Chase Property Investments Pty Limited v Blue Mountains City Council & Anor

Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404; Canyonleigh Environment Protection Society Incorporated v Wingecarribee Shire Council (1997) 95 LGERA 294; Evans v Maclean Shire Council and Anor [2003] NSWLEC 352; Foodbarn Pty Limited & Ors v Solicitor-General (1975) 32 LGRA 157; CASES CITED: Georgakis v North Sydney [2004] NSWLEC 123; Lowy v The Land and Environment Court of NSW & Ors (2003) 123 LGERA 179; North Sydney Municipal Council v P D Mayoh (No 2) (1990) 71 LGRA 222; Penrith City Council v Waste Management Authority (1990) 71 LGRA 376; Strathfield Municipal Council v Poynting (2001) 116 LGERA 319

APPLICANT: Mr C McEwen SC SOLICITORS: Pike Pike & Fenwick

FIRST RESPONDENT: LEGAL REPRESENTATIVES: Mr T Cork (solicitor) SOLICITORS: McPhee Kelshaw SECOND RESPONDENT: Mr T Robertson SC and Ms L Byrne (barrister) SOLICITORS: Woolf Associates

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

10720 of 2005 Chase Property Investments Pty Limited v Blue Mountains City Council & Residents Against Improper Development Incorporated [No 2]

JUDGMENT 1 Her Honour: This matter concerns two preliminary questions of law in Class 1 proceedings brought pursuant to s 97 of the Environmental Planning and Assessment Act 1979 ("the EP&A Act") against the deemed refusal of development application no. X05/0412 ("DA X05/0412") by Blue Mountains City Council ("the Council") for 39 new buildings for tourist and residential accommodation at 132 - 174 Govetts Leap Road, Blackheath, known as "Parklands". The parties agreed that the proposal involves subdivision. The Parklands site is zoned Residential Bushland Conservation Zone by the Blue Mountains Local Environmental Plan 1991 ("the LEP").

2 DA X05/0412 proposes to deal with waste water produced as a consequence of the development by a system that incorporates both an on-site sewage treatment plant ("STP") for the Parklands site and disposal of waste water to the public sewer owned and operated by Sydney Water. The Court was provided with the Water and Wastewater Strategy Report prepared by Martens & Associates ("the Martens Report") for the purposes of DA X05/0412.

Questions of law 3 Two preliminary questions of law have arisen as follows: (i) Whether on the proper construction of cl 10.8(e) of the LEP the proposed development in development application no. X05/0412 is prohibited because the proposed development cannot be serviced by a reticulated sewerage system. (ii) Whether development application no. X05/0412 is designated development under the Environmental Planning and Assessment Act 1979;

(i) The proper construction of cl 10.8(e) of the LEP 4 Clause 10.8(e) of the LEP states: The Council shall not consent to the subdivision of land to create additional lots or to the carrying out of development the Council considers is significant in the Residential Bushland Conservation zone unless: (i) each of the lots to be created which will require effluent disposal or the site on which the development will be carried out is to be serviced by a reticulated sewerage system, and (ii) the Water Board has previously provided certification to the Council that the sewage treatment plant serving the area concerned has the capacity to accommodate the additional development.

5 In determining the proper construction of cl 10.8(e) of the LEP, it is important to have regard to its context within cl 10.8 of the LEP. Clause 10.8(d) of the LEP states: Where a development application is for consent to: (i) subdivision, or (ii) other development which the Council has been required by the Water Board to refer to the Board,

the Council shall: (iii) where on-site disposal of effluent is proposed, require the applicant to furnish a geotechnical and water balance report to establish that the land is capable of such disposal, and (iv) include in any development consent a provision which requires that satisfactory arrangements be made with the Water Board for the provision of water and sewerage facilities.

6 Clause 10.8(f) of the LEP states: The Council shall not consent to any development that requires effluent disposal, unless: (i) the development is to be connected to a reticulated sewerage system, or (ii) the Council is satisfied by means of a geotechnical and water balance report that the effluent may be effectively disposed of on that part of the site on which the development is permissible.

This paragraph does not apply to subdivision of land in the Residential Bushland Conservation zone.

