Castle Constructions Pty Limited v North Sydney Council & Anor - [2008] NSWLEC 137 - NSWLEC 2008 case summary — Zoe

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Castle Constructions Pty Limited v North Sydney Council & Anor

[2008] NSWLEC 137

Land and Environment Court (NSW)|2008-02-11|Before: Lloyd J

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Source facts

Court

Land and Environment Court (NSW)

Decision date

2008-02-11

Before

Lloyd J

Source

Original judgment source is linked above.

Judgment (45 paragraphs)

[1]

Background 1 HIS HONOUR: North Sydney Local Environmental Plan 2001 ("the LEP") commenced on 1 June 2001. Division 4 of the LEP was introduced by Amendment No. 9, which commenced on 28 February 2003. Division 4 applies to North Sydney Centre, which generally covers the North Sydney Central Business District and sets out the objects and planning controls which apply in that area. 2 On 8 May 2006, North Sydney Council resolved to prepare draft Amendment No. 28 to the LEP. On 31 August 2006 the council rescinded the resolution and resolved to prepare a new version of the draft Amendment No. 28. The draft amendment proposes extensive amendments to Div 4 of the LEP. In due course a conditional certificate was issued under s 65 of the Environmental Planning and Assessment Act 1979 (NSW) certifying that the draft LEP may be publicly exhibited in accordance with s 66 of the Act. 3 The draft LEP was publicly exhibited from 6 September 2007 to 4 October 2007. Apparently due to doubts over the validity of the s 65 certificate the council resolved on 15 October 2007 to request a fresh s 65 certificate. On 26 October 2007, a second conditional s 65 certificate was issued and the draft LEP was again publicly exhibited from 1 November 2007 to 29 November 2007. The council subsequently extended the exhibition period to 3 December 2007. On 10 December 2007, the council resolved, inter alia, to forward the draft LEP to the Director-General of the Department of Planning with a request that the Minister make the LEP under s 70 of the Act. 4 The applicant, Castle Constructions Pty Limited, proposes to develop a property known as Nos 136-140 Walker Street, North Sydney, which is within North Sydney Centre, for a multi-storey mixed use building. The proposal is, as I understand, permissible under the existing LEP but would be prohibited under the draft LEP. 5 The applicant claims that the exhibition process and the council's resolutions of 10 December 2007 miscarried for a number of reasons. It seeks the following declarations and orders:

[2]

[6]

The Governing Legislation 6 A draft LEP may not be publicly exhibited unless the Director-General issues to the council a certificate under s 65(1) of the Act. Moreover, the certificate may be granted subject to a condition that the draft plan be amended in the manner specified in the certificate before it is publicly exhibited: s 65(2). 7 Where a council receives a certificate under s 65 it shall, after complying with any conditions subject to which it was granted, give public notice of when the draft LEP plan may be inspected by the public. Subsections (1)(b), (1)(c) and (1)(d) of s 66 are particularly relevant in the present case, because the applicant alleges that some of its terms were not complied with. These sub-sections state that the council shall: (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, (c) specify, in the notice, the period (being a period which is or includes the period referred to in subsection (2)) during which submissions may be made to the council in accordance with section 67, and (d) publicly exhibit such other matter as it considers appropriate or necessary to better enable the draft plan and its implications to be understood. 8 Any person may during the period referred to in s 66(1)(c) make submissions in writing to the council about the provisions of the draft environmental plan as exhibited: s 67. 9 Section 68 is headed "Consideration of submissions"' Section 68(3) states: ( 3) The council shall consider the submission and the report furnished pursuant to subsection (2) and may make any alterations it considers are necessary to the draft local environmental plan arising from its consideration of submissions or matters raised at any public hearing. 10 Section 68(4) states: (4) The council shall, subject to and except as may be provided by the regulations, submit to the Director-General:

[11]

