Colonial Credits Pty Ltd v Pittwater Council

Development contributions for community facilities

1. As is conventionally the position when a new residential development is approved, the conditions of development consent also provided for a contribution to be made by the beneficiary of the development consent toward the cost of the provisions of community facilities, facilities the need for the provision of which arises in whole or in part as a consequence of the approved development.
2. This process is effected, in broad outline, by the Council identifying the facilities that are said to be needed either across the entire local government area or for a lesser specified area.
3. Having done so, the Council prepares a contributions plan pursuant to s the Environmental Planning and Assessment Act 1979 (the Planning Act) that, inter alia: 1. Sets out the items that are proposed to be funded; 2. Provides a basis for the costing of them; and 3. Describes the process by which the cost is to be recouped (for facilities already provided) or to be funded (where it is intended that monies will be accumulated prior to the provision of the facility).
4. In this instance, at the time this development consent was granted, the Council had such a contributions plan applicable to the site. As a consequence, a condition was included in the conditions attaching to the development consent that made provision for the payment of such a contribution from Colonial Credits to the Council to fulfil Colonial Credits' obligation calculated pursuant to the plan. The amount included in the conditions of development consent, in condition C19, was $1,998,815.64, which was subsequently modified, by consent, to be $1,936.715.64.

A reduction in contributions is sought

1. Colonial Credits has now applied to modify, further, the development consent to reduce the contribution by $880,000 on the basis that the modified contribution is unreasonable. The foundation for the application, in a mathematical sense, is said to be the combination of the cost of providing a stormwater system to convey stormwater generated from the catchment above the site (Warriewood Road and upslope from it) and the impact of providing this system on the value of five allotments within the approved subdivision.

The proposed drainage system

1. This proposed drainage system (separate from the one required to accommodate the drainage needs of the site itself) will take water flowing from uphill of the boundary of the site from a collection point along the frontage of the site. The system will operate by a piped stormwater system along an easement through the site coupled with a contingent high rainfall event overland flow path to accommodate any water unable to be conveyed through the stormwater pipe system. All this water will, eventually, be discharged into Narrabeen Creek (this creek is the southern boundary of the site).
2. For this piped system, although it has a number of inlet grates at various points within its easements, there is no suggestion that the purpose of this drainage system is other than the conveyance of water that would otherwise enter the site from upstream on Warriewood Road or beyond.
3. A separate stormwater disposal system has been designed to accommodate collection and disposal of stormwater from within the site in a different and discrete fashion.
4. The conceptual design for the stormwater disposal system dealing with the piped transportation of the upstream water and the contingent flow paths for water from greater than 1:20-year and up to 1:100-year rainfall events is shown on the plan reproduced below (the pipeline is depicted as a dotted line):
5. This plan also depicts the easement for the pipes:

• running along the western boundaries of Lots 3 and 21 in the Torrens Title element of the subdivision;
• turning to the south-west across the turning circle at the head of the internal roadway between the Torrens Title and Community Title elements of the subdivision; and then
• running along the western boundary of the site, this being the western boundary of the approved Community Title allotments Nos 2, 15 and 18.

1. The contingent overland flow path runs along the easement along the western boundary of Lots 3 and 21 until reaching the street when the flow path will be along the street commencing in a generally south-eastern direction and eventually flowing directly into Narrabeen Creek.

The evidence

1. Expert evidence was provided in three distinct disciplines: engineering, town planning and valuation.
2. The evidence, both written and oral, was provided by: 1. Engineering - Mr Halmarick (Applicant) and Mr Salvaterra (Council); 2. Town Planning - Mr Brindle (Applicant) and Ms Stagni (Council); and 3. Valuation - Mr Sukkar (Applicant) and Mr Davis (Council).

