Criminal law - Appeal from dismissal of prosecution - Alleged offence under S 218(c) of Planning and Development Act 2005(WA) - Development of grouped dwellings on land subject to storm water drainage scheme - Condition of approval of development that developer pay contribution towards drainage scheme 'before the development is occupied' - Development completed in stages so that some dwellings occupied while others still being constructed - Whether developer committed any offence by failing to pay contribution once the development was partially occupied

Planning and Development Act 2005 (WA), s 218(c)

Chatenay v Brazilian Submarine Telegraph Co (1891) 1 QB 79

Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337

Gordon v Macgregor [1909] HCA 26; [1909] 8 CLR 316

Hall & Co Ltd v Shoreham-by-Sea UDC [1964] 1 WLR 240

Life Insurance Co of Australia Ltd v Phillips [1925] HCA 18; (1925) 36 CLR 60

Maharaj (1995) 85 A Crim R 374

Neilson v Harford [1841] EngR 887; (1841) 8 M & W 806

R v Baxter (1998) 3 NZLR 144

R v Spens (1991) 4 All ER 421

Royal Botanic Gardens v South Sydney [2002] HCA 5; (2002) 240 CLR 45

Stephens v R [1978] HCA 35; (1978) 139 CLR 315

Weigall Constructions Pty Ltd v Melbourne Board of Works [1972] VicRp 93; [1972] VR 781

Wollongong City Council v Australian Iron & Steel Pty Ltd (1988) 67 LGRA 51

1 BLAXELL J: Following a trial in the Magistrates Court at Midland on 20 August 2010, Magistrate Musk dismissed a prosecution by the appellant (the City) against the respondent (Investments) for an offence under s 218(c) of the Planning & Development Act 2005 (WA) (the Act). The complaint against Investments was that it had breached a condition of approval by the City for the development of certain land. The condition required that Investments pay a contribution of $29,370 towards a local district drainage scheme before the development was occupied.

2 Investments admitted that it was obliged to pay the drainage contribution, but denied that the contribution had become due at the time of the alleged offence. The Magistrate found that the condition was ambiguous as to the time for payment, and for that reason was not satisfied that Investments had committed an offence.

3 The City now appeals from this decision on two grounds which are the subject of leave granted by McKechnie J on 12 October 2010.

4 At all material times Investments (or its predecessors in title) owned 1.175 hectares of land in Clayton Street, Bellevue on which it proposed to develop 38 strata titled dwellings. On 21 August 2001 the City granted approval for commencement of development pursuant to the relevant local planning scheme. The approval was subject to a number of conditions, one of which was the following:

1. A drainage contribution at the rate of $25,000 per hectare shall be paid to the City of Swan, as the development falls within the Midland District drainage area. Payment shall be made before the development now approved is occupied.

5 This contribution was payable in respect of a storm water drainage system which serviced a number of properties in the local area. It was a further condition of approval that (unless the City otherwise directed) all stormwater produced on the development site had to be disposed into that drainage system.

6 The development did not proceed immediately but was constructed in four separate stages over a period of five years between 2004 and 2009. The City issued separate building licences for each stage of the development authorising construction of either eight or nine grouped dwellings. Each building licence required compliance with the conditions of planning approval, and the second licence (issued on 3 December 2004) also required that the drainage contribution be paid 'within 14 days of completion of the project'.

7 However, the City did not demand payment of the drainage contribution until September 2008 by which time building licences had issued for only the first three stages of development. As the demand for payment was not met, the City ultimately lodged a complaint alleging that on 7 October 2009 Investments had committed the following offence:

Continued to carry out a development of the Land otherwise [than] in accordance with the condition imposed under the City of Swan Local Planning Scheme No. 17 - namely condition 5 imposed on an Approval to Commence Development dated 21 August 2001.

8 As at 7 October 2009 construction of the first three stages of the development (totalling 28 dwellings) had been completed, and those units were occupied by the strata owners. A further ten dwellings in the fourth stage of the development were still under construction. Two of these further dwellings had their roofing complete, and concrete slabs had been laid for the remainder. At all material times the development site had been connected to the City's storm water drainage system.

9 The prosecution notice alleged an offence under s 218(c) of the Act which provides as follows:

(a) contravenes the provisions of a planning scheme;

(b) commences, continues or carries out any development in any part of a region the subject of a region planning scheme or any part of an area the subject of a local planning scheme or improvement scheme otherwise than in accordance with the provisions of the planning scheme; or

(c) commences, continues or carries out any such development which is required to comply with a planning scheme otherwise than in accordance with any condition imposed under this Act or the scheme with respect to the development, or otherwise fails to comply with any such condition,

10 The trial before the Magistrate was largely on the papers, and the relevant facts were almost entirely common ground. However, the court also heard oral evidence from the City's technical engineering officer, Andrew Townsend, and from a director of Investments, Joseph Tilli.

