Bungendore Residents Group Inc v Palerang Council & Anor

Land and Environment Court Act 1979 s 25B LEGISLATION CITED: Environmental Planning and Assessment Amendment (Desginated Development) Regulation 2007 Sch 3 Environmental Planning and Assessment Act 1979 s 124 Yarrowlumla Local Environment Plan 2002 cl 16, cl 21A, cl 22

ACR Trading Pty Ltd v Fat-Sel Pty Ltd (1987) 11 NSWLR 67; Belmore Residents' Action Group Inc v Canterbury City Council (2006) 147 LGERA 226; Bungendore Residents Group Inc v Palerang Council and Anor (No 3) [2007] NSWLEC 251; Centro Properties v Hurstville City Council, (2004) 135 LGERA 257; Chambers v McLean Shire Council (2003) 57 NSWLR 152; Corporation of the City of Enfield v Development Assessment Commission (1999) 199 CLR 135; CASES CITED: Currey v Sutherland Shire Council & Ors (1998) 100 LGERA 365; Franklins Ltd v Penrith City Council & Anor [1999] NSWCA 134; GPT Re Ltd v Wollongong City Council (No 2) (2006) 151 LGERA 158; Kindimindi v Lane Cove Council (2007) 150 LGERA 333; Manly Council v Hortis (2001) 113 LGERA 321; Residents Against Improper Development Incorporated & Anor v Chase Property Investments Pty Ltd (2006) 149 LGERA 361; Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335

DATES OF HEARING: 21 August 2007 22 August 2007

APPLICANT Mr J Johnson SOLICITOR Environmental Defender's Office LEGAL REPRESENTATIVES:

SECOND RESPONDENT Mr J E Robson SC SOLICITOR Harris & Company

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

40302 of 2005 Bungendore Residents Group Inc v Palerang Council and Navaroo Constructions Pty Ltd (No 4)

JUDGMENT 1 Her Honour: In my judgment Bungendore Residents Group Inc v Palerang Council and Anor (No 3) [2007] NSWLEC 251 (Bungendore No 3) I considered six grounds of challenge raised by the Applicant in relation to the granting of four development consents for subdivision of land at 70-74 Trucking Yard Lane, Bungendore to the Second Respondent by the Council. This land is located in the Village zone. The background is set out in Bungendore No 3 at [2] - [10].

2 I upheld three of the grounds of challenge. I found (i) that there had been a failure by the Council to comply with a clause in the Yarrowlumla Local Environmental Plan 2002 (the YLEP), cl 22(3)(f), which required that the Council have before it a detailed analysis which identified sufficient information whether by description or plan to meet cl 22(3)(f) for each lot in the subdivisions. (ii) there was a failure by the Council to consider cl 16(2)(h) of the YLEP which requires the Council to consider whether each allotment in a subdivision has a practical building precinct before consenting to development of land. (iii) following the decision in Residents Against Improper Development Incorporated & Anor v Chase Property Investments Pty Ltd (2006) 149 LGERA 361 (RAID) on 23 November 2006 and the granting of leave to the Applicant to add a ground of challenge, I found that the development consents for subdivision were for designated development. No environmental impact study had accompanied the development applications as required by the Environmental Planning and Assessment Act 1979 (EP&A Act). 3 On 1 March 2007 Sch 3 of the Environmental Planning and Assessment Amendment (Designated Development) Regulation 2007 was amended to remove cl 29(4)(g) which had referred to sewerage works above a certain size being within 500m of a residential zone. If applied for now the development consents would not be designated development under Sch 3 as a result.

4 I must now decide if in the exercise of my discretion the declarations of invalidity of the four development consents and the order that these not be relied on sought in the Applicant's Amended Application should be made. No order for mandatory injunctive relief is sought, such as requiring the doing of work.

5 The Council has filed a submitting appearance in the proceedings subject only to costs and did not make any submissions on the exercise of discretion. Second Respondent's evidence and submissions 6 The Second Respondent opposes the making of the declarations and orders.

7 Additional evidence tendered included two notices of determination of development consent DEV.2006.0230 and DEV.2006.0231 that were granted by the Council on 8 August 2007 for subdivisions having similar layouts to those the subject of the challenge.