7 Clause 10.8(g) of the LEP states: The Council may grant development consent for the erection of a dwelling house served by an effluent pump out system on a lot existing at the appointed day where the sewer is not available. This provision does not extend to dual occupancy.

8 Clause 10.8(h) of the LEP states: For the purpose of this clause, "geotechnical and water balance report" means a report which contains sufficient technical data to meet the requirements specified in any Development Control Plan that shows guidelines for the disposal of waste waters by land application, that includes consideration of: (i) the waste water treatment system, and (ii) site selection criteria,

and that demonstrates that the development site is capable of the disposal of effluent without adversely affecting bushland, watercourses, ground water, adjacent land, or environmentally sensitive areas.

9 There is no definition of "reticulated sewerage system", "on-site disposal of effluent", "sewerage facilities", "effluent pump out system", "the sewer" or "sewage treatment plant" in the LEP.

Council and RAID's submissions 10 The Council and RAID argued that cl 10.8(e) required that the Applicant dispose of its sewage by way of a public reticulated sewerage system for subdivisions in the Residential Bushland Conservation Zone. Clause 10.8(f) also refers to "reticulated sewerage system" as an alternative to land disposal of effluent on the site. This makes it clear that "reticulated sewerage system" means the trunk sewer which services a town. The Council and RAID also submitted that the word "and" in cl 10.8(e) should be read as a conjunctive so that cl 10.8(e)(i) and (ii) must both be satisfied.

11 Further, the Council and RAID submitted that cl 10.8(e) is not a development standard but rather a prohibition on subdivision where it is not able to be connected to the public sewer. Applicant's submissions 12 The Applicant submitted that the reference in cl 10.8(e) to a "reticulated sewerage system" did not require that the proposal be connected to a public sewer and that cl 10.8(e)(ii) does not require it. In this case the Applicant is proposing to install an on-site reticulated sewerage system as part of the proposed development.

13 If a purposive approach is taken and the zone objectives contained in cl 6.3 of the LEP are considered disposal of sewage by the Sydney Water sewer alone rather than through reuse is contrary to that objective. In the alternative If the clause does require disposal by the Sydney Water sewer the Applicant argued that cl 10.8(e) is a development standard and can be varied in the exercise of the Court's discretion pursuant to State Environmental Planning Policy No 1 - Development Standards ("SEPP 1"). Finding on cl 10.8(e) 14 Clause 10.8(e) applies to land zoned Residential Bushland Conservation Zone and states that subdivision cannot take place unless each lot to be created is connected to a reticulated sewerage system (i) and that Sydney Water has certified that the STP for the area can accommodate the additional development (ii). The issue is whether this clause requires that the reticulated sewerage system must be the public sewer. That interpretation is open on the wording of the section but is not explicitly so stated. 15 In order to determine the meaning of cl 10.8(e) it is necessary to consider other provisions of cl 10 particularly cl 10.8(f) and cl 10.8(d). Clause 10.8(f) does not apply to land zoned Residential Bushland Conservation Zone. It requires the Council to refuse consent to any development unless it is connected to a reticulated sewerage system or the Council is satisfied that on-site disposal is effective. This suggests strongly that cl 10.8(e) applies to public reticulated sewerage systems which take sewage off the site. This interpretation is strengthened given that "and" in cl 10.8(e) is clearly intended as a conjunctive so that Sydney Water certification as to capacity of the relevant STP, to which the reticulation system is connected by implication, must be obtained. I do not agree with the Applicant's submission that the use of "and" in cl 10.8(d), where it is not a conjunctive, implies the same use of "and" in cl 10.8(e) as the purpose of the clauses is different.

16 Clause 10.8(d) of the LEP also refers to the need for the on-site disposal of effluent. Clause 10.8(d) is general in nature and provides that where on-site disposal of effluent is proposed the Applicant is required to furnish a geotechnical and water balance report. I agree with RAID's submission that cl 10.8(e) is an exception to cl 10.8(d). Because cl 10.8(d) contemplates on-site disposal of effluent it makes clear that the intent of cl 10.8(e) is that development in the Residential Bushland Conservation Zone be connected to the public reticulated sewerage system rather than on-site disposal. The fact that the Applicant can describe its on-site disposal system as "reticulated" is not material given the context in which cl 10.8(e) operates. This construction is supported by cl 10.8(g) and cl 10.8(h) of the LEP.