11 Counsel for the parties agreed that the outcome of the prosecution turned upon the proper construction of condition 5 of the development approval. In this regard the City contended that as 28 of the units were occupied at the material time, the development was 'occupied' within the meaning of the condition. However, Investments submitted that on a proper construction of condition 5 the whole of the development had to be occupied before the contribution became due. It was further submitted that to the extent that the condition was ambiguous, it should be construed against the City of Swan.

12 The Magistrate dismissed the prosecution for the following reasons:

So, there's no dispute that this drainage contribution has to be paid. The question is simply when. When one reads condition 5 of the original approval, 'now or later when the development is occupied', 'the development' is referred to all the way through as 38 group houses. The majority of them are finished. The city argues that there's partial occupation, therefore the burden on the city's infrastructure is already there and also the accused's company has the benefit of that infrastructure and therefore liability has arisen already and we don't need to be overly technical in an approach to interpretation of the words of condition 5.

Whereas the accused says that part only of this development is occupied, the condition refers to a development already approved and all the way through, this development is described as the group dwellings, all 38 of them, not anything less, not all or a substantial part of it, but 'the development'.

So there are two possible interpretations of that condition 5. Criminal prosecution of course means I have to be satisfied beyond reasonable doubt that the interpretation or the case promoted by the prosecution is the one I should accept beyond reasonable doubt but in my view, having heard from both parties and seen the documentation, there are competing inferences to be drawn from condition 5 and the way it's drafted, even with both words in the first and the last sentence of that condition saying 'shall', not 'should'.

There are competing inferences to be drawn from condition 5, not just the interpretation promoted by the prosecution without being overly technical, therefore the prosecution can't possibly succeed on the beyond reasonable doubt standard of proof and it is not proven and is dismissed.

13 The City appeals from this decision on the following grounds:

1. The learned Magistrate erred in law in directing herself that she had to be satisfied beyond reasonable doubt that the interpretation of the condition of development approval, the subject of the prosecution, promoted by the Appellant (prosecutor) is the one she should accept beyond reasonable doubt. The learned Magistrate should have determined the issue of interpretation as a question of law without any application of the 'beyond reasonable doubt' standard.
2. The learned Magistrate erred in law in failing to hold that the Respondent (accused) had failed to comply with condition 5 of the development approval by allowing 28 of the proposed 38 dwelling units in the development to be occupied prior to payment of the prescribed contribution to the Appellant's District Drainage Scheme.

14 The City granted approval to commence development pursuant to a 'local planning scheme' within the meaning of the Act. That local planning scheme was 'subsidiary legislation' and therefore 'written law' to which s 3 of the Interpretation Act 1984 (WA) applies. However, the development approval was not subsidiary legislation because it had only particular, and not general, effect (Pearce Geddes, Statutory Interpretation Australia (6th ed) [1.2]). It follows that the proper construction of condition 5 of the approval had to be determined in accordance with common law principles.

15 The parol evidence rule is a well known principle of the common law. Subject to certain exceptions, extrinsic evidence cannot be used to contradict, vary, add to or subtract from the terms of a written instrument (Gordon v Macgregor [1909] HCA 26; [1909] 8 CLR 316, 319, 323 - 324). This rule is most often applied in the context of written contracts, but it applies equally to other documents such as wills, deeds, and orders or judgments of courts (Cross on Evidence (8th Aust. ed.) [39145]).

16 One of the exceptions to the rule can arise when the provisions in a document are ambiguous. The most authoritative expression of this exception was that of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at 352:

The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. ... [W]hen the issue is which of two or more possible meanings is to be given to a contractual provision we look, not at the actual intentions, aspirations or exceptions of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting.

17 Notwithstanding other authorities which suggest some relaxation of the requirement for ambiguity (Cheshire & Fifoot, Law of Contract (9th Aust ed) 10.12) Codelfa continues to be good law (Royal Botanic Gardens v South Sydney [2002] HCA 5; (2002) 240 CLR 45). However, a planning approval is not a contract but the unilateral action of a local authority, and it follows that there can be no 'presumed intention' of 'the parties'. Accordingly, the application of the Codelfa principle to such a document simply involves the determination of the objective framework of facts within which the approval came into existence, which may throw light on the meaning of the ambiguous provision.

18 Furthermore, in planning cases it is not always appropriate to adopt an over-technical approach when construing conditions in permits and approvals (Weigall Constructions Pty Ltd v Melbourne Board of Works [1972] VicRp 93; [1972] VR 781, 796; Wollongong City Council v Australian Iron & Steel Pty Ltd (1988) 67 LGRA 51, 56). The words used by a local authority in imposing conditions should not be scrutinised in the same way as words used by a parliamentary draftsman (Hall & Co Ltd v Shoreham-by-Sea UDC [1964] 1 WLR 240, 245).

