Castle Constructions Pty Limited v Director-General of the Department of Planning & Anor

Land and Environment Court (NSW)|2007-11-20|Before: Jagot J, Mr J

CITATION : Castle Constructions Pty Limited v Director-General of the Department of Planning & Anor [2007] NSWLEC 783

APPLICANT Castle Constructions Pty Limited

PARTIES : FIRST RESPONDENT Director-General of the Department of Planning

KEY ISSUES: Judicial Review :- validity of s 65 certificates - standard instrument - whether applicable - whether draft local environmental plan had to be prepared in accordance with standard instrument - transitional provision - whether Director-General satisfied with respect to nominated matters - grounds of invalidity not made out - application dismissed

Environmental Planning and Assessment Act 1979 LEGISLATION CITED: Environmental Planning and Assessment Amendment (Infrastructure and Other Planning Reform) Act 2005 Interpretation Act 1987

Castle Constructions Pty Ltd v North Sydney Council [2007] NSWCA 164; Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280; Hill v Woollahra Municipal Council and Others (2003) 127 LGERA 7; Kartinyeri v The Commonwealth of Australia (1998) 195 CLR 37; McCulloch v Maryland 17 US 159; Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611; CASES CITED: No Dump Residents Association Inc v Collex Pty Ltd [2006] NSWCA 94; The Council of the City Parramatta v Pestell (1972) 128 CLR 305; R v Connell; ex parte The Hetton Bellbird Collieries Limited and Others (1944) 69 CLR 407; Sutherland Shire Council v Telope Pty Ltd (1993) 85 LGERA 103; Sydney Catchment Authority v Bailey (2006) 149 LGERA 298; Thomas v Mowbray (2007) 81 ALJR 1414 ; Trust Company Limited v Chief Commissioner of State Revenue [2007] NSWCA 255; Weston Aluminium Pty Limited v Environment Protection Authority [2007] HCA 50

APPLICANT Mr T F Robertson SC with Mr J Lazarus SOLICITORS McLachlan Thorpe Partners

FIRST RESPONDENT LEGAL REPRESENTATIVES: Mr A Galasso SC SOLICITORS Department of Planning

SECOND RESPONDENT Mr J T Gleeson SC with Mr A M Pickles SOLICITORS Mallesons Stephen Jaques

THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

CASTLE CONSTRUCTIONS PTY LIMITED Applicant

DIRECTOR-GENERAL OF THE DEPARTMENT OF PLANNING First Respondent

NORTH SYDNEY COUNCIL Second Respondent

JUDGMENT Jagot J: A. Introduction 1 These proceedings concern provisions of the Environmental Planning and Assessment Act 1979 (the EPA Act) regulating standard environmental planning instruments. Castle Constructions Pty Limited claimed that two certificates issued under s 65 of the EPA Act by the Director-General of the Department of Planning, certifying that draft Amendment No 28 to the North Sydney Local Environmental Plan 2001 (the LEP 2001) may be publicly exhibited in accordance with s 66, were invalid and of no effect. There are two central questions arising in the proceedings: (1) Did the issue of the certificates with respect to draft Amendment No 28 engage the operation of s 65(1A) of the EPA Act to the effect that a certificate is not to be issued unless the Director-General "is satisfied that the draft local environmental plan has been prepared in accordance with any applicable standard instrument under section 33A"?

(2) If so, was the Director-General in issuing the second certificate satisfied that draft Amendment No 28 made "a necessary amendment of a principal environmental planning instrument made before the prescription of the relevant standard instrument" within the meaning of cl 92 of Sch 6 to the EPA Act which enables the Director-General to issue a certificate despite (relevantly) s 65(1A)?

B. Statutory provisions 2 The major amendments to the EPA Act inserted by the Environmental Planning and Assessment Amendment (Infrastructure and Other Planning Reform) Act 2005 included provisions in Pt 3 (environmental planning instruments) relating to standard environmental planning instruments.

3 Sections 33A to 33C were provisions added to Div 1 of Pt 3 of the EPA Act. Insofar as relevant, they provide: 33A

(1) The Governor may, by order published in the Gazette, prescribe the standard form and content of local environmental plans or other environmental planning instruments (a standard instrument ).

(2) An environmental planning instrument may be made in the form of: (a) a declaration that the applicable mandatory provisions of a standard instrument are adopted, and (b) the prescription of the matters required to be prescribed for the purposes of the application of the mandatory provisions of the standard instrument (such as the adoption of land zoning or other maps), and (c) the prescription of any other matters permitted to be prescribed by an environmental planning instrument, including non-mandatory provisions of the standard instrument (with or without modification) or additional provisions.

(3) When an environmental planning instrument is made with such a declaration, the instrument has the form and content of the applicable mandatory provisions of the standard instrument and the matters so prescribed. Any draft of the instrument that is exhibited under this Act is to set out in full the provisions that are adopted.

(4) If the mandatory provisions of a standard instrument so adopted are amended by a further order under subsection (1) after they are adopted, the environmental planning instrument is taken (without further amendment) to adopt the amended provisions of the standard instrument on and from the date the amendment to the standard instrument takes effect.

(5) The order that amends a standard instrument may make provision of a savings or transitional nature consequent on the amendment of the standard instrument.

(6) Where a standard instrument has been adopted, the provisions of the environmental planning instrument (other than the mandatory provisions of the adopted standard instrument) may be amended from time to time by another environmental planning instrument or in accordance with any Act.

(7) A standard instrument may: (a) provide that a provision is a mandatory provision only in the circumstances specified in the instrument, and (b) contain requirements or guidance as to the form or content of a non-mandatory provision.

(8) The adoption of the provisions of a standard instrument in an environmental planning instrument is taken to be a matter of State environmental planning significance for the purposes of this Act.

(9) Subject to this Act and the regulations, the form and subject-matter of an environmental planning instrument or draft instrument is (if there is no applicable standard instrument) to be as determined by the Minister.

(10) In this section: amend includes alter or vary. form includes structure.

(1) In order to facilitate the staged implementation of standard instruments and the periodic review of existing instruments, the Minister may, by order published in the Gazette, establish a staged repeal program for existing environmental planning instruments.