8 An affidavit of Mr Gremmo sworn 29 June 2007 was relied on together with an affidavit sworn by him relied on in the substantive hearing. Physical work was commenced on the subdivision land in August 2006. Substantial earthworks have been carried out and a number of roads have been built in the subdivision. Mr Gremmo stated in his affidavit that approximately $1.3 million had been spent on the development the subject of the four subdivision consents under challenge by the First Respondent. In oral evidence he stated that this included all legal expenses of these proceedings, and 24 Class 1 appeals and one Class 2 appeal in this Court (a number of which appeals were discontinued). Other costs included the costs of obtaining various certificates. Hotel and meal expenses of attending meetings in Canberra connected with obtaining development consents for the land were included. He stated that of this amount about $580,000 had been spent on the actual construction of the subdivision. In oral evidence he stated that as a result of the development consents DEV.2006.0230 and DEV.2006.0231 granted in August 2007 the amount of costs spent on actual development of the site thrown away has been reduced to approximately $180,000. 9 The recently approved development consents do not have on-site disposal of waste water on each subdivision lot, no water reuse, no community management plan, no water storage tank and no sewage treatment plant on a community title lot as the subdivisions are intended to be connected to the Bungendore town water supply. They are otherwise similar in terms of the road and lot layout to the subdivision consents under challenge.

10 The Second Respondent's counsel's written submissions outlined 14 reasons why discretion ought not be exercised to make the declarations and orders sought. Some of these reasons overlap and are dealt with together. Firstly, the breaches are procedural and raise no public interest issue. The Second Respondent relied on the evidence of expert hydrologist Dr Martens and town planner Mr Hynes given in the main proceedings, as the basis for the submission that there was a detailed analysis within each lot and of the relationship between the proposed dwellings and irrigation fields. In light of all that information, the failure in relation to cl 22(3)(f) was technical (although not submitted to be unimportant) and not so substantive that discretion should be exercised in a determinative way.

11 A similar submission was made in relation to cl 16 of the YLEP. Having regard to the material which was before the Council, and while the Court found that there was no evidence that the Council literally turned its mind to the issue of practical building precincts, the conclusion was inescapable that there were adequate building precincts on each proposed lot.

12 The absence of compliance with the procedural requirements for the processing of development applications for designated development is not a factor weighing strongly in favour of the grant of relief if the law has been later altered to take development out of the "designated development" category. 13 Secondly, there is material before the Court which enables the Court to comprehensively consider the matters required in cl 22(3)(f) and cl 6(2)(h) itself. 14 Thirdly, given the amendment of Sch 3 in March 2007 there is no public interest in enforcing the "designated development" breach.

15 Fourthly, there is no adverse environmental impact arising from the grant of development consents and the grant of consent remains and was consistent with the objects of the YLEP and the 2(v) Village Zone. 16 Fifthly, there is no hardship to the Applicant or any other person if the development consents are not set aside. The Applicant is a private association rather than a local council or planning authority. 17 Sixthly, the Second Respondent has expended a significant amount of money in carrying out the subdivision works. If the development consents are declared void it will suffer considerable financial disadvantage through no fault of its own. There has been no fault on its part, the errors found by the Court are those of the Council. 18 Seventhly, the Applicant stood by knowing that substantial work was occurring and did not seek interlocutory injunctive relief in these proceedings commenced by Class 4 Application dated 21 April 2005. The Applicant was entitled to act on the valid development consents that it held. 19 The primary submission is that no relief should be granted to the Applicant. Alternatively, an order under s 25B of the EP&A Act ought be made. Section 25B is not confined to "preliminary and truly procedural" steps. See Tobias JA in Kindimindi v Lane Cove Council (2007) 150 LGERA 333 at [31]. The section confers a broad discretion not confined to a breach of preliminary requirements (at [34]) and allows the imposition of terms, compliance with which will validate the consent, requiring both the carrying out of steps not already carried out, as well as terms requiring acts, matters or things to be done that are different from acts, matters or things required to be done or omitted to be done under the EP&A Act (or other Acts). See also McColl JA at [45] and Hodgson JA at [21] - [25]. Applicant's evidence and submissions 20 The Applicant relied on affidavit evidence already before the Court in the substantive hearing. It also tendered a Council Ordinary Report dated 25 May 2006 which concerned the amendment to YLEP to add cl 21A gazetted on 18 August 2006. That clause states: Despite any other provision of this plan, consent must not be granted to the subdivision of so much of the land within Zone No 2(v) as is in the local government area of Palerang unless the consent authority is satisfied that the lots created by the subdivision will be connected to a reticulated sewerage system that is owned and operated by Palerang Council.

