Council of the City of Ryde v Sally Haddad executor of the estate of the late Dr Jim Haddad

The question of law

1. The Council appealed against the Commissioner's decision pursuant to s 56A(1) of the Land and Environment Court Act 1979 (NSW) (L & E Court Act). Section 56A(1) permits a party in proceedings in the Class 1 jurisdiction to appeal to the L & E Court on a question of law, being an order or a decision made by a Commissioner. By the time the appeal was heard Dr Haddad had died and the respondent to the appeal was the executrix of his estate.
2. Section 57(1) of the L & E Court Act provides that an appeal lies to this Court against an order or decision of the L & E Court on a question of law. However, s 57(4)(c) provides that in the case of an appeal against an order or decision made on an appeal to the L & E Court under s 56A of the L & E Court Act, this Court must grant leave to appeal.
3. The question of law identified by the Council is whether the primary Judge erred in upholding the Commissioner's decision that a doctor's surgery was a form of "business premises" as defined in the Standard Instrument (Local Environmental Plans) Order 2006 (Standard Instrument LEP). The effect of the Commissioner's decision was that the proposed use of the Premise was permitted notwithstanding that under the applicable local environmental plan use of the Premises as business premises was prohibited. Accordingly, the Commissioner made an order approving Dr Haddad's development application.
4. After the Council filed its written submissions in support of its application for leave to appeal the respondent filed an appearance submitting to the making of all orders sought by the Council save as to costs. At the hearing Mr Pickles SC appeared with Ms Pearman for the Council. There was no contradictor.
5. For the reasons appearing below the Council has established that the primary Judge erred in law by upholding the Commissioner's construction of the definition of "business premises". Leave to appeal should be granted and the appeal allowed.

Statutory framework

1. The site on which the Premises are located is zoned "R4 High Density Residential" pursuant to the Ryde LEP 2014. Under the Ryde LEP 2014, "business premises" is a prohibited use in Zone R4.
2. Subject to certain presently irrelevant exceptions, s 107(1) of the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act) provides that nothing in the EPA Act or in an environmental planning instrument prevents the continuation of an existing use. It was common ground in the L & E Court proceedings that the Premises benefited from existing use rights as a doctor's surgery as at 1 June 1979 when the Ryde Planning Scheme Ordinance (RPSO) commenced. The RPSO and subsequent local environmental plans, including the Ryde LEP 2014, prohibited use of the Premises as a doctor's surgery.
3. Dr Haddad relied in the L & E Court on cl 41 of the Environmental Planning and Assessment Regulation 2000 (NSW) (EPA Regulation). Clauses 39 and 41 of the EPA Regulation provide as follows: "39 In this Part: 'relevant date' means: (a) in relation to an existing use referred to in section 106(a) of the [EPA] Act - the date on which an environmental planning instrument having the effect of prohibiting the existing use first comes into force, or … 41 Certain development allowed (1) An existing use may, subject to this Division: … (e) if it is a commercial use - be changed to another commercial use (including a commercial use that would otherwise be prohibited under the Act), or … (3) 'commercial use' means the use of a building, work or land for the purpose of office premises, business premises or retail premises (as those terms are defined in the Standard Instrument)." (Emphasis added.)
4. The Dictionary to the Standard Instrument LEP includes the following definitions: "commercial premises means any of the following: (a) business premises, (b) office premises, (c) retail premises. business premises means a building or place at or on which: (a) an occupation, profession or trade (other than an industry) is carried on for the provision of services directly to members of the public on a regular basis, or (b) a service is provided directly to members of the public on a regular basis, and includes a funeral home and, without limitation, premises such as banks, post offices, hairdressers, dry cleaners, travel agencies, internet access facilities, betting agencies and the like, but does not include an entertainment facility, home business, home occupation, home occupation (sex services), medical centre, restricted premises, sex services premises or veterinary hospital. dwelling house means a building containing only one dwelling. health care professional means any person registered under an Act for the purpose of providing health care. health consulting room means premises comprising one or more rooms within (or within the curtilage of) a dwelling house used by not more than 3 health care professionals at any one time. health services facility means a building or place used to provide medical or other services relating to the maintenance or improvement of the health, or the restoration to health, of persons or the prevention of disease in or treatment of injury to persons, and includes any of the following: (a) a medical centre … (c) health consulting rooms … medical centre means premises that are used for the purpose of providing health services (including preventative care, diagnosis, medical or surgical treatment, counselling or alternative therapies) to out-patients only, where such services are principally provided by health care professionals. It may include the ancillary provision of other health services." (Emphasis added.)