(2) The staged repeal program may include provision for or with respect to the following: (a) the repeal of designated environmental planning instruments at specified times during the period of the program, (b) requirements for the preparation and making of replacement instruments (including the times by which draft replacement instruments are to be submitted to the Director-General or the Minister), (c) the postponement of the repeal of particular instruments when the making of a replacement instrument is delayed, (d) the periodic review by a council of environmental planning instruments (other than State environmental planning policies and regional environmental plans) applying in its area and the submission of reports of each review to the Director-General.

(3) At the time specified by the staged repeal program for the repeal of a designated environmental planning instrument, the instrument is repealed by the operation of this section.

(4) The Minister may, by order published in the Gazette, make a local environmental plan to take effect on the repeal of an instrument under this section pending the making of a replacement instrument in accordance with this Act. Any such plan made by the Minister is to adopt the mandatory provisions of a standard instrument (with the prescriptions the Minister considers necessary in the particular circumstances).

(5) For the purposes of subsection (4): (a) an order making a plan under that subsection is not required to comply with other requirements for the making of an environmental planning instrument, and (b) public notice is to be given of the proposed plan for such period as the Minister considers appropriate and submissions invited on the proposed plan during that period, and (c) the council is to provide the Minister, when requested, with copies of any draft plans, maps or other relevant documents prepared or held by the council.

The Minister may direct the council to pay to the Director-General such amount as the Director-General determines will meet the reasonable costs incurred on behalf of the Minister by the Department for the purposes of making the plan under subsection (4). 4 Section 65(1A) was inserted after s 65(1) in Div 4 of Pt 3 (local environmental plans) so that the section reads as follows: (1) Where the Director-General receives a copy of a draft local environmental plan from a council under section 64, the Director-General may cause to be issued to the council a certificate certifying that the draft plan may be publicly exhibited in accordance with section 66.

(1A) A certificate is not to be issued under this section unless the Director-General is satisfied that the draft local environmental plan has been prepared in accordance with any applicable standard instrument under section 33A. This subsection does not limit the grounds on which a certificate may be refused or the draft plan may be required to be amended under this section.

5 Consequential amendments were made to ss 66, 68 and 69 with respect to the documents required to be placed on exhibition, a council's consideration of submissions in response to the exhibition of a draft local environmental plan and the Director-General's report to the Minister.

6 Hence, ss 66(1)(b)(ii) and (iii) take a new form as follows: (1) Where a council receives a certificate under section 65 with respect to a draft local environmental plan, it shall, after complying with any condition subject to which the certificate was granted and subject to the regulations:

(b) publicly exhibit at the place, on the dates and during the times set out in the notice: (i) a copy of that environmental study and draft local environmental plan,

(ii) a copy of any standard instrument, environmental planning instrument or direction under section 117 that substantially governs the content and operation of the draft local environmental plan (or provide for access to such a copy), and

(iii) a statement to the effect that any such standard instrument, environmental planning instrument or direction substantially governs the content and operation of the draft local environmental plan and that any submissions made pursuant to section 67 should be made having regard to that fact, 7 Section 68(9) has been added providing that: (9) After a draft local environmental plan has been submitted to the Director-General under this section:

(a) the council and the Director-General may (on one or more occasions) agree to the council making changes to the draft plan and resubmitting it under this section, or

(b) the Director-General may (on one or more occasions) return the draft plan so that the council can make changes to accord with any applicable standard instrument under section 33A or to take into account any directions under section 117. 8 Section 69, dealing with the Director-General's report to the Minister, has been supplemented by s 69(2) as follows: (2) The Director-General is not to furnish a report to the Minister under this section unless the Director-General is satisfied that the draft local environmental plan has been prepared in accordance with any applicable standard instrument under section 33A. This subsection does not limit the matters that the Director-General is required to consider for the purposes of a report. 9 Div 5 of Pt 3 of the EPA Act (review and amendment of environmental planning instruments) was also amended by the insertion of ss 73A and 74A as follows: 73A

An amending environmental planning instrument may be made under this Part without compliance with the provisions of this Part relating to the conditions precedent to the making of the instrument if the instrument, if made, would amend or repeal a provision of a principal instrument in order to do any one or more of the following: (a) correct an obvious error in the principal instrument consisting of a misdescription, the inconsistent numbering of provisions, a wrong cross-reference, a spelling error, a grammatical mistake, the insertion of obviously missing words, the removal of obviously unnecessary words or a formatting error,

(b) address matters in the principal instrument that are of a consequential, transitional, machinery or other minor nature. 74A

This Division is subject to sections 33A and 33B. 10 Sch 6 to the EPA Act contains savings, transitional and other provisions. Clause 92 relates to the 2005 amendments with respect to standard environmental planning instruments and says: The Director-General may issue a certificate under section 65 or furnish a report under section 69 (despite sections 65 (1A) and 69 (2), as inserted by the 2005 Amending Act) if the Director-General is satisfied that: (a) significant council resources have been expended in the preparation of the draft instrument before the prescription of the relevant standard instrument, or

(b) the draft instrument makes a necessary amendment of a principal environmental planning instrument made before the prescription of the relevant standard instrument, or a necessary amendment of an instrument referred to in paragraph (a),

and the Director-General is satisfied that satisfactory arrangements have been made for the making of a replacement instrument in accordance with the relevant standard instrument.

C. The facts 11 On 1 June 2001 the LEP 2001 was gazetted and took effect (s 34(5) of the EPA Act). Amendment No 9 to the LEP 2001 inserted provisions relating to the North Sydney Centre (Div 4 of Pt 3) and took effect on 28 February 2003.

12 On 15 April 2005 the Director-General informed North Sydney Council that, as part of the amendments to the planning system made by the Environmental Planning and Assessment Amendment (Infrastructure and Other Planning Reform) Act 2005, it was proposed the North Sydney local government area have a new local environmental plan within three years. The letter noted that: … local councils are requested to avoid proposing minor amendments to existing local environmental plans, where possible. For amendments to proceed in the transition period, it should be by exception, and Council will need to demonstrate a compelling case. For example, that the amendment is to facilitate an employment generating activity, or that existing provisions jeopardise or undermine State Government policy, or that it implements agreed strategic direction for development in the area.