17 I agree with the Council's argument that the two other provisions that refer to "reticulated sewerage system", being cl 11.6(b) and cl 15A.3 of the LEP, support this approach. Clause 11.6(b) states that "the Council shall not consent to any development that requires effluent disposal unless the development is to be connected to a reticulated sewerage system". Having regard to cl 11.6(a), which requires applicants to make arrangements with Sydney Water for the provision of water and sewerage facilities, it is clear that the reference to a "reticulated sewerage system" in cl 11.6(b) is a reference to the Sydney Water public sewerage system. This approach is supported by cl 15A.3 of the LEP which states that bed and breakfast establishments located in the Residential Bush Conservation Zone are to be connected to a "reticulated sewerage system", unless they are on a lot greater than 1ha. In other words, it is clear that the planning intention was that development in the Residential Bush Conservation Zone be connected to the Sydney Water reticulated sewerage system.

18 Is it enough that the reticulated sewerage system proposed is intended to partly deliver sewage off site from the public sewer? About 8,571 litres/day is intended to go to the Sydney Water sewer with 26,633 litres/day to be disposed of on-site. Given my finding above I do not think that partial disposal of sewage off site through the public sewer is sufficient and in any event the vast bulk of sewage in this case will be treated on-site under the current proposal. If the clause is not a development standard to which SEPP 1 can apply then the development is not permissible. Whether cl 10.8(e) is a development standard 19 Is cl 10.8(e) of the LEP a development standard? Development standard is defined in s 4 of the EP&A Act to include: provisions of an environmental planning instrument or the regulations in relation to the carrying out of development, being provisions by or under which requirements are specified or standards are fixed in respect of any aspect of that development, including, but without limiting the generality of the foregoing, requirements or standards in respect of: … (m) the provision of services, facilities and amenities demanded by development, (n) the emission of pollution and means for its prevention or control or mitigation, and … 20 The question arises as to whether the clause is concerned with a characteristic of the land or of an aspect of the development. In North Sydney Municipal Council v P D Mayoh (No 2) (1990) 71 LGRA 222 the Court of Appeal per Clarke JA stated at 236 that: There is, in my view, a great difference between a clause which prohibits the carrying out of a particular development on identified land and one fixing requirements to be complied with in carrying out that development. Further, Mahoney JA stated at 234: I do not think that cl 14A(a) is a provision 'in relation to the carrying out of development ...'. There is, in my opinion, a distinction in the provisions between a provision which in form provides: 'On land of characteristic X no development may be carried out' and a provision which in form provides: 'On such land development may be carried out in a particular way or to a particular extent.' The provision in cl 14A(2) is, I think, of the latter kind. If cl 14A(1)(a) provided merely that 'no building shall be erected on land in Zone No 2(c) if ...' the position would, in my opinion, be clear. In fact cl 14A(1)(a) prohibits erection on the land described in par (a) not of all buildings but only of 'a residential flat building'. But it remains correct, I think, to say that, in respect of the land referred to in par (a) what is done is to prohibit the erection of the relevant kind of building, not to make a provision in relation to 'the carrying out of' development of that or any other kind. If regard be had to purpose, the purpose of the provision was, I think, to proscribe development by buildings which would overshadow smaller buildings at the particular place. This is not a matter relating to 'development standards' but to the carrying out of development at all.

21 In the Court of Appeal decision in Strathfield Municipal Council v Poynting (2001) 116 LGERA 319, Giles JA considered a number of decisions in his judgment and at 343 set out two steps as follows: A provision prohibiting the development in question (the use of land, subdivision of land, erection of a building etc, see the definition of "development" in the Act) under any circumstances will be a provision controlling development, but it will not be a development standard. The availability of SEPP No 1 will fail at the first step. Beyond this, the debate should be over the second step, whether the provision specifies a requirement or fixes a standard in relation to an aspect of the (non-prohibited) development. I consider one can profitably return to the observations of McHugh JA in Woollahra Municipal Council v Carr , to his Honour's reminder of the need to define the development and its aspects before it can be determined whether the provision in question is a development standard. Referring again to the definition of `development standards', there must be a provision in relation to the carrying out of development, and then the provision must specify a requirement or fix a standard in respect of an aspect of that development. Having identified the development in relation to which there is the provision, the aspects of that development must be considered in order to say whether the provision specifies a requirement or fixes a standard in respect of an aspect of the development.

