Group Development Services Pty Limited v Baulkham Hills Shire Council

Land and Environment Court (NSW)|2004-08-17|Before: McClellan CJ, Clellan J

CITATION : Group Development Services Pty Limited v Baulkham Hills Shire Council [2004] NSWLEC 537 PARTIES : Group Development Services Pty Limited (Appl) Baulkham Hills Shire Council (Resp) FILE NUMBER(S) : 10054 of 2004 CORAM: McClellan CJ Appeal :- Condition of a development consent requiring monetary contributions pursuant to a s 94 Plan KEY ISSUES: Whether a new plan is required to be prepared following adjustment of the land component of a contribution imposed pursuant to a contributions plan Whether purported latest average land estimates published in a Shire Plan are "quarterly or annual variations to readily accessible index figures" Meaning of "readily accessible index figures" LEGISLATION CITED: Environmental Planning & Assessment Act 1979 (NSW) s 94 CASES CITED: DATES OF HEARING: 17 August 2004 DATE OF JUDGMENT: 09/24/2004

C W McEwen (Appl) Hunt & Hunt (Sol - Appl)

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

10054/04 GROUP DEVELOPMENT SERVICES PTY LIMITED v BAULKHAM HILLS SHIRE COUNCIL

JUDGMENT 1 HIS HONOUR: This matter raises for consideration the Kellyville/Rouse Hill Contributions Plan No 8 made pursuant to s 94 of the Environmental Planning & Assessment Act 1979 (NSW) by Baulkham Hills Shire Council. The applicant has appealed to the Court against a condition of consent imposed by the Council pursuant to the Plan in respect of a proposed sub-division of land. 2 The appeal initially came before Roseth SC for hearing and he has referred two questions for determination by a judge. Those questions are:

Whether the adjustment of the land component of a contribution imposed pursuant to Kellyville/Rouse Hill Contributions Plan No 8 (December 2001) in the manner set out in that Plan is authorised by s 94 of the Environmental Planning & Assessment Act 1979 and cl 32(3)(b) of the Environmental Planning and Assessment Regulation 2000 without the preparation of a new plan.

Whether the purported latest average land value estimates published in the Shire Plan (Baulkham Hills Shire Council) are "quarterly or annual variations to readily accessible index figures" within the meaning of cl 32(3)(b) of the Regulations. 3 Before considering the particular questions, it is necessary to identify the relevant statutory regime. 4 Section 94(1) of the Act authorises a council to grant consent to a development application subject to a condition requiring: "(a) the dedication of land free of cost or

(b) the payment of a monetary contribution, or both ." 5 Section 94(2) imposes a requirement that the dedication and/or contribution the subject of the condition be reasonable. Section 94(11) indicates that a council may only impose a condition "if it is of a kind allowed by, and determined in accordance with, a contributions plan approved under s 94B." 6 Section 94B provides that a council may, "subject to and in accordance with the regulations, prepare and approve a contributions plan for the purpose of imposing the condition(s) referred to in s 94." 7 Part 4 of the Regulations contains detailed provisions as to the matters which must be contained within a contributions plan and the steps, including public participation, which must be fulfilled before such a plan can be adopted. Once the plan has been adopted, cl 32 of the Regulations makes provision for its repeal and, in limited circumstances, its amendment. With respect to amendment, cl 32(3) provides as follows: "A council may make the following kinds of amendments to a contributions plan without the need to prepare a new contributions plan: (a) minor typographical corrections, (b) changes to rates set out in the plan to reflect quarterly or annual variations to readily accessible index figures adopted by the plan (such as a Consumer Price Index),