21 The Council Ordinary Report of 25 May 2005 identifies that: At its meeting of 14 December 2004, Council resolved to prepare a draft Local Environmental Plan to amend the Yarrowlumla Local Environmental Plan 2002 (YLEP 2002) (Mayoral minute 349/2004) to require that all future subdivisions in the 2(v) Village zone be connected to a council owned and operated sewerage treatment system. This Mayoral minute was generated in response to an application to subdivide Village zoned land in Trucking Yard Lane that relied upon a community title operated and managed onsite reticulated effluent disposal system. … Council has supported the extension of the sewerage system to the unsewered areas of Bungendore in the 2005-06 Management Plan. With this commitment, Council is in a much stronger position to ensure the objective of the zone is upheld on the basis that onsite sewerage package plans do not achieve the most effective uses of existing utility services.

22 As a result of that amendment these development consents would now be prohibited under the YLEP because the subdivision relied on onsite waste water disposal systems. The YLEP was amended in direct response to the development consents the subject of these proceedings because there was an anomaly in the YLEP which allowed this inappropriate development, subdivision in the Village zone which was not connected to the sewer. There is a clear intention of government expressed through the amendment that the subject development was and is inappropriate. This Court should not permit what the government has so clearly intended to prohibit. 23 There is clear potential for damage to the aquifers that supply the drinking water for Bungendore. The Department of Infrastructure, Planning and Natural Resources (DIPNR), the Public Health Unit of the Greater Southern Area Health Service and the Council all supported the rezoning for this reason (see Council Ordinary Report dated 25 May 2006).

24 The breaches of the YLEP found by the Court are neither technical nor procedural and have clear practical consequences which cannot be remedied by a s 25B order. Clause 22(3) contains a matter which must be considered before the merits of the matter can be considered under s 79C. Nor is there an "inescapable" conclusion that there was an adequate building precinct on each lot. Further, the failure to comply with the requirements of designated development is more than a failure to comply with procedural requirements. The Court is not in a position to determine that there was adequate information before the Council. The Court should not undertake its own assessment of the merits of the matters raised as part of the legal issues in the case, for example whether there is a practical building precinct. 25 There is a fundamental public interest in enforcing the law, Corporation of the City of Enfield v Development Assessment Commission (1999) 199 CLR 135 per Gaudron J. The exercise of discretion to make the orders sought would be consistent with the objects of the EP&A Act, s 5. If discretion is enabled to permit this development such development is now otherwise prohibited by the amended YLEP. This would not therefore encourage the orderly and economic use of land and the best management of Bungendore. The amendment of the YLEP was to ensure the connection of future subdivisions to the town water supply as the Council had serious concerns about the potential impact of contamination of its water supply from irrigated effluent on subdivisions in the town area. 26 The onus is on the Second Respondent to demonstrate that there will be no environmental harm, relying on Chambers v McLean Shire Council (2003) 57 NSWLR 152. On the evidence the Court should not find that there will be no environmental harm if the proposed development proceeds.

27 The physical works carried out by the Second Respondent were done well after the commencement of these proceedings of which it was well aware. The Class 4 application was filed in April 2005 and then stood over on the Second Respondent's application while 24 Class 1 appeals and one Class 2 appeal were pursued. It was enlivened in early 2006 and set down for hearing in early May. By consent the May hearing dates were vacated and the hearing was ultimately held in August 2006. The Second Respondent has taken on the commercial risk of commencing works being well aware that a challenge against the validity of the consent had been commenced. It undertook the work in full knowledge of the risk it faced if the challenge were successful. The commencement of work was a material circumstance which the Second Respondent did not disclose to the Court (or the Applicant) on 1 May 2006 when the hearing date of 2 May was vacated. 28 There is no evidence of hardship as a result of costs thrown away. As a result of the recent development consents for subdivision of precisely the same site which will use precisely the works which have been constructed, it is unclear that there are any costs thrown away. The Court should exercise its discretion to grant the relief sought as there are no reasonable reasons relied on to suggest that it should not.

Finding 29 The discretion I must exercise pursuant to s 124 of the EP&A Act includes the discretion to refuse declaratory or injunctive relief. It is wide, unfettered and equitable in nature, per Kirby P in Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335 at 339 - 341. Kirby P identifies a number of matters that may be considered in exercising that discretion. I note that these are not intended to be exhaustive. In ACR Trading Pty Ltd v Fat-Sel Pty Ltd (1987) 11 NSWLR 67 at 82 Kirby P stated that: Nevertheless, it is important to appreciate the wide scope and purpose of the discretion conferred by s 124 of the Act. Clearly, it is not a warrant to set at nought the complicated and sensitively balanced provisions of the legislation, substituting for the operation of the law laid down by Parliament, the personal opinions of the judge hearing the case. On the other hand, it would be equally erroneous to ignore the discretion or to give it an unduly restricted operation. It is just as much part of the structure and scheme of the Act, for the enforcement of planning law, as are the other parts. In Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335, I collected the authorities and the principles which are applicable to the approach to be taken by a judge exercising the discretion conferred by s 124(1). That discretion is a mollifying one. It permits, in appropriate cases, the refusal of injunctive relief where to grant such relief would work such an injustice as to be disproportionate to the ends secured by enforcement of the legislation including by injunction.