13 On 31 March 2006 the Governor, by order published in the Gazette, exercised the power in s 33A of the EPA Act with respect to local environmental plans (a standard instrument).

14 On 21 December 2005 the Department of Planning and the Council entered into a memorandum of understanding for the review of the North Sydney CBD provisions and the consolidation of the LEP 2001 into the "standard LEP". Under that memorandum of understanding the Department provided the Council with funding for the reforms to its local environmental plan and established milestones for the Council to achieve. The milestones and timeline were described in the memorandum in the following chart:

Milestones Timeline* Progress Requirements

Priority review of Commercial Development Provisions for North Sydney CBD and Amendment of North Sydney LEP 2001
Finalise strategy to input into preparation of draft LEP
exhibition of draft LEP Council approves exhibition Within 12 months of signing of MOU Council endorses report
s68 report prepared Minister approves
Gazettal (amend LEP 2001)
Review of Residential Development Strategy & other strategic planning matters including infrastructure, traffic, mixed use zones a. Residential yield figures compiled. b. Draft Strategies prepared Endorsed by Council for exhibition Within 12 months of signing of MOU Report prepared for Council c. Exhibition of draft strategy Council endorsement d. Finalise following exhibition
Integration of strategy results in 2. with North Sydney LEP 2001 reformatted into template LEP
s62 consultation completed Council endorses exhibition
Draft prepared Department issues s65 cert.
s65 certificate Within 24 months of signing of MOU
Exhibition completed Council endorses s68 report
s68 report prepared Minister makes plan
Gazettal (amend LEP 2001)

Timeline may be amended only in consultation and agreement between Department of Planning and Council. 15 The provisions of the memorandum of understanding linked funding to these three stages. It also noted that the review of the provisions relating to the North Sydney CBD should have regard to: · ensuring that the provisions will provide a practicable, economic basis for the development of at least 250,000 square metres of new commercial floor space calculated from the date of gazettal of North Sydney ELP 2001 Amendment 9 - North Sydney Centre; and in particular · ensuring that the achievement of this target will not be compromised by sunlight access requirements either for areas within the centre or those surrounding it. 16 On 8 May 2006 the Council resolved to prepare draft Amendment No 28 to the LEP 2001. The Council notified the Department of this resolution by letter dated 8 June 2006. This letter said: Council is aware of the Director-General's request that councils avoid proposing minor amendments to existing LEPs where possible. The DLEP is considered to be a significant amendment to the North Sydney Council planning controls, and it should proceed through for gazettal prior to the development of a comprehensive LEP within Council's three-year time frame. The DLEP has been part funded by the Department as outlined by a Memorandum of Understanding (MOU) between it and Council. 17 On 31 August 2006 the Council rescinded this resolution of 8 May 2006 and resolved to prepare a new version of draft Amendment No 28. The Council notified the Department of this resolution by letter dated 5 October 2006. This letter repeated the observation made in the earlier letter of 8 June 2006 about avoiding minor amendments to existing local environmental plans and the significance of draft Amendment No 28. The documents relating to this notice included an "LEP Review Form". This form noted that the Council's new principal LEP was due in three years and said the preparation of draft Amendment No 28 was supported at this stage as the amendment was "intended to provide clarity on the outcome for North Sydney CBD as part of the global city by providing defined heights rather than relying on shadow diagrams". The Director-General signed the "LEP Review Panel's" consideration of the "LEP Review Form" on 10 November 2006. On the same day the Director-General wrote to the Council advising that it should continue preparing draft Amendment No 28. The issue of a certificate under s 65 was to be considered after certain additional information had been provided. The Director-General also determined that there was no requirement for an environmental study under s 57.

18 On 14 March 2007 the Council notified the Department of the key dates it was pursuing for its comprehensive local environmental plan in accordance with the standard instrument, with gazettal expected in March 2009. The Director-General and Minister acknowledged this revised timetable by signing a memorandum in June 2007 noting the due date for the comprehensive local environmental plan in accordance with the standard instrument. In July 2007 the Department accepted a recommendation to revise the memorandum of understanding.

19 On 27 July 2007 the Court of Appeal delivered judgment in Castle Constructions Pty Ltd v North Sydney Council [2007] NSWCA 164 in which the Court held that one of the provisions relating to the North Sydney CBD (cl 28D) prevailed over cl 30 (building height planes) so that cl 30 did not apply to development of a site in the CBD.

20 In August 2007 the Council submitted a statement under s 64 of the EPA Act to the Department with respect to draft Amendment No 28. On 27 August 2007 Departmental officers (including a delegate of the Director-General with respect to issuing certificates under s 65) completed a request for the issue of a certificate under s 65. This request noted that the due date of the new principal local environmental plan was in March 2009. It described the primary purpose of draft Amendment No 28 as to "provide clarity and certainty on the height controls" for the North Sydney CBD. It identified the reason for referral to the Director-General as: The Director-General advised the council that this matter would be dealt with expeditiously. 21 This request noted that the amendments included, amongst other things, amending the building height and massing controls in the North Sydney CBD and repealing a clause to remove the inconsistency provision (cl 28A) so that the CBD provisions did not prevail over the rest of the LEP 2001 (including cl 30). It also referred to the Minister's interest in floor space ratio controls for centres. This is a reference to the status of the North Sydney CBD as part of the Minister's strategic planning initiative for "global cities". The request noted that part of this initiative involved requiring the Council to establish controls for maximum floor space in the commercial zone. Further, that this requirement would delay the finalisation of the draft Amendment No 28 but was discussed at a meeting between the Director-General and Mayor of the Council. The request identified an alternative to this delay as follows: An alternative approach would be to require this action as part of the preparation of the Comprehensive DLEP.

22 The request answered "No" to the pro-forma question "Is the proposed draft LEP consistent with the Standard Instrument (LEPs) Order 2006" and then said: Council proposes RLs for buildings in the Centre which is consistent with the requirements of the Standard Instrument.