(c) the omission of details concerning works that have been completed." 8 The Kellyville/Rouse Hill Contributions Plan ("the Plan") generally conforms to the requirements of the Regulations. However, some difficulty arises in relation to the Schedule of Contribution Rates contained in the Plan. 9 Clause 27(1) of the Regulations provides that a contributions plan must include a number of matters. Of relevance to the present dispute is the requirement that a contributions plan include: "(d) the formulas to be used for determining the s 94 contributions required for different categories of public amenities and services, (e) the contribution rates for different types of development, as specified in the schedule to the plan, (f) the council's policy concerning the timing of the payment of monetary s 94 contributions and the s 94 conditions that allow deferred or periodic payment." 10 The Plan refers to a "Schedule of Contribution Rates" and under that heading says: "A schedule of contribution rates for various types of residential development forms an integral component of the Kellyville/Rouse Hill Contributions Plan No. 8. The schedule is continually updated in accordance with the provisions of this plan and is therefore available to be viewed or purchased separately to the booklet containing the five contribution plans (8A to 8E)." 11 Accordingly, although not actually included in a schedule to the Plan, the Plan contemplates a schedule of rates which is separately published and which will be continually updated "in accordance with the provision of the plan." As I have indicated, there are difficulties with this provision. The Regulations provide that changes to rates set out in the Plan can only be effected pursuant to cl 32(3)(b) of the Regulations, which requires them to change to reflect relevant adjustments in "readily accessible index figures adopted by the plan." 12 The Plan contains contributions formulae as required by cl 27(1)(d) of the Regulations. With respect to land, which is the matter in dispute in this case, the Plan provides a formula designed to allow calculation of the rate of contribution per lot or dwelling. That formula is in the following terms: "Contribution Rate = L x O (per lot/dwelling) P-E* L - land cost (see Appendix A) O - is the assumed occupancy rate for the development (see Section 3.3) P - is the expected population of the Kellyville/Rouse Hill release areas (see Section 3.4) E - is the existing population of the release area (see Section 3.1) * Refer Section 5.4." 13 Appendix A contains a detailed Schedule of Works, Cost Estimates and Priority. It includes "Acquisition Costs", which I infer means the land cost to be included in the formula. 14 Section 5.5 of the Plan provides for adjustment of contributions. In relation to land the clause provides as follows: " Land The land component of the contribution condition amount will be adjusted in line with the latest average land value estimates published in the Shire Plan (Baulkham Hills Shire Council). The average land value estimates will be reviewed on a quarterly basis and determined by averaging the cost of prime residential land acquisitions (per m²) within the Kellyville/Rouse Hill Release Area over the previous quarter. Formula for Adjusting Contributions - Land Contribution at the Time of Payment = C x L(1) L(2) Where:- C = is the original contribution condition amount as specified in the consent (excluding the capital component). L(1) = is the average estimated land acquisition cost (per m²) at the time of payment. L(2) = is the average estimated land acquisition cost (per m²) at the time of consent." 15 Two matters are plain from this section. Firstly, the adjustment contemplated is the difference in the land acquisition cost at the time of consent and the estimated land acquisition cost at the time of payment. Secondly, the mechanism for review of the cost of land is by reference to the "latest average land value estimates published in the Shire Plan (Baulkham Hills Shire Council)". 16 Baulkham Hills Shire Council prepares and publishes each quarter a document referred to as the Hills Shire Plan. The document is detailed and includes graphs showing the average land value estimates per square metre relevant to all s 94 contributions plans including the Kellyville/Rouse Hill Contributions Plan. That information is prepared by a registered valuer and is a task currently undertaken by Mr Robert Ferney. The parties have agreed that Mr Ferney is typically instructed in terms similar to the following: "to provide a revised average land value estimate (per metre²) within the Kellyville/Rouse Hill release area for the December quarter. It is noted that the last estimate provided by you for the September quarter was $310 per sq metre." 17 In revising the land value rates, the parties have agreed that Mr Ferney reaches his opinion and recommendation to the Council after taking into account the following matters: "1. whether the statutory controls have been changed, or are recommended to be changed. 2. comparable sales. 3. movements in prime interest rates. 4. movements in the rate of the Australian dollar, foreign exchange rate and especially the rate of the Australian dollar to the US dollar. 5. the local real estate market including discussions with local real estate agents and the agents' assessment of the current market and forecast for the following 12 months. 6. any new planning regulations, eg those imposed by the Rural Bushfire Services." 18 Prior to receiving and publishing Mr Ferney's proposed new rate, the Council does not notify the public and no opportunity is provided for submissions from any person. If adopted by the Council, the average land value estimate is included in the Hills Shire Plan and that rate is then used when calculating the amount payable under the Plan. 19 With this background, it is appropriate to return to the questions raised in these proceedings. Question One 20 The Council has been utilising the revised land values prepared by Mr Ferney and published in the Hills Shire Plan for two purposes. It is firstly adopted for the purpose of calculating the contribution due at the time of the grant of any relevant development consent. Accordingly, as I understand the position, the Schedule of Contribution Rates referred to in the Plan is updated every quarter following the receipt of Mr Ferney's opinion. It is submitted by the Council that: "… on a proper reading of the whole of the contributions plan (which, it is submitted, is the proper approach to the interpretation of this, or any, plan) the Court will conclude that a power to make such alterations exists, and secondly (apposite the relevant question) such power was utilised in the implementation of the relevant plan." 21 This submission by the Council is based, inter alia, on the fact that page 2 of the index page the Plan provides that:

"The schedule is continually updated in accordance with the provisions of this plan and is therefore available to be viewed." 22 By this reference, it is submitted that the Council makes provision for the "updating" of the Plan. There is no issue that the schedules are continually updated and are available for viewing in accordance with the Plan. 23 The Council also emphasises that in section 1.7 of the Plan (pages 2-3) the entitlement to "review, amend or repeal" in accordance with the Regulations is referred to. In particular it is said (page 3): "In order to keep this plan relevant it is envisaged that it will be monitored, reviewed and amended accordingly. Any changes to the plan apart from the quarterly indexation of the Works component and adjustments to the land acquisition component in accordance with the formulas set out in section 5.5, will be publicly exhibited in accordance with normal statutory process. The review process is discussed in more detail in section 7." 24 Accordingly, it is submitted that this passage indicates that the drafter of the Plan is concerned with the notion of updating or amending the rates set out in the Plan. It is emphasised that this section talks of an update of the Plan regardless of whether or not any condition of development consent is in fact imposed. It is submitted that this passage demonstrates that the intention of the Plan (such intention to be imported into the balance of the Plan, and in particular section 5.5) is that the initial rates are to be adjusted in accordance with quarterly variations. It is submitted that in fact, the particular elements of those rates (namely on the one hand capital, and on the other hand land) is specifically referred to in this section. It is submitted that to conclude that the Plan as a whole only provides for adjustment of rates once a condition of consent is imposed would be to give this section no meaning or effect. 25 The Council also points to the preamble (to the elements of 'capital' and 'land') of section 5.5 which reads as follows: "Contributions will also be adjusted at the time of payment so that they are relevant to current day values as follows." 26 The Council submits that the reference to "current day values" can only be a reference to the current day value at the date of making of the Plan. This is said to flow from the ordinary meaning of "current day values", and also flows from the fact that any further adjustment to deal with the period between the imposition of a condition and up to the date of actual payment is specifically addressed in the formula that follows. Insofar as the terms of that formula may be said (as the applicant does) to confine the adjustment only to the period from the date of imposition of consent to the date of payment of the contribution, the Council says that submission must be rejected by reading the Plan as a whole, but in particular section 1.7 and the preamble to section 5.5. The Council maintains that all the formula does is deal specifically with the period subsequent to the grant of development consent; but it does not serve to undo the clear prescription otherwise contained in the Plan. The Council says the actual formula itself simply informs the element "C" which is the contribution actually imposed on the date of grant of consent; but it does not thereby operate (as a matter of construction) to strike down the other relevant provisions of the Plan which make it clear that in the intervening period (that is, during the life of the Plan regardless of whether or not any conditions are imposed pursuant to it) the "schedule is continually updated" (page 2) and "the plan … will be monitored, reviewed and amended accordingly" (page 3). 27 Additionally, the Council submits that in section 5.5, the first sentence under the heading of "Capital" supports this ongoing adjustment: "The capital works component will be adjusted quarterly … " 28 Because this statement is made without any reference to a starting point as being the date of a consent, it is submitted that it is clearly concerned with an ongoing adjustment. 29 The Council says that the position is made abundantly clear by section 7 of the Plan (page 17). That section states that the Plan will be subject to review by the Council to ensure, inter alia, that: "Contribution levels reflect changes to construction costs and land values, where relevant" (second asterisk)