30 There are a number of matters raised by the parties' submissions to which I should apply these broad principles in deciding how I should exercise my discretion. Substantial or technical breaches 31 The issues in relation to which I found a breach of the YLEP and the EP&A Act are substantial and I would not characterise them as technical. Under cl 22(3) of the YLEP the minimum lot size for unsewered land is 2,000m2 in the Village zone. Only if the Council has regard to a detailed analysis can that area be reduced. Subdivision is permissible development in the Village zone. In Bungendore No 3 I held at [61] that cl 22(3) is a "condition precedent" which must be met by the Council before it can undertake a merits review as required by s 79C of the EP&A Act relying on Currey v Sutherland Shire Council & Ors (1998) 100 LGERA 365, Franklins Ltd v Penrith City Council & Anor [1999] NSWCA 134 and Manly Council v Hortis (2001) 113 LGERA 321. 32 In relation to cl 16(2)(h), which requires that the consent authority must consider whether each allotment in a subdivision has a practical building precinct before consenting to development of land, I held at [126] that there was a failure to consider that matter. I noted that there was extensive information available to the Council but did not provide any view as to whether that was sufficient for the Council to have determined this matter as it was not an issue I had to decide at that stage of the proceedings. I also stated in relation to expert evidence at [124] that: I have set out above at par 87 the limited role that expert evidence can play in judicial review proceedings such as this matter. In terms of the categories identified there, category 5 (to explain what was before the Council where there is a challenge to the reasonableness of the Council's decision) is possibly applicable. Ms Ketelby has given her evidence as an expert that more information had to be available in order for the Council to determine whether there was a practical building precinct. Mr Hynes' evidence was that the matter was self-evident. Dr Martens' evidence that he, an expert, was able to easily undertake an exercise to work out the practical building precinct for a single lot does not assist in this exercise because it is the Council's consideration that is relevant. This evidence is inconclusive at best. 33 I also held that, in accordance with RAID, the development was designated development as it came within Sch 3 of the EP&A Act. Due to amendments in March 2007 to Sch 3 the development consents would not be designated development now if applied for because the category for development with sewerage works of a certain size within 500m of a residential zone was removed from Sch 3. This circumstance is irrelevant however as amendment of the YLEP to add cl 21A now prohibits subdivision development unless connected to the Council's reticulated sewerage system. No merits review by Court 34 It is correct to state that there was extensive information before the Council about the intended water management system for each subdivision lot, which is summarised in my earlier judgment in relation to Dr Martens and Mr Hynes, inter alia, see summary of evidence and Second Respondent's submissions at [26], [28]-[32] of Bungendore No 3. 35 I agree with the Applicant's submission that it is not appropriate that I undertake an assessment of whether there was sufficient information before the Council to have enabled it to make a decision in conformity with cl 22(3) and cl 16(h). The Second Respondent sought to tender far too late in the hearing on the exercise of discretion a subdivision plan showing each lot and various features identified in the evidence located on it. This was an attempt to show that there was sufficient information before the Council. I did not allow the tender due to its lateness. Whether that would have been sufficient to have supported the Second Respondent's submissions about the adequacy of material before the Court is impossible to say.

Public interest in enforcing environmental legislation 36 There is an important public interest in upholding the terms of the EP&A Act. I do not consider the identity of the Applicant as an unincorporated association is a relevant matter given the broad standing provided by the EP&A Act. I note Kirby P in Sedevcic at 339: In exercising the discretion, it must be kept in mind that the restraint sought is not, in its nature, the enforcement of a private right, whether in equity or otherwise. It is the enforcement of a public duty imposed by or under an Act of Parliament, by which Parliament has expressed itself on the public interest which exists in the orderly development and use of the environment.

Now prohibited development 37 The Second Respondent correctly submitted that the subdivisions were permissible with consent in the Village zone and that the errors I found were not due to its actions, being errors of the Council. In these circumstances the issue of environmental impact is a relevant matter to consider. Whether or not there is environmental harm likely to be caused by these subdivision developments if proceeded with was one matter raised in competing submissions. I do not have any evidence on this matter one way or the other but do not consider the issue of which party bears the onus of proof on this issue needs to be resolved, given the following circumstance. The developments under challenge are now prohibited under the YLEP due to the Council's desire to avoid onsite disposal of sewage and waste in the Village zone. It was supported in this approach by other government agencies including the DIPNR, which must approve such amendments as they are made by the Minister administering the EP&A Act. Connection to the town water supply is now required for subdivisions in the Village zone, the purpose of amendment 21A of the YLEP. As identified in the Council's Ordinary Report dated 25 May 2006, this amendment was made as a response to the development applications for subdivision in Trucking Yard Lane. That is an important consideration in my exercise of discretion as it suggests that the long term orderly planning for this area requires a different approach to water and sewage disposal management.