The existing drainage position

1. Warriewood Road has kerb-and-gutter on its north-eastern side but does not have this constructed on the side adjacent to the site. All of the streets uphill within the two sub-catchments draining toward the site are kerbed-and-guttered. The consequence of this drainage is that stormwater (including from such conventional stormwater collection and discharge facilities as are incorporated in the various upper-catchment dwellings) is collected, in an orderly fashion, by the guttering and pit-and-piping system installed by the Council as a consequence of the permitted development upstream from the site.
2. This water is collected by this drainage system and transported to a single point within the Council's road reserve at a location that is agreed by Mr Halmarick and Mr Salvaterra to be the low point along the frontage of the site. From this collection point, the Council has installed a pipe that runs across the site to a point about halfway between the Warriewood Road frontage of 31 Warriewood Road and Narrabeen Creek.
3. From that point, the discharged water travels by overland flow until it reaches the creek. It is agreed that the Council has no easement that has permitted the installation and ongoing presence of this pipe on 31 Warriewood Road. It is presently inappropriate (for reasons later set out) to explore what, if any, legal basis the Council might have for this structure and its drainage activity under the now repealed Local Government Act 1919 or any other potentially relevant statutory or common law right which may (or may not) have historically existed.
4. It is also agreed by the engineers that the low point from which the pipe runs to discharge on the site is the low point to which the more northern of the two sub-catchments (Sub-Catchment A) upstream of the site on the north-eastern side of Warriewood Road would have drained when the upstream land was in a natural state prior to the approval of development in that sub-catchment.
5. It was also the agreed position of the engineers that, with respect to the more southern of the two sub-catchments, referred to as Sub-Catchment B, the predevelopment overland flow path for surface flows would not have been to this low point but would have been across what is now Warriewood Road and thence across the more eastern portion of the site (primarily 29 Warriewood Road) to Narrabeen Creek.

The site inspection

1. As I had earlier been involved in presiding over the conciliation conference between the parties that resulted in the first s 34 agreement and the resulting initial orders granting the development consent, it was unnecessary for me to undertake an extensive inspection of the site. However, at the commencement of the first day of the hearing, I met the parties' legal representatives and those advising and instructing them at the site in order to refresh my memory of the layout of the upstream catchment areas compared to the site. It was unnecessary to go onto the site itself.
2. During the course of this visit, Mr To, counsel for Colonial Credits, asked Mr Halmarick and Mr Salvaterra whether they had considered, in their joint discussions, matters relating to the pre- and post-upstream development volumes of water discharging onto the site. As they responded that they had not done so, they were requested to consider this and prepare any further, supplementary joint report on this topic that they might consider appropriate.
3. As it subsequently transpired, although they had such a discussion, no document was prepared arising from it.
4. However, during the course of their concurrent oral evidence, Mr To showed a document to Mr Halmarick that had been prepared by two engineers working for Mr Halmarick and under his supervision. That document purported to deal with some aspects of pre- and post-development volumes and flows.
5. As I considered that it was inappropriate for material of that nature to be dealt with without Mr Salvaterra having the opportunity to consider the detail contained in it and having an understanding of its derivation, the drainage experts were instructed to return to Mr Halmarick's offices and prepare, with such assistance as might be required from those working for Mr Halmarick, a proper supplementary joint report dealing with pre- and post-development volumes from each of the sub-catchments, and in total, for the various indicator rain-event frequencies adopted by Mr Halmarick in the original document. Those rain-event frequencies were 1-, 2-, 5-, 10-, 20- and 100-year rain events.
6. The first day of the proceedings was adjourned, early, and recommenced late on the second day to permit this work to be completed. As a consequence, a supplementary joint drainage report was prepared and this became Exhibit 9.
7. I do not propose to traverse in detail the calculations that were undertaken as part of this evidentiary process. There are, however, a number of points which should be made briefly concerning the basis for and conclusions capable of being drawn from them. These would require further detailed consideration if a merit assessment were to become necessary.
8. The first of these is that, although there are individual calculations for the increase in volume generated by each sub-catchment for each of the relevant rain-event frequencies, the simple way to draw a composite understanding of what is the overall impact of pre- and post-development stormwater generated by the Warriewood Road and upstream sub-catchments is to take the average derived from the six rain-event intervals contained in the tables attached to the supplementary joint report.
9. Although Mr Halmarick and Mr Salvaterra were not specifically asked to endorse the validity of this approach, the way they dealt with these issues seemed to me to provide an implicit endorsement for this process, this being the process that had been adopted by Mr Halmarick in the preparation of the document that had triggered the work leading to the supplementary engineering report.
10. Second, the pre- and post-development downstream flows draining from Sub-Catchment A would have drained to the low point adjacent to the frontage of 31 Warriewood Road and would have followed an internal overland flow path across 31 Warriewood Road toward Narrabeen Creek. Depiction of this overland flow path (also showing the existence of the pipe installed by the Council across part of 31 Warriewood Road) was attached to the joint town planning report . A copy of that diagram appears below:
11. Third, the overland flow from Sub-Catchment B would have been, but for its interception and collection by the Council's drainage system upstream, across the site as a sheet-flow and that the increment in this flow as a consequence of the upstream development (absent the piping in the Council's drainage system) would have been able to be accommodated within an internal drainage system for development on the site without the necessity for specific, separated drainage facilities of the nature being considered in these proceedings.
12. However, the interception and transportation for discharge of this through the installed drainage system now requires the incorporation of these flows into an integrated drainage system of the nature now proposed.

