardly ever used to mean more than that some action is found to have a lawful or unlawful purpose. It is extremely rare for public authorities to be found guilty of intentional dishonesty: normally they are found to have erred, if at all, by ignorance or misunderstanding. Yet the courts constantly accuse them of bad faith merely because they have acted unreasonably or on improper grounds. Again and again it is laid down that powers must be exercised reasonably and in good faith. But in this context 'in good faith' means merely 'for legitimate reasons'. Contrary to the natural sense of the words, they impute no moral obliquity.'"
In Minister for Home Affairs v DUA16; Minister for Home Affairs v CHK16 [2020] HCA 46; (2020) 385 ALR 212 ('DUA16') the High Court was considering the situation where a registered migration agent fraudulently provided submissions regarding the personal circumstances in an application for asylum and having noted its earlier decision in SZFDE, where it had emphasised, at [29] of that decision, that in considering the application of fraud to decision-making "close attention to the nature, scope and purpose of the particular system of review" rather than reliance upon maxims such as "fraud unravels everything" was required, stated at [15]: "Just as it is usually implied the decision will be invalid if a decision-maker exercises their powers fraudulently [Bodruddaza v Minister for Immigration and Multicultural Affairs (2007) 228 CLR 651 at 663 [28]], so too it will usually be implied that a decision will be invalid if a decision-maker is defrauded in the exercise of statutory powers. The implication requires that some aspect of the operation of the legislative scheme be affected by actual fraud or dishonesty, not merely negligence."
In light of these comments, which I find apposite to the present matter, I consider it clear that, as a ground of judicial review, fraud (if it is found) must affect a particular duty, function or power of the decision-maker, in this case Council. A finding of fraud or bad faith in the making of a decision will vitiate the decision, on the basis it was not made for legitimate reasons.
Having considered what can be understood to be the Mr Bowers' claim, from the summons, points of claim, evidence, and submissions, for the reasons detailed below, I have found that there was no fraud (or bad faith) in the sense usually understood. Further, even if there was evidence, which there is not, to substantiate Mr Bowers' submission regarding an "intention" of someone to flout the development consent (and the fact that that person may have occupied the premises unlawfully before the development consent was granted), it did not, and in my view could not, affect in any relevant way, Council's consideration of the development application in the present case.
Having considered the background and the material that was before Council, including the pre-lodgement meeting for development consent attended by the applicant for development consent (or its representatives) and Council officers, the material contained in the SEE, and the material provided as a result of Council's further enquiries and requests made to Council subsequent to the receipt of the development application, it is clear, first, that Council was aware at the time of the determination that there had been, at least, alleged illegal residential occupation of the premises; and second, that Council had sufficient information as was otherwise required pursuant to s 4.12 of the EPA Act and Pt 6 and Sch 1 of the EPA Regulation to consider the development application.
While past use of land, be it unauthorised or otherwise, can, on occasions, be a relevant matter to be taken into account in the consideration of a development application, the mere fact that an applicant (or another party) may have operated or conducted itself unlawfully on a premises is not a bar to the power of Council to grant consent: Kouflidis v City of Salisbury (1982) 29 SASR 321; (1982) 49 LGRA 17; Jonah Pty Ltd v Pittwater Council [2006] NSWLEC 99; (2006) 144 LGERA 408.