Direction 2.3 Heritage Conservation 19 Direction 2.3 applies to all councils preparing a draft LEP. A draft LEP must contain provisions that facilitate the conservation of items, places, buildings, works, relics, moveable objects or precincts of environmental heritage significance to an area. The draft LEP may only be inconsistent with this direction if the council can satisfy the Director-General of the Department of Planning that the draft LEP complies with Pt 5 of the Heritage Act 1977 and the environmental heritage significance of the item, area, object or place is conserved by existing or draft environmental planning instruments, or the provisions of the draft LEP that are inconsistent are of minor significance. 20 The LEP defines a heritage item as any building, work, place, fixture or tree listed in Sch 3 (cl 50(b)). Properties at Nos. 144, 146, 148 and 150 Walker Street are listed in Sch 3 of the LEP. A number of provisions apply to the conservation of heritage items and prevail over any other provisions if there is an inconsistency (cl 28A). The draft LEP proposes to delete cl 28A. It also changes the floor space ratio ("FSR") for the properties on Walker Street from 0.5:1-2:1 to 0-2:1 and the maximum height of a portion of the heritage building at Nos. 144-150 Walker St (the part of the building which fronts Harnett St) from 10 to 25 metres. 21 The applicant submits that Direction 2.3 is centrally relevant to the draft LEP because it contains provisions that affect heritage items by altering the FSR. The proposed deletion of cl 28A means that the heritage provisions in Pt 4 of the LEP may no longer prevail over the provisions of Div 4 of the LEP. In the application of s 117, the applicant relies upon the decision of the Court of Appeal in Smith v Wyong Shire Council (2003) 132 LGERA 148, which discusses the phrase "substantially governs". In that case Spigelman CJ refers to a s 117 direction as substantially governing the draft "in important respects" (at [55]), while Tobias JA uses the words '"in important ways" and "in fundamental respects" (at [156]). The applicant submits that this language indicates that the direction need not substantially govern the content and operation of the whole draft LEP, but only certain parts of it. 22 The council acknowledges that the direction applies but contends that since the draft LEP does not disturb the heritage provisions of the LEP and the only change is that proposed by sheet 10 of the draft LEP that imposes different non-residential FSRs and heights limits, the draft LEP cannot be substantially governed by the direction. The direction is not "centrally relevant" to the draft LEP. In any case, the phrase "centrally relevant" is not within s 66(1)(b)(ii) of the Act and cannot be equated with the phrase "substantially governs". The mere application of a direction to the draft LEP on its own fails to substantially govern the content and operation of the draft: Pongrass Group Operations Pty Limited v Minister for Planning & Anor [2007] NSWLEC 638 at [45]. 23 The council submits that s 66 was expressed differently when Smith v Wyong was decided, in that there was an obligation to exhibit any direction that applied where application also necessitated a statement to the effect that the direction "substantially governs the content and operation". This can be distinguished from s 66 as it is now expressed which requires that the direction "substantially governs the content and operation" before either of the requirements is activated. 24 The council submits that the proposed deletion of cl 28A does not interfere with the prevalence of the heritage provisions of Pt 4 of the LEP. Accordingly, the council submits that the applicant has failed to show that the directions substantially govern the content and operation of the draft plan. 25 I accept that the proposed deletion of cl 28A of the LEP does not interfere with the prevalence of those provisions in Pt 4 of the LEP (see cl 43 of the LEP). However, having regard, in particular, to the maps annexed to the LEP and the draft LEP which depict the changes in the FSR and height for the heritage buildings on Walker Street, I find that Direction 2.3 meets the threshold explained in Smith v Wyong in that it substantially governs the content and operation of the parts of the draft plan that relate to heritage buildings.

[12]

Direction 3.1 Residential Zones 26 Direction 3.1 applies when any council prepares a draft LEP that affects land within an existing or proposed residential zone (including the alteration of any existing residential zone boundary), or any other zone in which significant residential development is permitted or proposed to be permitted. The direction states that a draft LEP shall include provisions that encourage the provision of housing and relevantly, in relation to land to which this direction applies, it shall not contain provisions which will reduce the permissible residential density of the land. 27 In aiming to increase commercial floor space, the draft plan aims to rezone several properties located on Berry and Miller Streets, North Sydney from the mixed use zone to the commercial zone (cl 2(i)). Under the LEP it is mandatory to have residential components in the mixed use zone (cl 32(2)(a)) which would no longer be the case in the newly created commercial zone. 28 The applicant submits that the draft LEP decreases residential density by changing some sites from mixed use to commercial. New developments in the mixed use zone require a residential component under the LEP and under the draft LEP they do not. Therefore the direction applies because the draft LEP affects land within zones where significant residential development is at present permitted. 29 The council submits that the direction applies but denies that it substantially governs the content and operation of the draft LEP. According to the council, application of the direction no longer requires exhibition (Smith v Wyong as argued in par [23] above). It contends that the draft plan does not relate to or affect land within an existing residential zone or propose a residential zone. Land within the mixed use zone cannot be described as land in which significant residential development is permitted and the rezoning of that land to commercial does not mean that the permissible residential density of the land will be lower. The draft plan permits residential uses on the land at Nos. 77-81 Berry Street, North Sydney and Nos. 93-95 Pacific Highway, North Sydney, while also amending or removing the non-residential FSR for some properties in the mixed use zone. The council contends, therefore, that the draft LEP allows an increase in residential density. Finally, the council submits that the applicant has failed to show that the direction substantially governs the content and operation of the draft.