Matters requiring determination

1. There are two matters potentially falling to be determined in these proceedings. The first is whether or not there is proper statutory foundation in s 94B(3) of the Planning Act to enable any relief to be granted to Colonial Credits if it were to be considered appropriate to do so. There are then a range of matters, legal and factual, requiring determination in considering what relief should be granted (if any) if there is power to do so.

The statutory framework

1. The development consent was granted as a consequence of orders of the Court made pursuant to s 34 of the Court Act after the parties reached agreement as to the terms of a decision to be made by the Court.
2. The power to modify the development consent granted by the Court is provided by s 96(8) of the Planning Act. The application pursuant to this provision seeks to modify condition C19 of the development consent granted by the Court's orders made on 15 October 2014 after a conciliation process in Matter 10332 of 2014 (and modified on 3 August 2015 in Matter 10407 of 2015).
3. It is, for present purposes, unnecessary to reproduce the entirety of the modified condition. It is, however, for the purposes of this discussion, sufficient to note that this condition imposed a requirement on Colonial Credits to make a payment to the Council (of the amount which became that set out in [8] after the 2015 modification of condition C19) as the levied contribution pursuant to a plan prepared by the Council pursuant to the Planning Act.
4. The requirement for there to be a plan to found the ability to require such payment of a monetary contribution is to be found in s 94B(1) of the Planning Act. The application by Colonial Credits seeking a further adjustment to the contribution imposed pursuant to (now) condition C19 seeks to utilise the Court's powers arising as a consequence of s 94B(3) of the Planning Act, a provision in the following terms: (3) A condition under section 94 that is of a kind allowed by a contributions plan (or a direction of the Minister under this Division) may be disallowed or amended by the Court on appeal because it is unreasonable in the particular circumstances of that case, even if it was determined in accordance with the relevant contributions plan (or direction). This subsection does not authorise the Court to disallow or amend the contributions plan or direction. The Council says this provision does not provide any basis to grant Colonial Credits any reduction in its contribution required by the relevant contributions plan.