23 Under the heading "recommendation" the request contained the following matters: · LEP be sent back to Council under section 65(1A) Yes · Section 65 certificate should be issued Yes - Without conditions No - With conditions Yes - If certificate is issued, should section 69 functions be delegated to Council No

24 The request ended with a comment: The controls in the DLEP should be reviewed as part of the preparation of the Comprehensive DLEP.

25 On 27 August 2007 the Director-General's delegate issued a conditional certificate under s 65 of the EPA Act with respect to draft Amendment No 28. One of the conditions included requiring the draft to show maximum floor space ratio controls for all sites using a map made operative by a text amendment. The covering letter referred to the possibility of a savings provision being included in draft Amendment No 28. On 21 September 2007 the Council wrote to the Department noting that it was aware of the Court of Appeal's decision and had taken the view that cl 30 of the LEP 2001 remained relevant for the CBD and considered a savings provision inappropriate.

26 Castle Constructions commenced these proceedings on 25 September 2007. It challenged the validity of the certificate issued on 27 August 2007 on the ground that it had been issued in breach of s 65(1A) of the EPA Act. The Department wrote to the Council on 4 October 2007 noting the proceedings and the Department's position that s 65(1A) of the EPA Act did not apply to the certificate. Nevertheless, the Department suggested that it might be prudent for the Council to seek a fresh certificate. In so suggesting the Department asked the Council to include detailed information about: - (i) whether draft Amendment No 28 makes a necessary amendment of a principal environmental planning instrument made before the prescription of the relevant standard instrument, and (ii) the arrangements made for the making of a replacement instrument in accordance with the relevant standard instrument. This request reflected the terms of cl 92 of Sch 6 to the EPA Act. The letter also noted that the Council had informed the Department it would comply with the target date for gazettal of a standard instrument for North Sydney (that is, March 2009).

27 On 15 October 2007 the Council resolved to again forward draft Amendment No 28 to the Department. The Council notified the Department to this effect on 18 October 2007 and requested issue of a certificate under s 65 of the EPA Act. The Council noted that it provided a statement under s 64 of the EPA Act reflecting the report sent in August 2007. Officers of the Department prepared a further request for the issue of a certificate under s 65 shortly thereafter, which the Director-General signed. This request was in terms similar to the request made in August 2007 including the references to: - (i) the primary purpose of draft Amendment No 28 being to provide clarity and certainty on the height controls for the North Sydney CBD, (ii) the reason for referral to the Director-General being that the Director-General informed the Council the matter would be dealt with expeditiously, and (iii) the Minister's interest in floor space ratio controls for centres and the options relating to those provisions, including requiring inclusion in draft Amendment No 28 (which would delay its finalisation) and the alternative approach of requiring "this action as part of the preparation of the Comprehensive DLEP".

28 This request also included reference to the circumstances underlying it, specifically the proceedings commenced by Castle Constructions. With respect to the pro-forma question "Is the proposed draft LEP consistent with the Standard Instrument (LEPs) Order 2006?" the request answered "No, not required. See below". The text below appeared as follows: Section 65(1A) Environmental Planning and Assessment Act.

This section provides that a section 65 certificate is not to be issued unless the Director-General is satisfied that the draft local environmental plan has been prepared in accordance with any applicable standard instrument prepared under s33A of the EPA Act.

On 31 March 2006 a Standard Instrument was made under s33A of the EPA Act prescribing the form and content for a Principal Local Environmental Plan as set out at the end of the Standard Instrument (Local Environmental Plan) Order 2006.

There is currently no applicable standard instrument for a draft local environmental plan other than a principal local environmental plan. The Draft LEP received from Council under s64 proposes the amendment of an existing principal local environmental plan, North Sydney LEP 2001 and is not a principal local environmental plan itself. At the present time, there is no applicable standard instrument prescribed under s33A prescribing the form and content of a local environmental plan that is not a principal local environmental plan.

It is therefore considered that s65(1A) does not apply to this Draft LEP.

If s65(1A) did apply, then the Draft LEP received from Council under s64 would not comply with the form of the Standard Instrument made on 31 March 2006 and s65(1A) would not be satisfied. Despite that non-compliance, a s65 certificate may be issued under cl 92 of Schedule 6 of the EPA Act. That requires, in the circumstances of this LEP, that the draft LEP makes a necessary amendment of a principal environmental planning instrument made before the prescription of the relevant standard instrument, and that the Director-General be satisfied that satisfactory arrangements have been made for the making of a replacement instrument in accordance with the relevant standard instrument.

The Draft LEP makes a necessary amendment of the North Sydney Local Environmental Plan 2001 as the current controls for the Central Business District are considered uncertain and height controls expressed as RLs will remove this uncertainty and the following arrangements have been made for the making of a replacement instrument in accordance with the relevant Standard Instrument being the Standard Instrument for a Principal Local Environmental Plan set out at the end of the Standard Instrument (Local Environmental Plan) Order 2006 made on 31 March 2006.

· April 2005 letter sent out to North Sydney Council be Regional Director Elizabeth Kinkade, as part of the Department wide program approved by the then Director-General Jennifer Westacott, to advise each council as to the time period that was expected in which council would have a standard instrument in place - for North Sydney it was within 3 years of the Order. · July 2005 North Sydney Council was offered, by letter from the Department, $80,000 from Planning Reform Fund towards the North Sydney LEP 2001 consolidation into the LEP template (Standard Instrument). · 21 December 2005 a Memorandum of Understanding was signed by Council and the Department, which set out a timetable for the preparation of the Standard Instrument as part of the PRF funding process. · 14 March 2007 Council advised the Department of tis key dates for the preparation of its Standard Instrument. · Regular (quarterly) progress reports are made by Council to the Department on its preparation of the strategy that underpins the Standard Instrument. · 15 October 2007, Council resolved to commence preparation of a DLEP consistent with the Standard Instrument. On the basis of these arrangements the Director-General is able to be satisfied that satisfactory arrangements have been made for the making of a replacement instrument in accordance with the relevant Standard Instrument.