[15]

Failure to publicly exhibit the directions 35 Since the four directions substantially govern the content and operation of the draft LEP, the council was required to publicly exhibit, or provide for access to, a copy of each direction (s 66(1)(b)(ii)). It is conceded that the actual directions were not placed on public exhibition. I now have to decide whether, nevertheless, the council fulfilled its obligations under the section and whether there was a valid public exhibition. 36 On 26 October 2007, the council received a s 65 certificate from the Director General, certifying that the draft plan could be exhibited in accordance with s 66. Between 1 November 2007 and 29 November 2007, the council placed the following materials on public exhibition: · A copy of the draft plan and annexed maps (sheets 1-11); · Signed s 65 certificate; · Section 69 Checklist; · Section 117 directions statement; · The council resolution and the report of an officer (Mr Brad Stafford) to council meeting 13 August 2007; · The council resolution of 27 August 2007 adopting minutes of management services meeting 20 August 2007; · The council resolution and the report of an officer (Mr Joseph Hill) to council meeting 11 September 2006; · Statement in relation to "LEPs and Council Land Best Practice Guideline". 37 The applicant submits that not only were the directions not exhibited, but no access was provided to them. The applicant relies upon the affidavit of Mr Victor Lahoud who states that the directions were not exhibited on the council's website nor made available at the Stanton library when he attempted to view them. Mr Lahoud also notes that the s 117 directions statement relied upon by the council is deficient in that it fails to acknowledge the heritage direction (Direction 2.3) and residential direction (Direction 3.1). My attention is again drawn to the decision in Smith v Wyong (at [176]), where Tobias JA stated that "compliance with the public exhibition obligations imposed by s 66(1)(b) [is] an essential step in the process" of formulating a draft LEP for submission to the Director General for ultimate adoption by the Minister. Tobias JA concluded that he would discern a clear legislative intent to invalidate any local environmental plan where the public exhibition requirements of s 66(1)(b) have not been complied with (at [176]). 38 The council contends that: (a) the exhibition of the s 117 directions statement amounts to substantial compliance with s 66(1)(b)(ii) in respect of Directions 1.1 and 3.4; (b) in relation to the other directions, members of the public were alerted to the fact that the directions exist and that if they were so inclined, they could have inquired or requested a copy from the council; (c) reliance may be placed on the decision in Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355, where (at [91]) the court stated that "[a]n act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect"; (d) a test is then posed which directs the Court to look to whether there is a "legislative purpose to invalidate any act that fails to comply with the condition" (Project Blue Sky at [91]); and (e) that there is no such purpose here. Finally, the council submits that the underlying purpose of notifying the public was fulfilled in respect of Direction 1.1 because a s 117 directions statement was issued in respect of it and that failure to exhibit the actual direction does not disturb this.

[17]

Second Ground - failure to publicly exhibit a s 66(1)(b)(iii) statement 40 The applicant argues that the council did not comply with s 66(1)(b)(iii) in that it failed to publish a statement to the effect that the s 117 directions substantially govern the content and operation of the draft plan and that any submissions made under s 67 should have regard to that fact. 41 The applicant submits that the proper construction of s 66(1)(b)(iii) imposes two obligations on the council to publicly exhibit: · A statement that each of the four directions substantially govern the content and operation of the draft plan · A statement that informs the public that any submissions made pursuant to s 67 should be made having regard to that fact. 42 The applicant thus contends that the s 117 directions statement is deficient because it fails to identify the residential zones direction and the heritage direction as being directions that substantially govern the content and operation of the draft LEP. Moreover, although a statement is made that Direction 1.1 substantially governs the content and operation of the draft LEP, such statement is not made in relation to Direction 3.4. No statement is made in relation to any of the directions, to the effect that any submissions made under s 67 should have regard to the fact that the directions substantially govern the content and operation of the draft plan. The applicant acknowledges that although an expansive interpretation is to be given to the word "statement" (Drake-Brockman v Minister for Planning [2007] NSWLEC 490 at [100]-[105]), the council is far from having complied with the requirements of the section. On the basis of the ruling in Smith v Wyong [at 176], the applicant submits that any actions founded on the public exhibition are invalid and of no effect. 43 The council submits that the Court must again make a finding particular to the facts of this case and not place undue reliance on what proved decisive in other cases. It relies on the submissions that it made in relation to the first ground, namely that the directions do not substantially govern the content and operation of the draft plan and therefore there is no obligation to publish a s 66(1)(b)(iii) statement. Alternatively, the s 117 directions statement renders substantial compliance with the requirement. 44 The council argues that if a breach did occur, it is not the legislative purpose to render invalid any part of the environmental plan-making process for failure to comply with s 66(1)(b)(iii) (relying upon the test referred to in par [38] above, in Project Blue Sky). The council relies on s 117(5) of the Act which states that a draft LEP "cannot in any court proceedings be challenged, reviewed, called into question, prevented from being made or otherwise affected on the basis of anything in a direction under subsection (1) or (2)". The council submits that this position evidences a lack of intention on the part of parliament to prevent the making of a draft LEP or invalidate a draft LEP if subsections 117(1) or (2) have not been complied with.