The Class 1 Proceedings

1. The Commissioner found that the Premises comprised the ground floor unit in a residential flat building. [4] In addition to the ground floor unit, the building had a number of residential apartments. [5] The ground floor unit: [6] "was designed and constructed as medical consulting rooms for a doctor's surgery, consisting of five rooms, a reception and waiting area and bathroom facilities."
2. The principal factual issue before the Commissioner was whether Dr Haddad had abandoned the existing use of the Premises as a doctor's surgery. The Commissioner found that the existing use had not been abandoned. [7] No issue now arises as to that finding.
3. The Commissioner appears to have recognised that the existing use of the Premises had to be a "commercial use" as defined in cl 41(3) of the EPA Regulation in order for Dr Haddad to be entitled pursuant to cl 41(1)(e) to change the existing use to another commercial use. The Commissioner also appears to have appreciated that the existing use as a doctor's surgery could be a "commercial use" only if, at the date of the development application the Premises were being used as "business premises" as that term is defined in the Standard Instrument LEP.
4. The Commissioner's approach to that question was as follows: [8] "The definition of 'business premises' in the Standard Instrument LEP includes two alternative descriptions of the use, at (a) and (b), quoted above. The existing use most closely resembles the description in (a), 'an occupation profession or trade (other than an industry) is carried on for the provision of services directly to members of the public on a regular basis'. The Council submits that the description of the use in (b) excludes medical centres, which is the equivalent of the 1964 approved use for a doctor's surgery. As the application is for a change of use, there is no reason why the applicant may not apply for a change of use consistent with the description in (b), but notwithstanding this, it is my understanding from Dr Haddad's submissions that he wants to use, or for others to use, the premises for professional consulting rooms, but not necessarily for medical consulting rooms."

The appeal to the LEC Court

1. The Council argued on the appeal to the L & E Court that the Commissioner had not addressed the Council's contention that the existing use of the Premises as a doctor's surgery could not satisfy the definition of "business premises" in the Standard Instrument LEP. The Council's argument, both before the Commissioner and the primary Judge, was that the existing use as a doctor's surgery constituted use as a "medical centre" as defined in the Standard Instrument LEP. Since a "medical centre" is expressly excluded from the definition of "business premises", it followed (so the Council argued) that the existing use was not as "business premises" and thus was not a "commercial use" within the meaning of cl 41(1)(e) of the EPA Regulation. Accordingly, a development consent could not be granted for another commercial use in reliance on cl 41(1)(e).
2. The Council submitted to the primary Judge that the Commissioner evidently considered that exclusion of a "medical centre" applied only to subpar (b) of the definition of "business premises" and not to subpar (a). That construction of the definition, so the Council contended, constituted an error of law.
3. In support of its contention the Council cited a passage from DC Pearce and RS Geddes, Statutory Interpretation in Australia, 8th ed 2014, as follows: "12.3 Sections are frequently set out thus: 21. A person who is - (a) … (b) … or (c) … must submit a return to the Board. The concluding words in this case are read as if they were attached to the end of each paragraph, not simply para (c): R v Scarlett; Ex parte McMillan (1972) 20 FLR 349."
4. The primary Judge did not directly address the Council's submission beyond observing that he could find no error on a question of law in the Commissioner's decision notwithstanding the principle enunciated in R v Scarlett; Ex parte McMillan [9] to which the Council had referred. [10]

Reasoning

1. In order for Dr Haddad to rely on cl 41(1)(e) of the EPA Regulation to change the existing use of the Premise from a doctor's surgery to use for the purpose of business premises, he had to establish that use as a doctor's surgery was a "commercial use" as defined in cl 41(3). That required him to show that the existing use of the Premises was as "business premises".
2. The Council's contention before the primary Judge was that Dr Haddad [11] could not succeed if use as a doctor's surgery fell within the definition of "medical centre". On the Council's case, a medical centre was expressly excluded from the definition of "business premises". The first question therefore is whether use of the Premises as a doctor's surgery satisfied the definition of "medical centre".

Medical Centre

1. "Medical centre" is defined in the Standard Instrument LEP to mean "premises that are used for the purpose of providing health services … to out-patients only, where such services are principally provided by health care professionals". While the Commissioner's analysis is not entirely clear, it appears to be implicit in her reasoning that she considered the doctor's surgery to satisfy the definition of "medical centre". Otherwise she had no need to consider whether use as a doctor's surgery was excluded from the definition of "business premises".
2. In any event, the facts found by the Commissioner establish that the use of the Premises as a doctor's surgery constituted use as a "medical centre". Clearly, health services were provided at the Premises to out-patients, principally by health care professionals. Accordingly the definition in the Standard Instrument LEP was satisfied.
3. The Standard Instrument LEP distinguishes between a "medical centre" and "health consulting rooms" (see the definition of "health services facility"). It may be that use as a doctor's surgery would not constitute use as a medical centre if the use fell within the definition of "health consulting rooms". But the doctor's surgery conducted on the Premises did not satisfy the definition of "health consulting rooms" because the surgery was not within or within the curtilage of a "dwelling house" (which is defined to mean a building containing only one dwelling).