It is submitted that this concept of review notes that: "The contribution rates and works program for this Plan have been formulated using information available at the time of writing . A number of variables will be monitored to facilitate the review process. Some of these are listed below: * * * * * * construction costs * land costs." 30 It is submitted by the Council that this passage again makes clear that the concept of "review" uses as its relevant base date "the time of writing", and observes that there will be a constant review to ensure contribution levels reflect changes to construction costs and land values. This is then expanded upon by the balance of section 7 as follows: "Contributions will be adjusted quarterly in accordance with s 5.5. However, where major shifts are observed in the variables Council may review this plan at any time. Any changes to the plan, apart from the quarterly adjustment to contributions, will be placed on public exhibition … ". 31 Again, it is submitted that the reference to the quarterly adjustment of contributions is a reference to the adjustment of the rates of contribution regardless of whether or not a condition of consent has been imposed. If a condition of consent was in fact imposed, the Council submits that the prescription contained in section 7 would then serve no purpose. 32 The Council submits that the fact that that formula does not specifically refer to the date of the Plan is to be interpreted beneficially to the mandate and prescription contained in section 7 such that that formula ought properly be construed as applying mutandis mutandi to the situation envisaged in section 7. To construe it otherwise would, in the Council's submission, render section 7, insofar as it makes reference to the periodical adjustment of the rates, of no utility or effect. Finally, it is submitted by the Council that "section 7 makes it abundantly clear that the contribution rates will be periodically adjusted and, as the Plan itself observes, that where that periodical adjustment does not address the true variation then 'any changes to the plan … will be placed on public exhibition', the exception to this prescription being "apart from the quarterly adjustment of contributions" - a reference that is not dependent upon the imposition of the condition (to which the applicant says section 5.5 is constrained) and which prescription mirrors almost word for word the power contained in cl 32 of the Regulations." 33 It is plain that the Plan has not been well drafted. I accept the Council's submission that the Council's intention was to provide for quarterly adjustment of the rate of contributions to reflect any movement in market conditions. However, although that intention is expressed most clearly in section 5.5, the relevant formula provides only for adjustment between the date of consent and the date of payment. It is correct, as the Council submits, that section 7 contemplates ongoing review but as this is stated to be carried out in accordance with section 5.5, the difficulties with the wording of the formula are not removed. 34 The Council's submission must contend with further difficulties. Clause 27(1)(e) of the Regulations requires that a contribution rate be set. It does not authorise a rate which changes from time to time or which is "continually updated." 35 In accordance with cl 27(1)(d) of the Regulations, section 4.4 of the Plan sets the formula from which the contribution rate required by cl 27(1)(e) of the Regulations can be derived. Section 4.4 makes no reference to an altered land cost. On the contrary, the formula refers only to "land cost (see Appendix A)." Appendix A contains fixed land costs. 36 The Council's argument relies upon the words contained in section 7 of the Plan - "contributions will be adjusted quarterly in accordance with s 5.5" - in order to support a submission that contribution rates are adjusted on a quarterly basis, not simply when a condition of consent is imposed. However, as the applicant points out, this fails to acknowledge a clear distinction between the expression "contribution rates", as referred to in s 4.4 and the second paragraph of section 7 (which also reflects the wording in cl 27(1)(e)) of the Regulations, and the expression "contribution", as referred to in section 5.5 and in the third paragraph of section 7 of the Plan. The amount imposed by way of condition is the "contribution". Such a contribution is derived from the "contribution rate." The wording of section 5.5 makes it plain that it is the "land component of a contribution condition amount" which is being adjusted. This means the adjustment of the land component of a contribution is only possible once a condition has been imposed. Accordingly, it would seem that section 5.5 is limited in its application to an adjustment of the original contribution amount as specified in the consent to the time of payment. 37 Even if the Plan has provided for quarterly adjustment, any change to the Plan must be made in accordance with cl 32 of the Regulations. Accordingly, if the Plan intended to provide a method of adjustment on a quarterly basis after the date of the commencement of the Plan, this can only be done in conformity with that clause. For the reasons I have given in relation to question 2, the suggested method of adjustment does not conform to the Regulations. 38 In my opinion the answer to question one is "no." Question Two 39 The Oxford Dictionary includes in the meaning of the word "Index" "a number showing the variation (increase or decrease) in the prices or value of some specified thing, since a chosen base period as a retail price index or cost of living index." Accordingly, it could be argued that the land value estimates published in the Shire Plan constitute an index. However, the question is whether or not the method adopted by the Council utilises "readily accessible index figures" of the type contemplated by the Regulations. The land value estimates published in the Hills Shire Plan are in effect the assessment by a valuer of the potential movement in land values having regard to a number of matters including factors which may influence the market, evidence of market sales, and the valuer's assessment of the likely future movement of the market. In my opinion, although no doubt a useful document, it is not a relevant index for the purpose of cl 32(3) of the Regulations. 40 When referring to a "readily accessible index (such as a Consumer Price Index)" I am satisfied the Regulations contemplate a document which is both publicly available and generally recognised to be a collection of and possibly an analysis of existing market information. The process adopted by the Plan does not meet this criteria. Rather by engaging a valuer, the Council has undertaken its own review of market circumstances having regard to the criteria which it has itself defined, the process being undertaken for the purpose of amending the Plan. Rather than the adopted procedure being one which involves reference to accessible index figures, it is a process whereby numbers are generated with the intention that they will serve no other purpose but amendment of the Plan. In my opinion, one essential characteristic of the procedure contemplated by the Regulations is that reference will be made to an index of relevant prices prepared for the purpose of providing information about their movement, rather than a document generated by a Council for the purpose of amending its Plan. 41 There are available to the community a number of published indices of movements in the price of land. The Department of Lands publishes relevant information. There are also publications known as Australian Property Monitors, Residex and RP Data Pty Limited. This material, published for the purpose of providing market information, would qualify as a relevant index. 42 It was submitted by the Council that it could justify the process contemplated by the Plan having regard to the fact that by engaging a valuer to look at the information specifically available for a property within its area, it would be more likely that a reliable estimate could be made of price movements. Even if this is the case, this was not the actual process adopted by the Council. Although required to have regard to direct sales information, the valuer was also required to have regard to a number of other matters. 43 The answer to question two is "no." **********

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.

Assessment Act 1979(NSW)s 94

At a glance

Court

Decision date

Before

Source

Judgment (13 paragraphs)

Parties

Legislation Cited (1)

Cited By (1)