[21]

Consideration of individual submissions 47 The applicant submits that the council failed to consider a mandatory relevant consideration in breach of s 68(3), by failing to consider relevant submissions that were made in response to the public exhibition. The question put before me by the applicant is one of fact and I now set out the facts as I see them. 48 The public exhibition process took place from 1 November 2007 to 29 November 2007. A memorandum from the Director of Planning and Development Services to the councillors confirms that submissions were permitted up until the end of 3 December 2007. 49 The Council Code of Meeting Principles and Practices provides (at cl 23.1) that "any letter or document, relevant to the business before the meeting, received up to 3:30 pm on the day of the council meeting, will be presented to the meeting'" 50 At the conclusion of the period for submissions, council officers prepared a summary of submissions table that was forwarded to the councillors to consider at the meeting. The table identifies a number of submissions that raise the concern that the draft LEP format is not in accordance with the standard instrument, and does not demonstrate how it will achieve objectives for the ''global strategic centre'' as defined in the Metro Strategy (Summary of Submissions for Amendment No. 28, points 10 and 13). The table does not identify the submitters but these summary statements can be variously correlated to submissions made by: a) Scott Carver on behalf of UnitingCare Ageing and the Australian Institute of Management on 4 October 2007; b) The Planning Institute of Australia on 26 November 2007; c) The New South Wales Urban Taskforce on 29 November 2007. 51 The table also identifies a number of submissions which raise the concern that 250 000 m² of additional floors space will be difficult or impossible to achieve under the draft plan. The submitters are not identified in the table but these submissions can be traced to those made by: a) The New South Wales Urban Taskforce on 29 November 2007; b) The Planning Institute of Australia on 26 November 2007; c) The applicant on 19 September 2007, 26 September 2007 and 23 November 2007; d) Pike Pike & Fenwick, attaching report by Landsburys on 6 September 2007; e) JBA Urban Planning Consultants on 28 November 2007; f) Attache, attaching a letter from Strand Estates on 26 November 2007. 52 The council held its 3476th meeting on 10 December 2007. It was resolved that the council consider the submissions received following the public exhibition during the period 1 November 2007 to 29 November 2007, adopt the draft LEP and forward it to the Minster. 53 A notice to produce was served by the applicant on 10 January 2008 and required the council to provide all documents in the business papers given to members of the council for its 3476th meeting. The council produced, inter alia, council officer Brad Stafford's report and the summary table of submissions, but not the actual submissions identified in pars [50] and [51] above. 54 The applicant contends that the council made the decision as a collegiate body at the meeting and not by a delegation to its officers. It alleges that the councillors did not read the individual submissions and that the summary of submissions table was considered by the councillors instead of the actual submissions.

[23]

56 The applicant submits that on this evidence there arises a prima facie presumption that the councillors did not read the actual submissions and instead, relied on the summary table to inform themselves of these submissions: Jones v Dunkel (1959) 101 CLR 298; Schroders Australia Property Management Ltd v Shoalhaven City Council [2001] NSWCA 74, at [72]- [73]. The council's answer to the notice to produce, it says, reverses the onus that Schroders would otherwise place upon the applicant to prove that the councillors did not read the documents. 57 The council submits, however, that all documents within the council and received by the council are available to the councillors. It also submits that the documents produced in response to the notice produce are not exclusive, that is, it cannot be said that these were the only documents that were sent to the councillors for the purpose of making their decision. The documents produced in response to the notice to produce were simply those that constituted the business papers given to the members of the council which is what was demanded by the notice to produce. The council relies upon a memo dated 10 December 2007 from the Director of Planning and Development Services, Warwick Winn, to all councillors that notes that a member of council staff had received an enquiry from a councillor relating to the proposed RL height limit for Nos. 3-11 Ward Street. The council argues that this shows that the councillors had access to information beyond that considered at the meeting. It relies on the unreported decision of the Court of Appeal in Schroders Australia Property Management Ltd v Shoalhaven City Council at [67] as authority for the proposition that material in the possession of the council is prima facie treated as being in the possession of the councillors. The summary, it contends, refers to each of the submissions by reference to a number where at point 14, for example, it states "an FSR of 8-9:1 is more appropriate for the site and reflects that which can be achieved under the RL height control'. The council argues that to properly understand the site which is referred to, one must go to the numbered documents which were available to the council and that there is a presumption that the councillors did this. 58 The council submits that since the applicant has failed to lead evidence to show that the councillors did not read the individual submissions, there is no obligation upon the council to ask the individual councillors if they read the submissions and there should be no adverse inference drawn from the council's failure to do so: Gee v Council of the City of Sydney (2004) 137 LGERA 157, at 164-165. 59 I agree with the council that to begin with, there was a prima facie presumption that the councillors had at least the opportunity to read the material in the council's possession: Schroders Australia Property Management Ltd v Shoalhaven City Council at [72]. I also agree that no adverse inference can be drawn from a party's silence until facts are proved requiring that party to provide an answer: Schroders Australia at [72], following Jones v Dunkel at 332. The question is whether the council was silent and/or whether the applicant has proved facts that require the council to answer. In my opinion, the answer to the notice to produce does not, in the present case, change the presumption. The notice did not require the production of all documents that were considered by the members of the council. It requires the production of only those documents in the business papers for the relevant meeting - that is, the meeting held on 10 December 2007. The response to the notice to produce does not break the council's silence on the matter. Although the applicant has adduced evidence that the submissions were not amongst the business papers for the meeting, it has not proved that the members of the council did not otherwise read them. That is not, however, the end of the matter. Apart from having access to the individual submissions, the councillors were each provided with the summary table of submissions that was, as noted in paras [61] to [67] below, itself misleading. Those councillors relying on the summary table, whether they had read the individual submissions or not, would in turn have been mislead. In considering the misleading summary table it could not be said, in my opinion, that the councillors considered the submissions, as required by s 68(3) of the Act. They considered another person's misleading summary of the submissions.