29 The recommendation was in the following terms: 1. The Director General be satisfied that:

a) there is no applicable standard instrument prepared under s33A of the EPA Act for a non principal local environmental plan and consequently s65(1A) of the EPA Act does not apply to the issue of a s65 certificate for draft North Sydney LEP Amendment 28.

b) draft North Sydney LEP Amendment 28 makes a necessary amendment of North Sydney Local Environmental Plan 2001, being a principal environmental planning instrument made before the prescription of the relevant standard instrument, and

c) satisfactory arrangements have been made for the making of a replacement instrument North Sydney Local Environmental Plan in accordance with the relevant standard instrument being the Standard Instrument for a Principal Local Environmental Plan set out at the end of the Standard Instrument (Local Environmental Plan) Order 2006 made on 31 March 2006.

The Director-General sign the attached conditional certificate Conditions: · The DLEP must show maximum FSR controls for all sites by a map which is made operative by a text amendment. · Reference to FSR map for sheets 5 and 8 should cross reference specific sheets of the map. · Map: Omit sheet 5 of amendment 9, as these provision no longer have any application and the shadow controls have been shows to be inaccurate.

               · LEP be sent back to Council under section 65(1A) Yes
               i) If certificate is issued, should section 69 functions be delegated to Council No

30 On 26 October 2007 the Director-General signed the certificate under s 65 of the EPA Act which was issued to the Council on the same day.

31 On 7 November 2007 Castle Constructions amended the proceedings to include a challenge to the validity of the certificate issued on 26 October 2007 on the ground that it was issued in breach of s 65(1A) of the EPA Act. This included a claim that the Director-General was not properly satisfied in accordance with cl 92 of Sch 6.

For the applicant 32 The applicant submitted that the purpose of the amendments in 2005 with respect to standard instruments was clear. Once the standard form and content had been determined, all future local environmental plans should conform to that standard.

33 Section 33A does not contemplate different standard forms for particular local environmental plans. Rather, it suggests that there will be one standard instrument for all local environmental plans (called a standard instrument). The reference to any "applicable" standard instrument in ss 65 and 69 ensures that inapplicable types of standard instruments (such as standard regional environmental plans) do not control the making of local environmental plans. Section 74A ensures that the standard instrument for local environmental plans affects all amendments to local environmental plans even though the standard instrument has been adopted as a principal instrument. The extent of impact of s 74A is disclosed by the transitional provision in cl 92 of Sch 6.

34 On 31 March 2006 the Governor exercised the power under s 33A. Draft Amendment No 28, as a draft local environmental plan, must comply with the form and content requirements in the standard instrument. Otherwise, the Director-General cannot be satisfied in accordance with s 65(1A). Draft Amendment No 28 was not prepared in accordance with the applicable standard instrument.

35 The respondents' reliance on the references to "principal local environmental plan" in the standard instrument was misplaced. Section 33A contains no reference to a principal local environmental plan as there was to be one form of local environmental plan from the date of gazettal of the standard instrument, subject only to the transitional provision in cl 92 of Sch 6. Section 33A only gives power to prescribe the form and content of all local environmental plans and does not permit different standard instruments for different local environmental plans. Clause 92 of Sch 6 is a strong indicator of this legislative intent. The clause would be otiose if the standard instrument does not apply to amending local environmental plans.

36 The effect of the respondents' argument is that although a principal local environmental plan has to be made in accordance with the standard instrument, amendments to that local environmental plan do not. However, the 2005 amendments established a "straitjacket" that was intended to confine local environmental plans to a standard form and content. The result of the respondents' approach would fundamentally undermine the legislative purpose of standardising instruments. The position is analogous to that considered by the High Court in Weston Aluminium Pty Limited v Environment Protection Authority [2007] HCA 50. The Court had no difficulty in construing a reference to a power to grant a licence only if development consent had been granted as also constraining the power to vary a licence. The Court so held because (quoting Basten JA in the Court of Appeal) a "contrary conclusion can readily be seen to give rise to anomalous results which would be entirely subversive of the legislative policy underlying the scheme" (at [35]). The same conclusion applied to this case. The second reading speech (Hansard, 27 May 2005, p 16332) confirmed the legislative intention apparent from the statutory provisions to standardise local environmental plans.

37 The Director-General did not consider cl 92 with respect to the first certificate (which was common ground). The Director-General's reliance on cl 92 of Sch 6 with respect to the second certificate was misplaced. It was also common ground that the Director-General had not relied on sub para (a) of cl 92 ("significant council resources have been expended in the preparation of the draft instrument before the prescription of the relevant standard instrument"). The relevant part of sub para (b) involves a "draft instrument [that] makes a necessary amendment of a principal environmental planning instrument made before the prescription of the relevant standard instrument". Although "necessary" does not mean absolutely necessary, it means something that "cannot be dispensed with or done without; requisite, essential, needful" (Shorter Oxford English Dictionary). It does not mean expedient or appropriate (Kartinyeri v The Commonwealth of Australia (1998) 195 CLR 37 at [39]). In the context of the 2005 amendments and the function of cl 92 as a transitional provision, a "necessary amendment" is one that cannot await the making of a local environmental plan in accordance with the standard instrument. This temporal aspect of necessity is revealed in the Director-General's letter of 15 April 2005 and forms part of the context of the 2005 amendments to the EPA Act (No Dump Residents Association Inc v Collex Pty Ltd [2006] NSWCA 94 at [25]). In other words, to be a necessary amendment within the meaning of cl 92 of Sch 6 there must be an imperative to make the amendment now rather than later (see, by analogy, Thomas v Mowbray (2007) 81 ALJR 1414 at [101] citing McCulloch v Maryland 17 US 159 at 203 (1819)).

38 In this case the evidence shows that the Director-General treated draft Amendment No 28 as necessary merely because it removed uncertainty with respect to the planning controls for the North Sydney CBD. However, there is no material supporting the suggestion that the amendment had to be made now rather than waiting for incorporation into the new local environmental plan for the North Sydney area (in accordance with the form and content prescriptions of the standard instrument). The Director-General asked the Council to supply supporting information about the issues arising under cl 92 but the Council failed to do so. The Director-General did not ask the right question and thus the formation of the state of satisfaction miscarried (R v Connell; ex parte The Hetton Bellbird Collieries Limited and Others (1944) 69 CLR 407 at 432).

