Council of the City of Sydney v Karimbla Properties

EX TEMPORE Judgment 1On 11 June 2014 the Council of the City of Sydney (the Council) commenced proceedings against the Respondents seeking to restrain them from carrying out building work on a large construction site at 879B, 881-891 South Dowling Street and 54A, 56-60 O'Dea Avenue, Waterloo (the Site). At the time of commencing proceedings, the Council also filed a notice of motion seeking an interlocutory injunction to similar effect. It is that motion with which I am presently concerned. 2In essence, the Council's claim is that building work being undertaken is work for which a construction certificate is required but which has not been issued. By its motion for an interlocutory injunction, it seeks an order, until further order, to restrain the carrying out of development on the Site for which a construction certificate is required but for which no such certificate has been issued. 3The Respondents acknowledge that a construction certificate has not been issued for the work presently being undertaken. In the context of the principles applicable to the grant of an interlocutory injunction, they acknowledge that there is a serious question to be tried. Section 81A(2) of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act) requires that, before erecting a building in accordance with a development consent, a construction certificate must have been issued and a principal certifying authority appointed for the building work. Neither requirement has been observed. Failure to observe the requirements of the section constitutes a breach of the EPA Act : s 122. 4Both parties accept that the principles applicable to the exercise of the Court's discretion to grant an interlocutory injunction require not only that a serious question for trial be demonstrated but also that the balance of convenience favours the making of an interlocutory order pending final determination of the proceedings (Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; 118 CLR 618 at 623). 5A considerable volume of evidence has been adduced on behalf of the Respondents directed to the balance of convenience. On the basis of that evidence they contend that the Council's motion for an interlocutory injunction should be dismissed. 6As is appropriate for an application of the present kind, the evidence tendered was not (with one presently inconsequential exception) the subject of challenge by cross-examination. The evidence, as it is recited in this judgment, must be understood in that light. Findings of fact made on a final hearing, when the evidence can be fully tested, may well differ from those presently made and yield a different conclusion. 7A deferred commencement development consent was granted by the Council for development of the Site on 9 May 2013: s 80(3) EPA Act. That consent became an operative consent on 4 October 2013. Development authorised by the consent involved the erection of five residential flat buildings ranging between 8 and 25 storeys in height and providing, in aggregate, about 360 residential apartments. The consent also authorised the carrying out of public domain works, a childcare centre, car parking for 255 vehicles and associated infrastructure works. The estimated cost of development is said to be about $119,000,000. Several conditions of the development consent were required to be satisfied before a construction certificate could be issued. 8Development of the site commenced approximately six months ago. Demolition of existing structures or buildings was the subject of a construction certificate issued for that work, as was a construction certificate for site remediation works. No further construction certificates have been issued. 9At present, four of the five buildings authorised by the consent are partially constructed. Two buildings have columns and floor slabs up to about 9 storeys in height. A third building has been constructed to level 3, while excavation and basement construction has commenced for the fourth building. The Site is in a prominent location adjoining the main traffic artery from the City to Sydney Kingsford-Smith Airport. 10The fact that a construction certificate did not appear to have been issued for the buildings presently being constructed on the Site was not discovered by senior staff of the Council until 22 May last. Upon enquiry then being made by the Council staff of the General Manager of the Meriton Group of companies, Mr Peter Spira, as to whether this was so, he is recorded as expressing dismay at that discovery. He immediately investigated the claim. Upon learning that the claim made by the Council was correct, Mr Spira acknowledged that fact to the Council and met with Council staff to address the position. Following the meetings, Mr Spira endeavoured to persuade the Council that the Respondents had undertaken their building responsibilities seriously and set about a course of action that he considered would allow construction to continue while addressing the omission of the construction certificate. However, when finally pressed by the Council to halt work on the Site, while the actions of the Respondents were considered by the Council, Mr Spira indicated on 6 June that the Respondents would not accede to that request. 11Mr Shener Dursun was retained by the Meriton Group of companies as a contractor to project manage the development of the Site. The Respondents are part of that corporate group. Mr Dursun has given evidence that although aware that a construction certificate was required, he authorised commencement of construction without such a certificate having been issued. He believed that by negotiation with the Council he would overcome the impact of development consent conditions that stood in the path of obtaining the construction certificate, thereby allowing the certificate to be issued by a private certifier. While the process of negotiation with the Council continued, following commencement of construction, resolution of outstanding issues had not been achieved by the time the Council discovered that a construction certificate had not been issued. Importantly, Mr Dursun had not informed anyone in the employ of the Respondents or anyone within the Meriton Group of companies that a construction certificate had not been obtained for the buildings previously being constructed. Thus the surprise of Mr Spira when he learned of that fact through the Council. 12Upon becoming aware of the omission, Mr Spira and Mr Dursun not only had the meetings with Council staff to which I have earlier referred but took action in endeavour to address the omission. They lodged seven applications for modification of conditions that affected the capacity of a certifier to issue a construction certificate. The Council has since granted consent to four of those applications. However, three of those applications remain to be determined. They concern development consent conditions numbered 10, 93 and 108. 