[24]

60 There is another issue that arises in respect of the consideration of the submissions. The applicant submits that the council was obliged to consider the Urban Task Force submission. According to the Council's Code of Meeting Principles and Practices, the council is obliged to bring to the meeting any document relevant to the meeting, received up until 3:30 pm of the day of the meeting. The council, however, submits that s 68(3) did not require consideration of the submission. It was only required to consider the submissions made up until 29 November 2007 and the particular submission was made on 7 December 2007. The council contends that the exhibition period was not in fact extended, but rather, those who expressed their intention to make submissions were given up until 3 December 2007 to do so. Nor was the submission one of the kind identified in Gales Holdings Pty Limited v Minister for Infrastructure and Planning [2006] NSWCA 388, namely a submission that identifies a new matter or updates material that was previously before the council. The council submits that the Urban Task Force submission simply re-iterates the matter of whether the proposed amendments can secure an additional 250 000 m² of commercial floor space. In reply, the applicant further contends that the council was required to make a decision on the basis of the most current material available (Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162 CLR 24 at 44-45 and Gales Holdings at [161]-[176]); and on this basis, the council was obliged to take into account the Urban Task Force submission even if it was received after the official public exhibition period. I agree with the applicant. I am of the view that the Urban Task Force was an important submission that ought to have been considered. In light of the Council's Code of Meeting Principles and Practices and the two decisions referred to above, the submission should have been brought to the attention of the councillors at the meeting. Consideration of the summary of submissions table 61 The applicant contends that the summary of submissions table only becomes an acceptable substitution for reading the actual submissions if it is complete and accurate. In Minister for Aboriginal Affairs v Peko Wallsend Ltd, Gibbs CJ stated (at 30) that a Minister may rely on a summary of the relevant facts furnished by the officers of his Department. (In this case the councillors may rely on the council officers.) However, as His Honour also stated (at 31): [ I]f the Minister relies entirely on a departmental summary which fails to bring to his attention a material fact which he is bound to consider, and which cannot be dismissed as insignificant or insubstantial, the consequence will be that he will have failed to take that material fact into account and will not have formed his satisfaction in accordance with law. 62 The applicant submits that the table makes a number of misleading statements and, therefore, cannot be relied upon. The table (at point 7) notes the submission: "Proposed FSR of 20:1 greatly reduces calculated capacity under proposed RL" and the response provided by the council is: "This matter is covered in the main body of the report". The report referred to is the 3476th Council Meeting Post-Exhibition Report prepared by council officer Mr Brad Stafford and within its contents the matter referred to is nowhere to be found. 63 The summary describes another submission (at point 15): "The proposed amendments will not secure an additional 250 000 m² of commercial floor space, and will effectively down zone the subject site" and the response provided by the council is: "This matter is covered in the main body of the report". An examination of the report reveals that the ability of the draft plan to achieve an additional 250,000 square metres of additional commercial floor space is not specifically addressed. 64 According to the applicant, the table was not complete and accurate because it misled the councillors in advising them not to direct their minds to fundamental questions raised by the submissions, on the basis that these submissions had already been considered in the decision making process. If the councillors digest materially misleading information, the applicant submits that the Court may infer that the particular submissions were not given proper, genuine and realistic consideration: Weal v Bathurst City Council (2001) 111 LGERA 181. Accordingly, the decision to forward the draft LEP to the Minister should be vitiated. 65 The council argues that the summary was complete in that it drew the councillor's attention to the two issues; namely the metropolitan strategy and the objective of an additional 250,000 square metres of commercial floor space. It submits that this is all that was required in light of the history behind these issues. According to the council, the councillors did not come cold to the topic of the 250,000 square metres objective and had been deliberating the subject with the Department in the prelude to the feasibility study carried out by Preston Rowe Paterson Pty Ltd ("PRP"), to which I make reference in par [70] below. 66 The council submits that since the individual submissions are to be forwarded to the Director-General at the next stage of the process, any failure by the council to meet the level of consideration required does not result in invalidity of the whole process. Section 68(4) of the Act requires the details of all submissions to be forwarded by the council and s 69 requires that the Director-General formulate a report that considers such matter, which is then forwarded to the Minister. Therefore, a failure to consider the Urban Task Force submission or adequately consider the individual submissions in the summary or otherwise, does not attract invalidity upon the decision.