39 For these reasons, the first and second certificates under s 65 were invalid.

For the respondents 40 The Council made no submissions about the first certificate but otherwise the respondents' positions were identical.

41 The respondents submitted that Castle Constructions misunderstood the legislative scheme with respect to standard instruments. Section 33A applies to all classes of environmental planning instruments and does not qualify the power in s 65(1A). There is no reason to construe s 33A as empowering the making of only one standard instrument for local environmental plans. The singular includes the plural (s 8 of the Interpretation Act 1987). The section also ensures consistency after the making of an environmental planning instrument through s 33A(6) which excludes amendments to the mandatory provisions after an instrument in accordance with the standard instrument has been adopted.

42 Unlike s 33A, s 65(1A) is concerned solely with local environmental plans. Section 65(1A) is engaged only where there is an applicable standard instrument under s 33A. Consistent with the scope of the power in s 33A, s 65(1A) assumes that there may be more than one standard instrument for local environmental plans and such standard instruments may or may not be applicable to any particular draft local environmental plan. The standard instrument made on 31 March 2006, in terms, applies (and is only capable of applying) to principal local environmental plans. Section 26(3)(a) of the EPA Act virtually defines the distinction between a principal and amending instrument. Principal local environmental plans are plans applying to a whole local government area. Draft Amendment No 28 is not such a plan. Hence, s 65(1A) was not engaged with respect to draft Amendment No 28. The second reading speech supported the respondents' position that the legislative intent was to standardise key provisions of local environmental plans over time and not to stymie amendments to local environmental plans before adoption of a plan in accordance with a standard instrument (Hansard, 27 May 2005, p 16332). Section 33B (enabling a staged repeal of instruments) was the incentive to councils to implement the new regime, not s 65(1A). Clause 92 was a transitional provision to facilitate amendments despite s 65(1A). Clause 92 contemplated that there may be relevant and not relevant standard instruments. This reinforced the respondents' submissions that the legislative scheme contemplated the possibility of more than one standard instrument for local environmental plans. Alternatively, draft Amendment No 28 was prepared in accordance with the standard instrument insofar as that instrument might be capable of application.

43 Castle Constructions' approach to cl 92 of Sch 6 to the EPA Act and the state of satisfaction formed by the Director-General when issuing the second certificate involved a review of the documents with an "an eye keenly attuned to the perception of error" (Minister for Immigration and Ethnic Affairs v Wu Shan Liang and Others (1996) 185 CLR 259 at 271 citing Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287). This was contrary to principle. Whether an amendment was "necessary" or not was a matter for the Director-General. The meaning of "necessary" must involve contextual considerations. Urgency or a temporal component might be one aspect of necessity but it was neither essential nor exhaustive. Even if it were essential, the Director-General was satisfied that draft Amendment No 28 was necessary to proceed in advance of the comprehensive local environmental plan for North Sydney in accordance with the standard instrument (which not due until March 2009). The Court would be slow to interfere with the Director-General's decision (for example, The Council of the City Parramatta v Pestell (1972) 128 CLR 305 at 323 and Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at [39] - [41]).

44 The competing submissions about the statutory provisions relating to standard instruments disclose the parties' conceptually different starting points. From Castle Constructions' perspective there was no purpose to the scheme of standardisation if there may be more than one standard instrument applying to local environmental plans and if local environmental plans may be amended irrespective of that one standard instrument (except as provided for in cl 92 of Sch 6 to the EPA Act). Any other scheme would not achieve the intended standardisation of instruments. From the respondents' perspective the legislative scheme, whilst directed towards significantly greater uniformity in local environmental plans, is less rigid. It permits more than one standard instrument for local environmental plans and entrenches only the mandatory provisions of such an instrument. In other words, the debate about the operation of the statutory scheme involves inconsistent underlying assumptions about the required degree of standardisation and, in particular, whether the scheme authorises the making of more than one standard instrument.

45 The second reading speech is incapable of yielding any definitive answer. The focus must be the text of the statutory provisions construed in context (see the observations in Trust Company Limited v Chief Commissioner of State Revenue [2007] NSWCA 255 at [83] per Giles JA about the limits on the use of explanatory material). The context includes the overall legislative scheme.

46 Contrary to Weston Aluminium, this is not a case where it is obvious that the legislative purpose will be undermined if the legislation is not construed in accordance with Castle Constructions' submissions. Rather the statutory provisions disclose that Castle Constructions has overstated the legislative purpose.