Accepting that, at its highest, Mr Bowers alleges that Grigull Custodian had acted fraudulently by using the premises illegally since mid-2017 and/or "intending" to use the premises unlawfully; and/or that Council itself acted in bad faith in approving the development application, on any iteration of Mr Bowers' case, I do not accept that there is evidence of conduct that could be considered to amount to fraud or bad faith. My reasons may be shortly stated.
First, there is no evidence that Council was "deceived" in relation to any alleged unlawful use. Council was well aware from the material (noted above) that there had been concerns expressed regarding residential use of the premises. This was specifically noted in the Assessment Report. Combined with the fact that the alleged unlawful use of the premises was not a relevant consideration, the evidence does not satisfy me that Grigull Custodian has acted in a manner that could be properly described as fraud.
Secondly, to the extent that it is suggested that Grigull Custodian had formed an "intention" to unlawfully use the premises or not to comply with the development consent (and the conditions thereto) that may be granted, I do not consider this is a matter that is relevant to Council's consideration of the development application - even if such "intention" could be proved (and I consider it has not). Even if that were not the case, non-compliance with a development consent is a matter for separate consideration and action by Council. Again, taking Mr Bowers' claim at its highest, the mere fact that there may be an "intention" not to comply with the development consent has itself not been made out on the evidence.
Thirdly, as is implicit from the above, the evidence does not satisfy me that Grigull Custodian (or its directing mind, if Mr Grigull can be so described) actually intends (or intended) to occupy the premises unlawfully. Indeed, even accepting that there was unlawful use (being residential occupation) prior to the grant of the development consent, that fact itself may explain, at least, a desire to seek development consent to authorise a manner of use which may have previously been unauthorised.
Fourthly, I consider that the imposition of conditions of the development consent, in particular, Conditions 2, 6, 19 and 23, which respectively provide, that the caretaker's residence may only be occupied by persons working at the premises who are permanently involved in the daily role of caretaker of the premises; that the plans were required to be amended to label the relevant area as "caretaker's residence"; that a covenant on title to that effect was required; that the residence cannot be sold, leased, used or occupied as a dwelling independent of the property's industrial use; and finally, that the owner of the premises is required to keep a register of the occupation of the caretaker's residence, indicates that Council was aware of and addressed any ongoing concern regarding future use of the premises.
Fifthly, in relation to Mr Bowers' contention based upon the conduct of Grigull Custodian (and the applicant for development consent) that Council acted in bad faith in assessing and determining the development application, I do not consider that there is evidence to substantiate this claim. As considered above, it is clear, that Council was aware of the earlier alleged unlawful use of the premises when determining the development application; and, Council imposed the conditions (summarised above) which limit the permitted use and provide for adequate restriction, which may be otherwise enforced. Further, Council referred the alleged unlawful conduct to Council's Compliance department for further investigation and action. In these circumstances, I find that there is no evidence before the Court that would indicate that Council had acted in bad faith or that such conduct should be inferred.
For the above reasons, I find that Mr Bowers has not established that the development application itself, and/or Council's consideration and determination thereof, are tainted by fraud, or that the fact that a director of Grigull Custodian may have resided at the premises unlawfully (in the sense not as caretaker) since mid-2017 and "intends to continue to do so" (a fact I do not find proved), was relevant to Council's determination. Further, to the extent that Mr Bowers claims that it should be "inferred" that Council has acted in bad faith in approving the development application, that claim has not been made out.