[28]

71 The draft LEP as submitted for certification had annexed to it an indicative reference map which depicted the maximum commercial FSR for a number of sites within the North Sydney Centre. This reference map failed to identify the FSR for a number of commercial sites and did not fall within the definition of "map" as provided in the draft plan. As pointed out by the council, the indicative reference map had no function within and was not part of the plan as certified. 72 A s 65 certificate was issued for the draft plan on 26 October 2007 and, as previously noted, the public exhibition process took place between 1 November 2007 and 3 December 2007 (and as extended by the council). The s 65 certificate was made on the condition that (at Sch 2) the draft LEP shows the maximum FSR controls for all sites by a map. Consequently, the exhibited draft plan included an additional sheet, sheet 11, which shows the maximum FSR for most of the buildings within the North Sydney Centre. 73 The FSR figures on sheet 11 differ from those on the indicative reference map. The affidavit of Mr Lahoud dated 20 December 2007, provides a table of comparison between the indicative reference map and sheet 11. The table illustrates that the FSR figures on the indicative reference map are somewhat higher than the FSR figures on sheet 11 as exhibited. 74 From what I understand, the applicant submits that on the basis of sheet 11, the statement that the five sites could yield up to 180,090 square metres or 72 per cent of the additional 250,000 square metres of commercial floor space is materially misleading. The applicant contends that the PRP report is based on the indicative reference map. The further affidavit of Mr Lahoud dated 1 February 2008 concludes that, based on sheet 11 the five sites only have the capacity to yield 117,457 square metres. The applicant further submits that 180,090 square metres is not a likely figure as it is based on the assumption that strata plan units could be purchased by a developer without the payment of a premium to the existing tenants or owners, and would be available with vacant possession. The possibility of this happening and of re-development for these sites is low as it would be difficult to gain consent from all the owners of the strata schemes. 75 The council did not cross-examine Mr Lahoud but has made a number of submissions in relation to the first alleged misrepresentation. The council defends the methodology employed by PRP. As evidenced by the final PRP report, the objective of the study it undertook was to determine the development potential for 14 key sites and, on that basis, provide an opinion as to whether North Sydney Council could meet its target of an additional 250,000 square metres of commercial floor space. It identified five sites as having development potential based on applying maximum permissible height levels. It then added the gross floor area of these five sites (205,510 square metres) to the gross floor area of current development approvals (88,315 square metres) and a current development application under assessment (3,500 square metres) to arrive at the figure of 297,325 square metres. The council submits that this methodology forms the basis of a reasonable professional opinion. 76 The council submits that the applicant has not demonstrated that the PRP report was based on the indicative reference map. The council relies on the draft plan submitted to the minister that has annexed to it ten sheets or maps, in addition to the indicative reference map. The ten sheets are each referred to in the body of the draft LEP while the indicative reference map is not mentioned. The s 65 certificate was granted on the condition that a map be prepared to display the relevant FSR controls and the council duly prepared map 11 which is annexed to the draft plan as exhibited. The council submits, therefore, that the indicative reference map did not form part of the materials which were the subject of the s 65 approval and the only relevant FSR controls that are the subject of the draft instrument are those in sheet 11. 77 The council also contends that in the context of the amendments to the LEP, 250,000 square metres is a cap, as opposed to a minimum requirement. It interprets cl 28C(5) of the LEP as providing that the consent authority should withhold its consent if it is satisfied that the increase in non residential gross floor area will, since the commencement of the division February 2003 exceed the 250,000 square metres. Clause 28C(6) of the LEP provides that once 200,000 square metres of non-residential floor space is achieved, the whole question of commercial floor space is to be reviewed. The council also relies on cl 28D(8) which is inserted by the draft LEP and states that cl 28D(2)(a), the height map, will prevail over the floor space controls expressed in cl 28D(2)(e) in the event of an inconsistency. The council contends that the overall effect of the draft plan is to reduce the available floor space and the supremacy of the height controls is indicative of that intention. 78 The council relies on other provisions of the draft plan that, it says, provide a context in which the 250,000 square metres should be viewed. One of the objectives of building height and massing controls in the LEP, is to achieve a transition of building heights generally from No. 100 Miller Street (Northpoint) and Nos. 79-81 Berry Street "… stepping down towards the boundaries of the North Sydney Centre": cl 28D(1)(a). The council contends that there is constant reference to the capacity to reach a building height of RL 195 in cl 28D and that in this context the objective of cl 28D(1)(a) is not to achieve an overall RL of 195, but to achieve a stepping down. The draft plan thus expresses maximum controls that provide a ceiling for the magnitude of floor space and height permissible in the North Sydney Centre.