"Business premises"

1. The definition of "business premises" identifies in subpars (a) and (b) buildings or places at or in which certain activities are carried on. Subject to the concluding paragraph of the definition, it is necessary for a building or place to satisfy only one of the two sub-paragraphs in order to be "business premises". In the absence of the concluding paragraph, use of the Premises as a doctor's surgery would clearly satisfy both sub-par (a) and sub-par (b).
2. The concluding paragraph of the definition of "business premises" serves two purposes. First, the paragraph makes it clear that a building or place at which certain activities are carried on is within the definition. Secondly, the paragraph excludes from the definition a building or place on which specified activities take place, including use as a medical centre. The exclusion applies notwithstanding that the specified activity otherwise would be within sub-par (a) or sub-par (b) (or both).
3. The ordinary meaning of the language in the definition is that a building or place used for any of the activities specified in the concluding paragraph is not to be regarded as "business premises". There is no textual reason to construe the exclusion as limiting the operation subpar (b) of the definition would otherwise have, but as having no application to sub-par (a). (Equally there is no textual reason to construe the concluding paragraph as limiting the operation sub-par (a) of the definition would otherwise have, but as having no application to sub-par (b).) As the Council submitted, it would make little sense to exclude a medical centre from subpar (b) (a service provided directly to the public) when in any event it would be within subpar (a) (a place at which a profession is carried on for the provision of services directly to members of the public). The same can be said about most, if not all of the other excluded activities identified in the concluding paragraph of the definition.
4. The primary Judge should have upheld the Council's submission that the Commissioner's construction of the definition of "business premises" was incorrect as a matter of law and therefore her construction of cl 41(1)(e) of the EPA Regulation was also incorrect. His Honour should also have held that Dr Haddad was not entitled to rely on cl 41(1)(e) to justify the grant of development consent for use of the Premises for business purposes. That use was prohibited under the Ryde LEP 2014. The primary Judge's failure to uphold the Council's submission constituted an error of law.

Orders

1. The significance of the question of law identified by the Council goes beyond the circumstances of the present case. The question of construction is potentially significant for cases in which an applicant relies on cl 41(1)(e) of the EPA Regulation to change from what is said to be an existing "commercial use" to another commercial use. Since an error of law has been established the Council should be granted leave to appeal.
2. The following orders should be made:
3. Grant the Council leave to appeal.
4. Direct the Council to file the draft notice of appeal within seven days.
5. Allow the appeal.
6. Set aside the orders made by Sheahan J on 20 June 2017.
7. In lieu of the orders referred to in Order 4 make the following orders: (1) Allow the appeal from the decision and orders of the Commissioner made on 6 September 2016. (2) In place of the decision and orders referred to in Order 1, order that the Class 1 appeal be dismissed. (3) Order the respondent to pay the appellant's costs of its appeal pursuant to s 56A of the Land and Environment Court Act 1979 (NSW) to the Land and Environment Court.
8. As has been noted, the respondent filed a submitting appearance in this Court, submitting to the orders of the Court save as to costs. The appearance was filed well after the Council had filed its written submissions. The Council had no choice but to seek leave to appeal against the orders made by the primary Judge if it wished to challenge those orders. The respondent participated in the contested hearing before the primary Judge.
9. For these reasons our present view is that the following additional order should be made:
10. The respondent pay the appellant's costs of the appeal.
11. However the respondent should be given the opportunity, if she so wishes, to dispute the proposed costs orders and to put forward alternatives. Accordingly, the following directions should be given:
12. If the respondent wishes to dispute Orders 5(3) and 6, she is to file and serve written submissions and any material in support, including alternative proposed costs orders, within 14 days.
13. If such written submissions and supporting material are filed and served in conformity with Order 7, the Council is to file and serve its written submissions in response and any supporting material within fourteen days of service of the respondent's submissions.
14. Direct that any application by the respondent with respect to costs be dealt with on the papers.

Endnotes

1. Council of the City of Ryde v Haddad [2017] NSWLEC 70 (Primary Judgment).
2. Haddad v Council of the City of Ryde [2016] NSWLEC 1385 (Class 1 Judgment).
3. The numbering of sections in the EPA Act has been altered by the Environmental Planning and Assessment Amendment Act 2017 (NSW), which came into force on 1 March 2018. This judgment retains the section numbers of the EPA Act as in force at the date the appeal was heard.
4. Class 1 Judgment at [4].
5. A certificate of subdivision dated 17 November 1979, to which the Commissioner referred, suggests that the building had eight strata titled residential units: Class 1 Judgment at [5].
6. Class 1 Judgment at [4].
7. Class 1 Judgment at [22].
8. Class 1 Judgment at [25].
9. (1972) 20 FLR 349.
10. Primary Judgment at [60].
11. By this stage, as already noted, Dr Haddad had died and the executrix of his estate was the respondent to the appeal to the L & E Court. 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: 08 March 2018