The jurisdictional question

1. Mr Nash, counsel for the Council, provided written submissions which dealt, inter alia, with the jurisdictional objection by submitting that a proper reading of s 94B(3) did not provide a foundation for an objection to a contribution on the grounds of unreasonableness, unless the objection related to matters specifically to be found in and to be funded through the relevant contributions plan. His written submissions on this point are in the following terms: 30 Thirdly, neither the Works nor the Easement are referenced in, contemplated by, or have any relationship whatsoever with, the relevant s 94 contributions plan which formed the basis for the imposition of condition C19 of the Consent. The Application relies on s 94B(3) of the Environmental Planning and Assessment Act 1979, however the power in s 94B(3) is only available where the terms of the relevant contribution plan produce the allegedly unreasonable contribution condition. The opening words of s 94B(3) make that clear - 'a condition under section 94 that is of a kind allowed by a contributions plan…'. The closing words also make the position clear - 'even if it was determined in accordance with the relevant contributions plan'. That is, a contribution condition can be found to be unreasonable in the particular circumstances even if the terms of the contributions plan permit the imposition of the contribution. 31 If the contribution, however, relates to a payment for public amenities or services (or dedication) not recognised by the contributions plan, s 94B(3) is not engaged. Rather, the contribution condition is simply unlawful under s 94 (see s 94B(1)). This is supported by the policy rationale for s 94B(3) - if the Application was determined favourably to the Applicant, the practical effect is that the wider Pittwater community would need to subsidise the Works and the Easement, because the Council's s 94 fund would be reduced in quantum. That is in circumstances where the wider Pittwater community will not in any way benefit from the Works or the Easement, for the reasons as outlined below. Section 94B(3) is therefore only engaged where the terms of the relevant contributions plan produce the alleged 'unreasonable' contribution condition.
2. As Mr To pointed out in his written submissions, it is clear that a modification application pursuant to s 96(8) of the Planning Act can encompass consideration of a contributions' condition using s 94B(3) as the vehicle for doing so (Arkbuilt Pty Ltd v Ku-ring-gai Council [2006] NSWLEC 502 per Jagot J at [2]).
3. The question of what is the scope of enquiry permitted by s 94B(3) was addressed by Mr To, in his response to Mr Nash's paragraphs set out above, in the following terms: 18 Council makes a related submission about the scope of the section 94B(3) power in its identified third issue. Stripped to its essence, the contention is that section 94B(3) is only available where the "terms of the condition" produce an unreasonable contribution condition. The contention is unsustainable when regard is had to the phrase 'circumstances of the case' in section 94B(3). The phrase is of wide import, and permits the Court to consider any relevant circumstance - whether it be "the terms of the condition", or other relevant matters. The provision of some other material public benefit is a relevant matter.
4. Mr To had earlier referred, in paragraph 6 of his written submissions, to the seminal Court of Appeal decision in Rose Consulting Group v Baulkham Hills Shire Council (2003) NSW CA 266; 58 NSWLR 159; 129 LGERA 165 as evidencing the breadth of the discretion to disallow or amend a condition derived from a contributions plan. I did not understand Mr Nash to contest that proposition.
5. Neither Mr Nash nor Mr To cited authority for the proposition that each advanced on the correct approach to be taken to s 94B(3).
6. The answer, on my reading of it, is to be found in the judgment, in Rose Consulting Group, of Santow JA (with whom Meagher JA and Young CJ in Equity agreed) where his Honour dealt with the interrelationship between s 94(2) of the Planning Act (a provision in the following terms): (2) A condition referred to in subsection (1) may be imposed only to require a reasonable dedication or contribution for the provision, extension or augmentation of the public amenities and public services concerned. and the terms of the (then) s 94(12) of the Planning Act (the provision that is now embodied in s 93B(3) of that Act).
7. His Honour wrote (at [25]): To elaborate. The argument put by the respondent attempts to give some meaning to s94(2) and (12). They, on their face, start by imposing a requirement of reasonableness in conditions (s94(2)) and then predicates their disallowance should it be shown that they are unreasonable. That disallowance of an unreasonable condition is expressly provided by s94(12) "even if it was determined in accordance with the [contributions] plan"; s94(12). "Reasonable" in terms of s94(1) and (2) of the Act clearly means judged by the criterion of what the development will or is likely to require, in terms of providing for increased demand for public amenities and public services. Section 94(2) provides that a condition "is to be imposed only to require a reasonable dedication or contribution for the provision, extension or augmentation of public amenities or public services" and (s94(1)) within the area, as "the development will or is likely to require". Disallowance or amendment of conditions which are "unreasonable" in s94(12) are therefore directed at conditions which fail to meet that criterion, equating absence of reasonableness to unreasonableness. The respondent's argument is based on giving s94(11) overriding force, with the consequence that a condition permitted or mandated by a contributions plan cannot be overridden by a curial determination that it is unreasonable. To support that submission and in an attempt to reconcile it with the clear words of s94(12), the respondent sought to draw a somewhat strained distinction. It was between the supposed legitimacy of finding unreasonableness of a so-called project-specific condition based on "the particular circumstances of the case", as against the supposed illegitimacy of finding a so-called generic condition unreasonable; that is, unreasonable by reason of the contributions plan being somehow "faulty in itself"; (T, 54). The fundamental problem with that attempted distinction is this. To say that curial review is permitted, but only by reference to "the particular circumstances of the case" is essentially a platitude. The circumstances of the case are always necessarily relevant. But they are here invoked to distinguish permissible review of so-called "project specific" conditions, based on the circumstances of the case, from impermissible review of a condition reflecting the intrinsic requirements of the contributions plan. That is a somewhat arbitrary distinction, difficult to justify and not readily reconcilable with the plain words of s94(12). I shall return later to this problematic underpinning proposed by the respondent to the trial judge's reasoning, invoked as it is to give some meaning to curial review of unreasonable conditions under s94(12).
8. The interlinking made clear by his Honour of the enabling and the disallowing provisions and the comparison between the requirement for reasonableness in the enabling provision and unreasonableness in the disallowing provision clearly identifies the limitation on the scope of s 94B(3) as being confined to reasonableness in the context of that which is contained in and imposed by the contributions plan itself.
9. The opening sentence of [35] and the first three sentences of [37] in his Honour's reasons reinforce my conclusion that the power to set aside a contributions' condition, such as condition C19, must find a basis of unreasonableness in the contributions plan's application to the site rather than in some other burden imposed on the beneficiary of the development consent where that burden is said to be unreasonable but has no foundation whatsoever in the contributions plan itself.
10. The additional elements of the Rose Consulting Group referred to immediately above are in the following terms: 35 I prefer the interpretation that the court on an appeal has a broader discretion than that of Council in amending an unreasonable condition so no longer unreasonable, even if no longer permitted or mandated by the contributions plan. … 37 It does not follow that where a contributions plan mandates an unreasonable result in terms of conditions, the effect of a court amending or disallowing a condition is to amend the contributions plan itself. That is not the result at all. What it does mean is that until the contributions plan is amended, anyone who challenges such a condition is likely to succeed. It is of course open to a council to avoid that result by adopting a new and sensible contributions plan provided it follows the mandated process including public participation; see Pearlman J in Stockland (Constructors) Pty Limited v Baulkham Hills Shire Council [1996] NSWLEC 185.
11. There is no basis for or link to the relevant contributions plan for the drainage works sought to be offset by this application.
12. I am therefore satisfied that s 94B(3) of the Planning Act cannot provide a vehicle that permits me to review the reasonableness or otherwise of the requirement for Colonial Credits to construct, at its cost, the stormwater drainage system for dealing with and disposing of the upstream catchment-generated water. This lack of jurisdiction requires that the appeal be dismissed.