47 As the respondents submitted, the EPA Act recognises that instruments may be both made and amended (see, for example, ss 26(3), 36(4) and Div 5 of Pt 3, albeit recognising that s 26(3) concerns a limited class of instrument relating to critical habitat). In this context, there is no justification for construing s 33A as empowering the Governor to make but one order prescribing the form and content for each type of environmental planning instrument. The text of s 33A does not support this limitation and the limitation is not obviously fundamental to the statutory scheme. For example, prescribing the form and content of amending local environmental plans would be one type of order (and thus standard instrument) potentially within the scope of s 33A. The use of the singular form ("a standard instrument") refers to the particular order and is an insufficient basis to support Castle Constructions' submissions. Once this is recognised there are no anomalies in the statutory scheme. The scheme is capable of sensible operation and achieves the objective of significantly greater consistency in the form and content of local environmental plans. In short: (1) Section 33A applies to State environmental planning policies, regional environmental plans and local environmental plans but s 65(1A) applies to local environmental plans only. In this context, the relevant field of operation of s 65(1A) is local environmental plans. Hence, the criterion of reference "any applicable standard instrument" in s 65(1A) involves a distinction between applicable and inapplicable standard instruments for local environmental plans. Section 65(1A) is engaged only where the standard instrument is applicable to the draft local environmental plan being prepared. (2) This construction of ss 33A and 65(1A) is consistent with the references to "any standard instrument" in ss 66(1)(b)(ii) and (iii) of the EPA Act. If it were otherwise, the accurate reference would have been to "the standard instrument, if any…" not "any standard instrument …that substantially governs the content and operation of the draft local environmental plan". The same conclusion applies to ss 68(8) and 69(2). (3) The power to amend an environmental planning instrument in s 74 is subject to s 33A (see s 74A). Section 33A(6) confines the power of amendment. It enables an environmental planning instrument to be amended from time to time other than the mandatory provisions of the adopted standard instrument. The adopted standard instrument is a reference to the function in s 33(A)(2)(a). These provisions disclose precisely how far the requirement for uniformity extends. Specifically: - (i) under s 24 an environmental planning instrument is to be made in accordance with Pt 3, (ii) Pt 3 includes s 33A, (iii) under s 33A(2) an environmental instrument may be made in the form set out therein (by declaration and prescription), including a declaration that the applicable mandatory provisions of a standard instrument are adopted, (iv) under s 33A(4), if the mandatory provisions of a standard instrument so adopted are amended by a further order after they are adopted, the environmental planning instrument is taken (without further amendment) to adopt the amended provisions of the standard instrument, and (v) under s 33A(6) where a standard instrument has been adopted an environmental planning instrument (other than the mandatory provisions of the adopted standard instrument) may be amended. (4) Clause 92 of Sch 6 to the EPA Act thus operates in the context of a legislative scheme that authorises the making of more than one standard instrument with respect to local environmental plans. The consistency of cl 92 with this scheme is apparent from its terms. Because cl 92 operates with respect to draft local environmental plans only (as ss 65 and 69 are concerned exclusively with local environmental plans) the references are to "the relevant standard instrument" rather than, for example, "the standard instrument". The relevant standard instrument will be any applicable standard instrument within the meaning of ss 65(1A) and 69(2). In other words, cl 92 recognises that s 33A (and, hence, ss 65(1A) and 69(2)) may operate with respect to more than one standard instrument. (5) Within the legislative scheme so construed (particularly recognition of the fact that the Governor may make more than one standard instrument for local environmental plans under s 33A), all parts of cl 92 have work to do. The provision's work, however, depends on the gazettal of relevant standard instruments. Unless and until the standard instrument was made on 31 March 2006 neither s 65(1A) nor cl 92 could operate. Sub para (a) of cl 92 potentially applies to all draft plans if significant council resources have been expended in the preparation of the draft before the prescription of the relevant standard instrument. Sub para (b) of cl 92 applies to draft local environmental plans that amend a principal environmental planning instrument made before the prescription of the relevant standard instrument or an instrument referred to in sub para (a). Both sub paragaphs are qualified by the further requirement that the Director-General is satisfied that satisfactory arrangements have been made for the making of a replacement instrument in accordance with the relevant standard instrument. Importantly, although the amending instrument in sub para (b) will necessarily be a draft local environmental plan (as cl 92 operates despite ss 65(1A) and 69(2)) the principal environmental planning instrument may be a local environmental plan, regional environmental plan or State environmental planning policy made before the prescription of the relevant standard instrument (see s 36(4) of the EPA Act for the capacity of any instrument to amend an instrument whether of the same or a different type). The first part of cl 92(b) thus potentially has a more general operation than allowed for in Castle Constructions' submissions (presumably to support the argument that if the statute is read other than as it submitted cl 92(b) would have no work to do). (6) There is no real ambiguity in the amendments to Pt 3 of the EPA Act with respect to standard instruments. Considerations of text and legislative purpose do not support Castle Constructions' submissions. (7) With respect to the text, Castle Constructions' submissions placed substantial weight on cl 92 as a leading provision with which the construction of Pt 3 (as amended) must conform. Clause 92 is facultative (as the respondents submitted). As explained, principal environmental planning instruments may not be local environmental plans. There is no justification for reading the first part of cl 92(b) as applying only to necessary amendments to a principal local environmental plan made before 31 March 2006. Clause 92, as a transitional provision, should be construed consistently with Pt 3 as a whole (rather than the reverse). Specifically, the clause should not be read as: - (i) confining s 33A to a power to make only one standard instrument for each type of environmental planning instrument, or (ii) restricting the meaning of "any applicable standard instrument" within s 65(1A) to the type of standard instrument (that is, local environmental plans and not regional environmental plans or State environmental planning policies) in distinction from the substance of the standard instrument applying to local environmental plans. The legislative provisions are more fine-grained and provide more flexibility in the making of standard instruments than Castle Constructions would allow. Castle Constructions' approach would involve a "straitjacket" not only for local environmental plans but also for standard instruments. (8) With respect to the legislative purpose, uniformity is achieved because amendments of adopted mandatory provisions of an applicable standard instrument are automatically incorporated within the environmental planning instrument (s 33A(4)) and those provisions cannot be amended (s 33A(6)). Further, whenever a standard instrument is made the Minister can ensure that its provisions are brought into effect within a reasonable time because of the continuing operation of s 33B.

48 The question then is whether the order prescribing the standard form and content of local environmental plans (standard instrument) made on 31 March 2006 is an applicable standard instrument as provided for in s 65(1A) with respect to draft Amendment No 28. The provisions of that order and standard instrument disclose that it is inapplicable to draft Amendment No 28. The order made on 31 March 2006 says in cl 2 that its purpose is to prescribe the form and content of a principal local environmental plan for an area. The limit on the scope of the order (and hence the standard instrument) as relating to principal local environmental plans only is reinforced by cl 3. Clause 3 provides that the "standard instrument for a principal local environmental plan is the instrument set out at the end of this Order". The meaning of a "principal local environmental plan" is informed by cl 7(1) of the order (a local environmental plan that adopts the standard instrument should apply to the whole of the land in the local government area concerned). The provisions of the standard instrument are fundamentally inconsistent with its application to anything other than a local environmental plan for a local government area (see, for example, the heading to the instrument, cll 1, 2(1), and 8). This is consistent with the ordinary meaning of "principal" (such as first or highest in rank, importance, foremost, leading or chief - Macquarie Dictionary, revised 3rd ed.). A principal local environmental plan is the primary, leading or main local environmental plan for an area (in contrast to a mere amending local environmental plan).