If the provision does not prohibit the development in question under any circumstances, and the development is permissible in circumstances expressed in the provision (whether positively or negatively, see the forms of provision earlier stated), in most instances the provision will specify a requirement or fix a standard in respect of an aspect of the development. In the absence of control, and subject for example to the private law of nuisance, a landowner may develop his land as he sees fit. Control by complete prohibition on the development in question will not leave room for requirements or standards. But anything less than complete prohibition means that there can be the development in question, and provided a relevant aspect of the development is identified the control will be by imposition of a development standard. In the debate over the second step, whether the provision specifies a requirement or fixes a standard in relation to an aspect of the (non-prohibited) development, the key will be identification of a relevant aspect of the development. The list of aspects in paragraphs (a) to (n) of the definition of "development standards" in s 4(1) of the Act shows that a broad view of what is an aspect of a development should be taken. North Sydney Municipal Council v P D Mayoh Pty Ltd (No 2) must be regarded as a case in which the majority considered that the provision in substance prohibited the development under any circumstances, not because of something in the definition of the development (see Clarke JA's comments on the observations of McHugh JA in Woollahra Municipal Council v Carr ) but because, as part of the environmental planning instrument as a whole, in the prohibition on erection of a residential flat building the governing characteristic was land with adjoining high buildings, so there was relevantly a prohibition on development in any circumstances.

22 In Lowy v The Land and Environment Court of NSW & Ors (2003) 123 LGERA 179 Giles JA applied his reasoning in Poynting and also stated at 203: It has been said many times that whether a provision is a development standard depends on the particular provision seen as part of the planning instrument as a whole. Rather than be caught up in a raft of decisions on their own facts and fine distinctions, I consider it better to address the LEP by regard to principle and its own structure and provisions. Mason P agreed with Giles JA in Lowy . 23 In Georgakis v North Sydney [2004] NSWLEC 123 McClellan J considered these decisions in deciding if the requirement in State Environmental Planning Policy No 5 - Housing for Older People or People with a Disability that there be written evidence that residents would have access to a transport service 400m from the site was a development standard. He states at [38] and [39]: Notwithstanding that the relevant clause in Poynting defined, albeit by reference to specified dimensions of the allotment, whether the particular development is permissible on the land, the court, taking "the wider view", held that it was a development standard. In Mayoh , permissibility was defined by reference to the attributes of adjoining land. In Poynting , permissibility was defined by attributes of the land itself. It would seem that the difference is significant when determining whether the provision contains a development standard.

It was submitted by the council in the present case that the reasoning in Mayoh remains the guiding principle when resolving whether a particular provision contains a development standard. Of this proposition Giles JA said in his detailed reasons in Lowy that "it may not be entirely correct." If his Honour had in mind the "wider view" adopted in Poynting , with respect, I doubt that the approach in Mayoh now completely reflects the law.

24 McClellan J went on to apply the two step process identified by Giles JA in Poynting to conclude that the provision before him was a development standard. It is not necessary for the purposes of this judgment that I further consider whether Mayoh does reflect the law as it is appropriate that I apply the approach identified in the recent Court of Appeal decisions in Poynting and Lowy.

25 It is necessary as emphasised in Lowy and several other cases to consider the relevant provision in the context of the LEP as a whole when considering the two step process identified by Giles JA in Poynting. An integrated housing and subdivision development meaning "development in the course of which a subdivision is carried out, and buildings, private and public open space, roads, pathways and landscaping are designed and constructed, as an entity…" such as this proposal is specifically allowed for under Sch 1 of the LEP. The definition of development standard in s 4 of the EP&A Act includes the provision of services as described at (m). Clause 10.8 is in a section titled "services" and states that each of the lots to be created on the site on which the development will occur "is to be serviced" by a reticulated sewerage system.