Hardship to Second Respondent 38 There were competing submissions from the parties on the appropriate weight to be given to the carrying out of work by the Second Respondent in reliance on the development consents after the commencement of proceedings. The Second Respondent submitted that it was entitled to rely on the consents in the absence of the Applicant obtaining an interlocutory injunction preventing work being carried out. The Applicant submitted that the Second Respondent undertook the work well aware of the commercial risk in doing so. It relied on Biscoe J in GPT Re Ltd v Wollongong City Council (No 2) (2006) 151 LGERA 158 at [33] where his Honour gave less weight to the fact that work had been done in reliance on development consents during the three month statutory period in which court proceedings could be commenced because the developer was aware that the appeal period was open. The situation here is that the work has been done after the commencement of proceedings. Knowledge of the commercial risk is a relevant consideration but not decisive given that the development consents are valid until declared otherwise. 39 Further, the financial disadvantage resulting from the Applicant commencing physical work and incurring costs (in August 2006) well after the commencement of proceedings (April 2005) in reliance on its valid development consent is substantially reduced by the recent grant of development consents DEV.2006.0230 and DEV.2006.0231 by the Council. On Mr Gremmo's evidence actual construction costs now "thrown away" are approximately $180,000, a relatively small amount in the overall scheme of this development. All of the existing work done on roads and lot layout can be utilised for the most recently granted development consents. 40 Substantial costs which are not actual construction costs are also relied on by the Second Respondent as evidence of financial disadvantage. The main expenditure identified by Mr Gremmo, without any specificity of the amount spent, was on legal fees incurred for 24 Class 1 proceedings, one Class 2 appeal lodged in 2005 and these Class 4 proceedings. The costs of obtaining the development consents and other certificates were also identified. I do not consider that the costs of the Class 1 and Class 2 legal proceedings undertaken voluntarily by the Second Respondent or the costs of these proceedings are relevant in the factors I must weigh up in exercising my discretion. Further, while I accept that there will be costs "thrown away" I do not have any evidence before me that these will cause hardship to the Second Respondent. In the particular circumstances of this case, the financial disadvantage to the Second Respondent is a less significant matter in the exercise of discretion.

Application of s 25B of the EP&A Act 41 I agree with the Applicant's submissions that I should not apply s 25B in this case. In Kindimindi Tobias JA (Hodgson JA McColl JA concurring) held it could be applied in more than preliminary procedural matters. At [32] he stated: It seems to me that s.25B(2)(c), for instance, would authorise the imposition of a term requiring a consent authority to reconsider if it has already considered the matter, or to consider for the first time if it has failed to consider the matter, any one or more of the matters required to be considered by, for instance, s.79C of the Environmental Planning and Assessment Act. That, of course, does not mean that in every case where a purported consent is invalid upon the basis that s.79C has not been complied with, that the court will exercise its discretion to suspend the consent and to require the consideration or reconsideration of a s.79C matter. 42 There are several cases not overturned by Kindimindi in which this Court has held that matters that are fundamental to the granting of consent should not be the subject of s 25B orders; see Centro Properties v Hurstville City Council, (2004) 135 LGERA 257, Belmore Residents' Action Group Inc v Canterbury City Council (2006) 147 LGERA 226, and GPT. In Kindimindi, Tobias JA referred at [33] to Centro Properties as an example of a case where the application of s 25B was not considered appropriate. As identified at [31] - [33], the breaches I have found in this matter are substantive breaches, and I consider are similar in nature to the cases cited above where s 25B has not been applied. 43 I therefore consider I should make the declarations and orders sought in the Applicant's Amended Class 4 application.

Costs yet to be decided 44 I have yet to decide the issue of costs in the proceedings and note that the Council wishes to put submissions before the Court on that issue. I have already heard submissions from the other parties on costs. I order that the Council is to provide its written submissions on costs by 4pm Tuesday 28 August 2007 and the matter is listed at 4pm on Thursday 30 August 2007 for brief oral submissions, if any, from any party wishing to respond. If there is no need for oral submissions that date can be cancelled. 45 I will issue final declarations and orders when costs are determined.

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