Making findings on the merits

1. I indicated to Mr Nash and Mr To at the conclusion of the proceedings when reserving my decision that, against the potentiality that I might be found to be wrong in the jurisdictional question, I considered it appropriate to deal with the merit issues raised by Colonial Credits as, if I were wrong, such findings might obviate the necessity for the matter to be dealt with on remitter.
2. On further examination of all the material (including further rereading and detailed consideration of the written submissions for the parties), I am not satisfied that it would be appropriate to do so. I have reached this conclusion because, if I am wrong in concluding that there is no jurisdiction given by s 94B(3) to grant a rebate of the nature sought by Colonial Credits, it would then be necessary to consider whether the facts and circumstances engaged by these proceedings should give rise to the exercise of such a power. This consideration is necessarily antecedent to consideration of what might be the quantum of such relief able to be afforded pursuant to the provision (if such relief were available and justified).
3. As a consequence, I would have needed to turn, on this contingent path, to consider whether these facts and circumstances would warrant exercising such a power. In my assessment, there would be three matters requiring such preliminary consideration on this point. They are: 1. What relevance, if any, does the physical presence and operation of the existing Council drainage pipe discharging onto the site play in such consideration? 2. What considerations, if any, arise concerning whether or not the existing drainage arrangements are lawful? 3. What role, if any, does the fact that the proposed drainage structures and easements now under consideration were offered by Colonial Credits as part of the development application process culminating in the conciliated outcome of consent orders of the Court granting approval of the proposed subdivision project subject to conditions, a number of which engage the drainage/easement proposals for which Colonial Credits now seeks an offset?
4. Although there was a deal of material concerning these three points in the written submissions from counsel for both parties, the truncation of court time as a consequence of the further work by Mr Halmarick and Mr Salvaterra limited the amount of time available to address these issues. Much time was spent on matters relating to potential quantum of reduction (if any) rather than on the three matters set out above.
5. Although I am satisfied that I have an appropriate basis upon which to calculate quantum (the final step if Colonial Credits has a jurisdictional foundation in these proceedings - contrary to my earlier finding), I am not satisfied on my rereading of the written submissions that I would have adequately afforded procedural fairness to either party on these three intermediate steps if I were to determine them on the presently available evidence and submissions.
6. I have therefore concluded that it is inappropriate to address quantum - a position that is unnecessary (as opposed to potentially expedient) given my jurisdictional finding.

Conclusion

1. I have concluded that a proper understanding of the decision of the Court of Appeal in Rose Consulting Group v Baulkham Hills Shire Council reveals that s 94B(3) provides no jurisdictional foundation for reducing the contribution required by condition C19 of the development consent granted for 29 and 31 Warriewood Road, Warriewood. This conclusion necessarily follows, I am satisfied, as a consequence of the fact that the drainage system subject of the contribution adjustment claim is not provided for as a community facility in the Council's contributions plan. It therefore follows that the appeal must be dismissed.
2. On reflection, I have also concluded that, despite my earlier indication to the contrary that I would do so, it is not appropriate to make any contingent finding on the merits of Colonial Credits' application. For the reasons earlier set out, I am satisfied that it would be premature and a denial of procedural fairness to both parties if I were to have done so.
3. In reaching these conclusions, I am not to be inferred as setting out any view as to the reasonableness or otherwise of the requirement that Colonial Credits provide, at its cost, a separate drainage system for the up-catchment stormwater nor on any issues arising with respect to how this stormwater drainage system came to be incorporated in the approved plans for Colonial Credits' subdivision proposal.

Orders

1. It therefore follows that the orders of the Court are: 1. The appeal is dismissed; 2. The application pursuant to s 96(8) of the Environmental Planning and Assessment Act 1979 to modify condition C19 of development consent granted by consent orders in Matter 10332 of 2014, and subsequently modified by further consent orders in Matter 10407 of 2015, for a part-Torrens Title/part-Community Title residential subdivision at 29 and 31 Warriewood Road, Warriewood is refused; and 3. The exhibits, other than Exhibits A, C and 2 are returned.

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DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 December 2015