26 Firstly, the requirement in cl 10.8(e) is not a complete prohibition as the site can be developed if there is sewerage capacity in the Sydney Water sewer. Secondly, "services" is included in the definition of development standard in s 4 of the EP&A Act which are provisions of an environmental planning instrument which relate to the carrying out of development in which requirements are specified. Contrary to RAID's submissions, the provisions of cl 10.8(e) is not a characteristic of the land. The clause, in its terms, does not operate to require the land to have a certain characteristic, rather, it requires the development to have a certain requirement. Such is made plain by the prospective nature of the requirement that the development for which consent is sought "is to be serviced" by a reticulated sewerage system.

27 I consider that in the context of this LEP the clause relates to an aspect of development rather than relating to the land and is a requirement that it be connected to the Sydney Water sewer. It is therefore able to be subject to an application pursuant to SEPP 1.

(ii) Whether the development is designated development 28 Pursuant to cl 4(1) of the Environmental Planning and Assessment Regulation 2000 ("the Regulations") development described in Pt 1 of Sch 3 of the Regulations is declared to be designated development for the purposes of the EP&A Act. Clause 29(4) of Sch 3 of the Regulations states that the following is classified as designated development: Sewerage systems or works that release or reuse more than 20 persons equivalent capacity or 6 kilolitres per day of sewage, effluent or sludge and that are located: (a) in or within 100 metres of a natural waterbody, wetland, coastal dune field or environmentally sensitive area, or (b) in an area of high watertable, highly permeable soils or acid sulphate, sodic or saline soils, or (c) on land that slopes at more than 6 degrees to the horizontal, or … (g) within 500 metres of a residential zone or 250 metres of a dwelling not associated with the development. 29 The parties agreed that the proposed sewerage treatment system comes within the description in cl 29(4) of Sch 3 of the Regulations. The issue arises as to whether the use of an STP can be characterised as an independent use so that the development is therefore designated. RAID's submissions 30 RAID submitted that the area of land proposed for on-site waste water disposal and for the construction of the STP was of such a scale that the proposed STP constituted an independent and separate use of the land. RAID noted that the proposed STP will comprise more than 2ha. 31 This use of the land could be contrasted to the proposed use for residential development which has a floor space of 0.94ha and a proposed building and garden coverage of 0.7265 ha. The land on which the STP will be constructed is also an area separate from the residential development, which is confined to another area on the Parklands site. RAID, relying on the Court of Appeal decision in Penrith City Council v Waste Management Authority (1990) 71 LGRA 376, emphasised that each case had to be considered on its merits.

32 RAID also argued that the STP could be characterised as an independent and separate use of the land on the basis that the tourist and residential component of the development was dependent on the STP for its existence, and the STP would have an ongoing function following construction of the tourist and residential development. RAID further submitted that as the Parklands site was located in the Residential Bushland Conservation Zone the sensitivity of the Parklands site supported a strict application of the categorisation of DA X05/0412 as designated development with the legal consequence that an environmental impact statement should be prepared. Applicant's submissions 33 The Applicant argued that while the proposal included an STP, the development application was not for "sewerage systems or works". Rather, the STP could only be characterised as a necessary and interrelated component of the primary use of the Parklands site, namely the construction of tourist and residential accommodation. The Applicant argued that it was an absurdity to suggest that the proposed STP was a separate and independent use as the STP had no operation outside of the tourist and residential accommodation use. Finding on the question of designated development 34 A number of cases have considered whether a proposed development that involves a number of uses can properly be characterised as designated development. In Foodbarn Pty Limited & Ors v Solicitor-General (1975) 32 LGRA 157, Glass JA stated at 161 that: It may be deduced that where a part of the premises is used for a purpose which is subordinate to the purpose which inspires the use of another part, it is legitimate to disregard the former and to treat the dominant purpose as that for which the whole is being used.

35 In Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404 Meagher JA said at 409 that: Notwithstanding the principles laid down in Foodbarn , it does not follow that a use which can be said to be ancillary to another use is thereby automatically precluded from being an independent use of the land. It is question of fact and degree in all the circumstances of the case whether such a result ensues or not.