Whether development the subject of the development application is permissible

As noted above, Mr Bowers articulates his second ground in the summons as "the use of a caretaker's flat is not ancillary: Chan v Bayside" and details this ground in the points of claim as: "The DA does not meet the legal requirements for ancillary use conveniently summarised by Commissioner Bish in Chan v Bayside. Expert report to follow."
Although Mr Bowers places emphasis upon the location and design of the caretaker's residence "on the roof of the industrial development", and points to the fact of the "near total absence of any passive surveillance opportunity", the gist of his submissions was that Council, acting reasonably, could not have concluded that the proposal was ancillary to industrial use, such that the determination was "perverse".
For the reasons that follow, I do not consider Council's decision to be perverse as submitted by Mr Bowers. While the concept of unreasonableness is not amenable to rigidly defined categorisation, I find that Council's determination does not lack material foundation or intelligible justification - and it is not arbitrary, capricious or lacking in common sense given the scope, purpose and terms of the relevant statutory power. In considering this ground, I adopt the principles summarised by the Full Federal Court in Minister for Immigration and Border Protection v Eden (2016) 240 FCR 158; [2016] FCAFC 28 at [54]-[65].
The approach to be adopted in assessing whether a development which would "otherwise be prohibited" may be legitimised as an ancillary use is well-known: Botany Bay City Council v Pet Carriers International Pty Ltd [2013] NSWLEC 147; (2013) 201 LGERA 116 at [28]; Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGERA 157 ('Foodbarn') at 161.
The principles applicable in the characterisation of a development are also well-known and conveniently summarised by Preston CJ of LEC in Chamwell Pty Ltd v Strathfield Council [2007] NSWLEC 114; (2007) 151 LGERA 400 ('Chamwell') at [27]-[28], [34].
It is a question of fact and degree as to whether a particular use of particular premises is ancillary or a separate and independent use: Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404 ('O'Donnell') per Meagher JA at 409-410.
Considering the above principles, I find that it was open to Council to determine that the proposal constituted development which was ancillary to the industrial use. I find this having closely considered the approved plans showing the location of the caretaker's residence in relation to the surrounding uses in the premises including spray painting facilities, a woodwork/cabinet workshop, painters' shop, and the location of the roof terrace, offices, carparking, and trade storage facilities. This included consideration of the marked-up site plan attached to Mr Bowers' affidavit filed 4 January 2022 (being an annotated copy of approved (Site) Plan DA 103E) indicating Mr Bowers' view regarding the area of passive surveillance and the location of the residential component of the proposal (within the industrial uses); the further material included in the SEE; the updated Operational Plan of Management; the conditions relating to use of the discrete area (in particular, Conditions 2, 6 19 and 23); and the Assessment Report
I find that it was clear from the development application (and the material accompanying it) that the nature of the use of the caretaker's residence is, and was meant to be, as a residence for a caretaker and, while noting that the nature of the use needs to be distinguished from the purpose of the use (Chamwell at [34]), I accept the submission of Council that, in making the determination, Council was satisfied that the purpose of the use of the premises is for industrial use and that the proposed use of the caretaker's residence is ancillary to the dominant industrial use and as such is not an independent use: Foodbarn at 161. In reaching this conclusion, Council had before it the Operational Plan of Management (which sets out the role of the caretaker) and, as Council submits, sufficient information by implication of the operational relationship between the caretaker's residence and the rest of the premises, and the conditions of consent, to understand clearly that the residence is integrated into the building in both appearance and functionality. In particular, this is clearly confirmed by the size (apparently, as submitted by Grigull Custodian, less than 6% of the total gross floor area) and the location (whereby it has no separate or independent access, such that it is not physically separate to, and is wholly within and accessed through, the industrial complex) of the caretaker's residence.
Although Mr Bowers pointed to the observations in O'Donnell (where the Court of Appeal considered that even if use of parts of a building could be seen to be as ancillary or related to another use, that use could still be classified as being for an independent purpose (presumably as a residence)), I do not find that this reflects the present situation. Further, I do not consider Mr Bowers' reliance on the decision in Chan v Bayside to be of assistance as that matter was concerned with merit review and is clearly distinguishable on the facts. I am also not assisted by the reference to the UK decision of Welwyn Hatfield Borough Council, where the conduct involved "deliberate, elaborate and sustained" dishonest conduct to deceive the consent authority, at [80] - circumstances well removed from the present matter.
In summary, I find that Council was satisfied, and was entitled to be so satisfied in all the circumstances, that characterisation of the development as a caretaker's residence is ancillary to industrial development, and that the proposal was therefore permissible.

Conclusion

I find that Mr Bowers has not made out any of the grounds raised in the summons and the proceedings should be dismissed.

Costs

As each of the parties sought their costs, I indicated at hearing that, irrespective of my determination, I would reserve the question of costs and give directions for the provision of short written submissions in relation to costs which I would determine on the papers.

Orders

The Court orders: 1. The proceedings are dismissed. 2. Costs are reserved. 3. Each party is to file and serve any written submissions (limited to 5 pages) in relation to costs on or before 22 February 2022. 4. Any written submissions in reply (limited to 3 pages) are to be filed and served on or before 1 March 2022.

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: 09 February 2022

Environmental Planning and Assessment Regulation 2000(NSW)

(2013) 201 LGERA 116

(2007) 151 LGERA 400

(2006) 144 LGERA 408

At a glance

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