19 The proper construction of a written instrument often involves mixed questions of law and fact. It requires the determination of two things: firstly, the meaning to be given to the words, and secondly, their proper construction or legal effect. The meaning of the words is a question of fact whereas their proper construction is a 'pure matter of law' (Chatenay v Brazilian Submarine Telegraph Co (1891) 1 QB 79, 85; Life Insurance Co of Australia Ltd v Phillips [1925] HCA 18; (1925) 36 CLR 60, 78 - 79). Accordingly:

The construction of all written instruments belongs to the Court alone, whose duty it is to construe all such instruments, as soon as the true meaning of the words in which they are couched, and the surrounding circumstances, if any, have been ascertained as facts by the jury: and it is the duty of the jury to take the construction from the Court, either absolutely, if there be no words to be construed as words of art, or phrases, used in commerce, and no surrounding circumstances to be ascertained, or conditionally, when those words or circumstances are necessarily referred to them. (Neilson v Harford [1841] EngR 887; (1841) 8 M & W 806).

20 (Other authorities that elaborate on these principles include Stephens v R [1978] HCA 35; (1978) 139 CLR 315, 322; R v Spens (1991) 4 All ER 421, 428; Maharaj (1995) 85 A Crim R 374, 377; and R v Baxter (1998) 3 NZLR 144, 155).

21 In the present case Investments did not dispute the first element of the alleged offence, namely that it 'continued to carry out a development of the land' at the material time. It was only the second element which was in issue and which required proof beyond reasonable doubt, namely that it had done so 'otherwise than in accordance with' condition 5 of the approval.

22 This issue as to the second element turned upon the proper construction of condition 5, and in particular the words specifying the time for payment of the drainage contribution. In this regard, the condition required payment 'before the development now approved is occupied'.

23 These are commonly used words with a natural and ordinary meaning which can be readily ascertained. However, the Magistrate had to construe the words in the context of the whole of the development approval document. If as a result of this exercise there was any ambiguity in condition 5, then it would have been necessary for her Honour to arrive at the proper construction after taking account of extrinsic circumstances, namely the objective framework of facts surrounding the issue of the approval.

24 As to the first part of this task, it is relevant to note that the word 'occupied' was not qualified by words such as 'fully' or 'partially'. In the context of a development of grouped dwellings 'occupied' clearly refers to them being lived in by the occupants. Accordingly, the issue of construction necessarily focused upon the words 'the development now approved'.

25 The approval in its terms was an approval to 'commence development in accordance with the application received on 20 July 2001 and the attached plans'. Reference to that application showed that the proposed development was described as 'grouped dwellings'. Copies of the attached building plans are not before me, but I understand it to be common ground that those plans depicted a total of 38 grouped dwellings.

26 The approval itself had the heading 'Development: Grouped Dwellings (38)' and it follows that the words 'the development now approved' referred to the development of a total of 38 grouped dwellings.

27 The approval to 'commence development' was an approval for planning purposes of the process of construction of those 38 grouped dwellings. (Each building licence was a separate approval for the purposes of the building regulations of each stage of that same process of construction). Accordingly, once construction commenced 'the development now approved' came into existence, and it continued to exist at all material times thereafter.

28 For this reason, I consider that there was no room for any construction of condition 5 which restricted the meaning of 'the development now approved' to the 38 grouped dwellings in their completed state. Such a construction would be inconsistent with the many other conditions and terms of approval (eg conditions 7, 14, and 16; and footnotes 3, 4, 9 and 12) which regulated the manner in which the development should proceed.

29 In light of these considerations it is my view that, on a proper construction of condition 5, there was no reason why 'the development now approved' could not be occupied at any time prior to completion of construction of the total project. Accordingly, Investments was obliged to pay the drainage contribution prior to any stage of the development becoming occupied and lived in.

30 In my opinion this construction is not only the plain meaning of condition 5, but it is one which is clear from the document itself without reference to extrinsic factors. However, if it had been necessary to resort to extrinsic factors, I consider that those factors would support the construction I have found. In that regard, it is relevant to note that the development site was to be connected to the stormwater drainage system from the start of construction. As the development was to be constructed in stages, there was no certainty that all of the 38 grouped dwellings would be completed and ultimately occupied. Accordingly, it would not make sense if condition 5 of the approval allowed disposal of stormwater into the City's drainage system to continue indefinitely without any requirement for payment of the contribution.

31 It is also my respectful opinion that the Magistrate fell into error in applying the criminal standard of proof to the question of the proper construction of condition 5. In this regard, her Honour appears to have assumed that the proper construction of condition 5 was entirely a question of fact. Her Honour also appears to have reasoned that there were two possible constructions, and that this meant there was a reasonable doubt as to the proper construction.

32 However, the meaning of the words was quite clear, and the real question of construction was a matter of law, namely their legal effect when viewed in the context of the whole of the approval document. Furthermore, in the event that there were two possible constructions, the Magistrate's task was to go on to determine which was the true construction.

33 For the above reasons the appeal will be allowed on both grounds. I will hear submissions from the parties as to the appropriate orders.