36 Subsequently, the Court of Appeal, comprising Kirby P, Meagher and Handley JJA, in Penrith City Council v Waste Management Authority stated at 384: Because the words of the statutory definition may relate to parts only of a development as proposed, it is necessary, in performing the task of characterisation to consider the 'character and extent and other features of the activities' proposed to decide whether, properly classified for legal purposes, they fit into the definition against which they are being measured. This is what Glass JA suggested in Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157 at 161. It is what Hope JA said explicitly in CB Investments Pty Ltd v Colo Shire Council (1980) 41 LGRA 270.

37 The Court of Appeal continued at 387 adopting the judgment of Meagher JA in O'Donnell agreeing with the emphasis placed upon: …the need to look at the facts in their detail and to consider, on the way to the characterisation finally assigned, whether, notwithstanding the existence of another "primary" use or development purpose, it may properly be said that an "ancillary" use or development purpose is involved. If it is, it will attract legal consequences.

38 The Applicant relied on the judgments in Canyonleigh Environment Protection Society Incorporated v Wingecarribee Shire Council (1997) 95 LGERA 294 and Evans v Maclean Shire Council and Anor [2003] NSWLEC 352 as examples of cases where this Court did not characterise sewerage systems or works as designated development. In Canyonleigh, Bignold J considered at 308 the relationship between the two uses proposed and concluded that as the proposed sewerage system or work was for a purpose which was subordinate to the tourist development that the uses could not be relevantly characterised as designated development. In Evans, Talbot J stated at [33] that in determining that the sewerage systems or works could not be classified as designated development, it was "an important fact that the proposed sewerage and effluent reticulation and treatment system will serve only the caravan park". Accordingly, at [35] Talbot J stated that, even though the sewerage system or work fitted the description of designated development, they were subordinate to the caravan purpose which dictated and demanded the sewage treatment use and accordingly, that the use was not characterised as designated development.

39 Penrith City Council v Waste Management Authority emphasises that the particular circumstances of each case must be considered. The extent of the use of the land for the STP must be determined to see if it is sufficiently separate and substantial use from the tourist/residential development as to hold that the proposal is designated development. 40 According to the Martens Report the STP is proposed to occupy a minimum 1.7ha of the 10.6ha Parklands site which includes several areas of the site identified for on-site irrigation by treated effluent. The area of the site suitable for irrigation is 3.2ha. The Martens Report recommends a 300,000 litre storage facility for the proposed development. Such a facility will provide a retention capacity of nine days. The actual plant will be at the northern end of the site. The estimated sewage generation rate for the development is 35,204 litres/day. Utilising the discharge allowance of 8,571 litres/day to Sydney Water's sewer, the estimated volume of sewage to be treated and disposed of on-site is 26,633 litres/day. 41 I do not consider the proposed sewage disposal system is so significant that it can be characterised as a separate use of the site. While the area to be potentially used by the system is not small, that area consists largely of irrigation areas where treated effluent is used on gardens and vegetated areas. That scale of use does not render this a separate use. The actual STP occupies a relatively small area to the north of the site. Given the site area of 10.6ha this is not a sufficiently large area to warrant a finding that it is a separate use. It is also material to consider as Talbot J did in Evans, the reason why the STP is necessary. Its sole purpose is to support the tourist/residential use proposed for the land. While that is not conclusive of the matter, it is another factor to consider and suggests the proposal is not designated development. The proper construction of cl 30 of the LEP 42 Initially an issue in relation to the calculation of the Principal Development Area under the LEP arose. The Principal Development Area of a site is calculated by reference to the Table contained in cl 30 of the LEP. The parties have now agreed that the Principal Development Area calculation must include the following aspects of the proposed development: (a) all components of the on-site effluent disposal system; (b) all landscaped areas and gardens; (c) all proposed carparking areas . The parties agreed that all proposed roads and footpaths are not included in the calculation of the Principal Development Area. Findings 43 The Court makes the following findings:

1. The proper construction of cl 10.8(e) of the Blue Mountains Local Environmental Plan 1991 requires that the proposed development in development application no. X05/0412 be serviced by a Sydney Water reticulated sewerage system;
2. Clause 10.8(e) of the Blue Mountains Local Environmental Plan 1991 operates as a development standard; and
3. Development application no. X05/0412 is not designated development under the Environmental Planning and Assessment Act 1979.

44 The Court makes the following orders:

1. That the exhibits are to be returned except for those required for the Class 1 proceedings.

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