[29]

79 I agree with the council that the indicative reference map did not form part of the draft plan subject to the s 65 certificate. The expected yield espoused by the report bears some resemblance to a figure that would be attained from the FSR figures on the indicative reference map, as indicated by the evidence of Mr Lahoud although it is difficult to maintain that the PRP report was definitely based on the indicative reference map. However, this is immaterial as it is clear to me that, on the basis of the FSR figures in sheet 11, the five sites cannot be expected to yield 180,090 square metres of non-residential floor space. This is compounded by the fact that some of the sites are strata title. Having said this, the council exhibited a statement relating to the feasibility of the sites that was irreconcilable with the FSR figures that were publicly exhibited in sheet 11. In that sense the statement was materially misleading. 80 I am not persuaded by the council's arguments that, in the context of the LEP and proposed amendments, 250,000 square metres of commercial floor space is a cap or that the height controls prevail to the extent that obtaining 250,000 square metres of additional commercial floor space is not intended. By dissecting the context in which the amendments were made, the council has failed to refute the applicant's allegation, which I accept, that the public was misled by the statement that the five sites could yield up to 180,090 square metres or 72 per cent of the additional 250,000 square metres of non-residential floor space. It is immaterial whether the capacity to achieve 250,000 square metres is the actual objective of the draft plan. What matters, is whether the statement itself was misleading, that is, whether the five sites had the capacity to yield up to 180,090 square metres of additional non-residential floor space. I am satisfied that the five sites are unlikely to yield this figure and that, therefore, an ordinary member of the public would be mislead by the statement.

[32]

84 The applicant also contends that the council sought to influence the outcome of the study. It has tendered correspondence between council officer, Mr Brad Stafford and PRP dated 7 August 2007, wherein the officer requested that PRP amend the sentence: "It appears therefore that North Sydney Council can meet its target of an additional 250,000 square metres of gross floor space" to read: "Therefore North Sydney Council can meet its target of an additional 250,000 square metres of gross floor space". 85 A request was also made that the summary and conclusions be placed at the beginning of the document which, the applicant contends, attempts to lull the reader into a false sense of security so that they read only the beginning of the document. PRP subsequently made the changes. The applicant submits that this demonstrates the direct influence that the council exercised over PRP, since it had PRP alter the report. 86 The applicant also relies on the High Court decision of Pilmer v Duke Group Limited (2001) 207 CLR 165 at [82]-[83] which supports the proposition that the existence of an ongoing or existing relationship results in a breach of the necessary independence. That case involved an application of the stock exchange rules to the relationship between an auditor and auditee. The applicant contends that these rules and corporations law can have a general utility in deciding what is an independent report. The applicant relies upon the Australian Securities and Investments Commission (ASIC), Regulatory Guide 112: Independence of experts, October 2007 ("RG 112"). The guide refers to the decision of Brooking J in Phosphate Co-operative Company of Australia Pty Limited v Shears (No 3) 14 ACLR 323 (Pivot) at 339 which states: "[T]he expert's integrity and freedom from baneful influences is essential": RG 112.6. The applicant also relies on the decision of Templeman J in Conocophillips WA - 248 Pty Limited v Batoka Pty Limited (2005) 54 ACSR 646 at [63] referring to s 667B(1) of the Corporations Act 2001 (Cth). Section 667B(1) states that for an expert to be independent: (1) The expert who provides the report must not be an associate of: (a) the person giving the notice, or

[34]

The applicant emphasises that no such disclosure took place here. It also submits that it need not establish that PRP did anything to compromise its independence because it is enough to show that its status as rental manager and general property adviser amounts to what would be a disqualification under the regulatory principles regarding independence which have been accepted by the courts. 88 The applicant submits that the reference to the report as an 'independent economic feasibility study' would therefore mislead the hypothetical reasonable person into thinking that PRP was a third party expert, unconnected and independent of the council. This is materially misleading and invalidates the public exhibition process. 89 The council concedes that PRP was retained for a fee, but claims that this on its own does not establish a lack of independence. It relies on an email from council officer Mr Stafford to Mr Greg Rowe of PRP dated 25 May 2007, which instructs PRP: "please base your fee proposal on 14 sites". The council submits that this evidences a separate agreement, outside the original contract for service that the applicant alleges compromises independence. The council likens the relationship here to the professional relationship between solicitor and client. The fact that a solicitor acts for a particular client on numerous occasions cannot lead one to assume that a request for advice by the client will lead to biased advice from the solicitor merely because there is a retainer. The subject matter of the exhibited letter was not the independence of PRP and the term "independent" intended to convey that PRP was not a part of the council or that the study was not authored by the council itself or that the study was not the product of the council's work. Mr Hill's evidence should be viewed as evidence that there is a report from a body or entity retained for a fee to provide property management services, but this does not amount to an admission that the report was not independent in the context in which it was used. The council argues that the fact that PRP is not a subordinate body or part of the council, amounts to its independence in this regard. 90 The council submits that the applicant's reliance on the principles of ASIC is misplaced, because the principles are applicable only to experts pertaining to matters the subject of the statutory or regulatory regime under corporations law. The report was not made in response to some statutory obligation for an independent report to be prepared, as is the case with ASIC, and the principles therefore have nothing to do with that which is considered in this case. Similarly, the rules that apply to an expert witness of the court do not apply, as PRP did not provide its opinion for the purpose of evidence in court proceedings. The council submits that in the absence of such rules, it cannot be assumed that because one is retained to provide advice on certain matters, advice given on other matters is tainted.