49 Draft Amendment No 28 is not a principal local environmental plan within the meaning of cl 2 of the order published on 31 March 2006. It is an amending local environmental plan that applies to the North Sydney CBD only. It pre-supposes the continued existence of the principal local environmental plan (the LEP 2001) as it amends certain limited provisions of that instrument. Hence, the order made on 31 March 2006 does not prescribe the form and content of any applicable standard instrument with respect to draft Amendment No 28. For draft Amendment No 28 there was no applicable standard instrument when the Director-General issued the first and second certificates. It follows that the certificates were not issued in breach of s 65(1A) and the argument about cl 92 is moot.

50 Nevertheless, in relation to cl 92 of Sch 6 to the EPA Act it is also apparent that if s 65(1A) were engaged (contrary to this conclusion) then the Director-General formed the state of satisfaction required. I accept the respondents' submissions about this issue. Castle Constructions' submission about the temporal aspect of "necessary" assumed that cl 92 is directed only to amendments to a principal local environmental plan made before 31 March 2006 in the period from 31 March 2006 until the making of a principal local environmental plan in accordance with the standard instrument. The discussion above indicates that this approach to cl 92(b) is too narrow. I accept the respondents' submissions that the Director-General was not bound to ask whether the amendment had to proceed immediately rather than await the making of a principal local environmental plan for North Sydney in accordance with the standard instrument gazetted on 31 March 2006 (scheduled for March 2009). The challenge to the Director-General's satisfaction within cl 92(b) on this ground therefore fails at the outset. For the reasons given below, the argument also fails on the facts if the test posited by Castle Constructions as to the essential content of any necessary amendment is correct.

51 Clause 92(b) commits to the Director-General the task of deciding whether an amendment is a "necessary amendment". "Necessary" takes meaning from its context and has frequently been held to involve something less than absolute necessity (see, for example, the observations of Gleeson CJ in Sutherland Shire Council v Telope Pty Ltd (1993) 85 LGERA 103 at 106 and the decisions cited in Sydney Catchment Authority v Bailey (2006) 149 LGERA 298 at [35]). Kartinyeri involved a wholly different context from the present. The idea of "necessity" in the present context involves judgments of fact and degree about the importance of the amendment to achieving the objects of the EPA Act. As the respondents submitted, provided the Director-General correctly understood the law (which, as explained below, the Director-General did) then the Court would be slow to interfere with the Director-General's conclusions about the status of the amendment as a necessary amendment or not.

52 If (as Castle Constructions submitted) a "necessary amendment" was one that the Director-General considered must be made immediately to the LEP 2001 and could not await the making of a principal local environmental plan for North Sydney in March 2009 (in accordance with the standard instrument gazetted on 31 March 2006), then the evidence establishes the Director-General asked the correct question and thus properly formed the required opinion. This is clear from the fact that the request to which the Director-General responded regarding the second certificate identified the option of awaiting the gazettal in March 2009 of the comprehensive North Sydney local environmental plan in accordance with the standard instrument. The Director-General, however, implicitly rejected that option by issuing the certificate to enable draft Amendment No 28 to proceed immediately. Nothing more is required to support the inference that the Director-General was satisfied draft Amendment No 28 must proceed forthwith rather than await the comprehensive North Sydney local environmental plan scheduled for 2009. Nevertheless, more is available as the request also discloses the following: (1) The Director-General informed the Council that draft Amendment No 28 would be dealt with expeditiously by the Department. (2) There was a concern about delaying the making of draft Amendment No 28. Hence, this potential for delay in the making of Amendment No 28 was specifically drawn to the Director-General's attention. (3) The comprehensive North Sydney local environmental plan in accordance with the standard instrument gazetted on 31 March 2006 would not be ready for gazettal until March 2009. (4) North Sydney CBD was subject to the Minister's strategic interest in global cities. (5) Some 250,000 sqm of additional commercial floor space was planned for the North Sydney CBD. (6) The amendments were necessary to provide clarity and certainty in the application of planning controls to the North Sydney CBD.

53 Against this background, the Director-General rejected the option of leaving the planning controls for the North Sydney CBD unclear and uncertain until 2009. The Director-General must be inferred to have decided that the essential clarity and certainty needed to be provided immediately. Moreover, the Director-General, in terms, formed the state of satisfaction required by cl 92(b). Castle Constructions' submissions to the contrary are untenable when the request on which the Director-General acted to issue the second certificate is fairly read. A consent authority need not expressly identify a clause of an instrument to consider its substance (Hill v Woollahra Municipal Council and Others (2003) 127 LGERA 7 at [53]). By analogy, to be properly satisfied that draft Amendment No 28 made a necessary amendment to the LEP 2001, the Director-General did not need to recite that the amendment could not wait until the making of a principal local environmental plan for North Sydney in accordance with the standard instrument (scheduled for March 2009). The Director-General's action in issuing the second certificate, despite the option of awaiting that plan, unequivocally speaks of the required state of satisfaction having been reached.

54 Castle Constructions did not press its challenge to the Director-General's state of satisfaction based on unreasonableness or irrationality. It also otherwise accepted that the Director-General's opinion about satisfactory arrangements having been made for the making of a replacement instrument in accordance with the relevant standard instrument was properly formed.

55 Accordingly, it is unnecessary to consider the submissions about draft Amendment No 28 having been prepared in accordance with the standard instrument made on 31 March 2006.

F. Conclusion and orders 56 Castle Constructions' challenge to the validity of the certificates has not been made out. Draft Amendment No 28 did not engage the operation of s 65(1A) of the EPA Act and hence the certificates were not issued in breach of that section. In any event, and with respect to the second certificate, the Director-General was properly satisfied that draft Amendment No 28 made "a necessary amendment of a principal environmental planning instrument made before the prescription of the relevant standard instrument" within the meaning of cl 92 of Sch 6 to the EPA Act which enabled the Director-General to issue a certificate despite (relevantly) s 65(1A).

57 For these reasons the Court orders that the Class 4 application is dismissed. The exhibits are returned. Costs may be argued.

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.

(2006) 149 LGERA 298

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