13Condition 10 relates to the need for a contamination Site Audit Statement. Evidence before the Court indicates that the area of the Site that requires remediation work to be completed is an area on which no building construction is presently being undertaken. The evidence, as it presently stands, indicates that the area of the Site on which building work is being undertaken is suitable for residential use. The modification of condition 10 that is sought is to defer the time by which a Site Audit Statement is provided to the Council to a later stage of construction but prior to commencement of construction in the area presently being remediated. The Respondents accept and their application proposes that the Statement be provided to the Council before all buildings are completed and before any occupation certificate is issued for any building. 14Condition 93 is directed to footpath levels adjacent to buildings on the Site. The development is not yet to a stage where the construction of footpaths is to be undertaken. The Respondents seek only to adjust the time prior to construction by which those levels are to be provided to the Council. The evidence before me indicates that the modification sought by the Respondents has the agreement, in principle, from Council staff. 15Condition 108 is directed to the provision of stormwater disposal and drainage works on Site that ultimately will be connected to the Council's external drainage system. The modification application that has been made seeks to adjust the time for compliance with the requirements of the condition, such that those requirements be met before onsite works are connected to the external system. Although the modification sought has not formally been sanctioned, the evidence presently before me indicates that the Council defers to the position of Sydney Water on this matter. Enquiries, evidenced by exchange of emails with Sydney Water, indicate that the latter considers the application made by the Respondents to be acceptable. Once again, it has no direct impact upon the building work that is presently being undertaken. 16Clearly, the identified conditions either need to be observed according to their present terms or modified in the manner sought. However, in each case compliance has no immediate impact upon the present building works. Further, the Respondents do not seek to avoid the substantive requirements of the conditions; they seek only to adjust the time by which the requirements imposed by those conditions are met. 17The Respondents have provided evidence that the present daily workforce on the Site approximates 311 workers, comprising both employees of the Respondents and contractors. It has also been stated on their behalf that if work onsite is stopped, almost all workers will need to be stood down. Evidence from contractors employed on the Site also indicates that in some cases those contractors have entered into commitments on the basis of their contracts with the Respondents such that if they cannot continue work on the Site, significant financial detriment will flow to them including, in one case at least, the prospect of bankruptcy. 18While the Respondents do not rely upon hardship for themselves if work is stopped, it is apparent from the evidence, as it presently stands, that there is a real prospect of significant financial impact upon a large component of the present workforce. That is a fact relevant to the exercise of discretion when considering the balance of convenience. 19The Council accepts the possibility of detriment to the work force from a cessation of work. However, the responsibility for such detriment, so it submits, falls squarely at the feet of the Respondents. The Council further submits that the failure to obtain a construction certificate and appoint a principal certifying authority amounts to a serious breach of the EPA Act. As a consequence, matters that an independent and qualified certifier would have addressed when determining to issue a construction certificate, such as building safety, fire safety and the like, are matters upon which there is no present certification. It says that the actions of the Respondent involve a challenge to and undermine the legislative scheme for building control established by the EPA Act. As a public authority, seeking to secure adherence to the law, the Court should sustain the Council's motion in seeking to prevent further work being undertaken until the requirements of the legislation are properly addressed. 20I accept that the failure to have obtained a construction certificate is a significant breach of the EPA Act. However, that circumstance, of itself, does not determine the outcome of an application for an interlocutory injunction. There are a number of factors in the present case that have a bearing upon the balance of convenience when determining whether that injunction should be granted. Different considerations may apply upon the final determination of the proceedings. 21First, I have identified the detriment that flows to the workforce on the Site if work is stopped by Court order. This Court has no power to impose an obligation upon the Respondents to bear any loss that might be incurred by others should work be stopped. 22Importantly, apart from the breach of the law, the Council has not demonstrated the prejudice that would be suffered if work continues. Its submissions seem to be directed, in large measure, to the consequence of work already carried out and the need to bring the Respondents to task for failing to observe the requirements of s 81A(2) of the EPA Act. 23This is not a case where buildings have been demolished without approval or new buildings erected without development consent. Further, the Council does not adduce any evidence to suggest that the four buildings being erected do not appear to conform with the buildings approved by the development consent that became operative in October 2013. 24The evidence led by the Respondents indicates that the work carried out to date has been supervised and is asserted to have been undertaken in accordance with the requirements of the Building Code of Australia. Moreover, the Respondents have now retained an accredited certifier who is prepared to provide certification for work yet to be undertaken pursuant to the development consent, as a principal certifying authority, and to act in that capacity for all future work. As the Council acknowledges, a construction certificate cannot be issued for work carried out to date. A building certificate under s 149A of the EPA Act has been sought by the Respondents for that work. 25Relevantly, the Council does not seek an order for demolition of building work constructed to date. That is significant. The injunction sought can have no impact upon that work. Further, work undertaken, if any, before the proceedings are finally determined will clearly be closely supervised. 26The evidence earlier discussed indicates that the work presently being undertaken on the four buildings being constructed are essentially unaffected by those conditions of consent that remain to be satisfied prior to issue of a construction certificate and are the subject of modification applications. It is likely that any issue in relation to those conditions is capable of timely resolution. 27For these reasons, I have concluded that the balance of convenience weighs in favour of the Respondents and against the grant of an interlocutory injunction. 28Accordingly the orders that I make are as follows: (1)The Applicant's notice of motion dated 11 June 2014 is dismissed. (2)Stand over the proceedings to the Class 4 List on Friday 20 June 2014 for directions. (3)Exhibits may be returned.