[35]

91 The council relies on the decision in Gales Holdings Pty Limited v Minister for Infrastructure and Planning [2006] NSWCA 388 which states at [110] that "[t]he reasonable person the subject of the relevant test is a person with no knowledge of planning law and the relevant provisions of the LEP". The reasonable person would therefore have no knowledge of the ASIC's requirements, would have no planning expertise generally and the term "independent" would therefore convey that the study was not carried out by either the Department or the council. The council also rejects the assertion by the applicant that the letter contained a limited statement that would lull a member of the public into a false sense of security. It relies on the penultimate paragraph of the said letter wherein the regional director of the department of planning states that progress toward the attainment of the desired capacity will be monitored. The fact that monitoring will occur, the council says, negates the possibility that the statement could mislead members of the public by lulling them into a false sense of security. 92 The council submits that the council did not cause PRP to alter its report in a material way. It points out that the fact that PRP conducted the study using 14 key sites and only identified five as feasible. The council argues that this illustrates that PRP was not the mouthpiece of the council as it could well have identified a greater number of sites. The council also relies on the email communication between Mr Stafford and PRP, as relied upon by the applicant. The council submits that the removal of the words "it appears" did not change the meaning of the statement. The word "can" denotes a question and the council simply asked PRP whether they could make the change, as opposed to telling them to do it. The report should be viewed as a whole and attention should also be paid to an amendment made earlier where the officer asked PRP to place the word "current" before "development potential" which qualifies the report on the present state of affairs. Similarly, the request that the summary and conclusion be placed at the beginning was made so that the first page could instantly inform reader who did not have time to read the whole document. This is a common format for reports. Omission of the words "it appears" was to enable the report to conform to the council's preferred format and eliminate any possibility for confusion. The fact that the council is alleged to have sought to influence the outcome cannot be a basis of challenge, unless the council's actions resulted in a material alteration of the outcome, which the council submits was not the case here. 93 On the evidence put before me by both parties, it is clear that PRP was not independent of the council. Although the company was not subordinate to, or part of, the council, it had a vested interest in the will of the council. It is more than a case of being retained to give advice. PRP was appointed as the council's property manager, for which it was receiving a regular income. It presumably hoped to renew its appointment upon expiry of its present engagement on 1 December 2008. Moreover, I find the ASIC's Regulatory Guide 112: Independence of experts (referred to in par [86] above) to be a useful reference on the independence of experts, and its principles are of general application. It is also clear from the correspondence between the council and PRP, that the council influenced the content of the report so that it conveyed a meaning more favourable to its interests. In this sense, although the council did not author the report, the council edited it, to the extent that the meaning of the report was changed. I therefore find that the reference to the study as 'independent' was materially misleading.

[37]

95 The applicant submits that the answer to this question is misleading: the plan does, in fact, rezone land currently zoned mixed use to commercial. The affidavit of Mr Lahoud dated 20 December 2007 identifies eight properties within the mixed use zone that currently permit residential development. He states that the rezoning of these properties to commercial will reduce the residential density on these properties to zero. 96 The applicant tendered a letter dated 26 September 2007 where it notified the council that it believed the statement to be untrue, suggesting that it be corrected prior to the exhibition in November 2007. The council left the statement unchanged and on this basis the applicant submits that the public exhibition process miscarried. 97 The applicant emphasises that even if the council was not required to provide information in the notice regarding the nature of the amendments to the LEP, once having provided an explanation, that explanation needed to be accurate and complete: El Cheikh v Hurstville City Council (2002) 121 LGERA 293 at [31]. The statement that the residential density would not be reduced was an inaccurate statement. It was also misleading because a reasonable person concerned about the matter would assume that a review of the provisions is unnecessary. The applicant notes that it is not the duty of the representee to enquire as to truthfulness of statements made by the representor. 98 The council submits that the rezoning of residential land would require that the land be zoned purely as residential to begin with. The mixed use zone must be distinguished from the residential zone and it cannot be said that the mixed use zone can be equated with that which is clearly defined as part of the residential zone. The council acknowledges cl 32 of the LEP, but is adamant that the requirement to include residential components in new buildings in the mixed use zone does not somehow zone the land as residential in the sense that the checklist so refers. Therefore, only the second limb of the question applies. 99 The council submits that the court should look at the amendments proposed by the draft LEP in their totality and submits that, on this view, there is not necessarily a reduction in the residential density. The council relies on the report of council officer Mr Joseph Hill, dated 31 August 2006, which states that the non-residential FSR for the mixed-use zones is reduced to enable greater take up of residential usage and greater incentive to redevelop buildings. This evidences the council's intention to achieve greater residential usage. 100 The council submits that the insertion of cl 28D(7) and deletion of cl 28A from the LEP does not necessarily reduce the land available for residential purposes. It relies upon the map at sheet one and argues that the application of the building height plane at cl 30 does not mandate a reduction in residential density of the land that is so affected. It points out that the draft plan reduces the minimum for non-residential floor space and that this change in conjunction with the other provisions permits an increase in residential density.

Castle Constructions Pty Limited v North Sydney Council & Anor

At a glance

Court

Decision date

Before

Source

Judgment (45 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (16)

Cited By (10)