Hamman & Anor v Lake Macquarie City Council, 40251 of 1997, Pearlman J, 26 May 1998.;

THIRD RESPONDENT Keyseem Pty Ltd FILE NUMBER(S) : 40151 of 1998 CORAM: Sheahan J KEY ISSUES: :- LEGISLATION CITED: Local Government Act 1993 Community Land Development Act 1989 Hamman & Anor v Lake Macquarie City Council, 40251 of 1997, Pearlman J, 26 May 1998.; CASES CITED: Tynan & Ors v Meharg & Anor, 16 September 1998, (at pp 6-7); Nelson & Ors v Burwood Municipal Council & Anor (1991) 75 LGRA 39 at 43-44 DATES OF HEARING: 07/10/98, 08/10/98 DATE OF JUDGMENT: 12/15/1998

APPLICANT Mr. Newport Mr. S. Berveling of Enviro Lawyers LEGAL REPRESENTATIVES: RESPONDENT Mr. J. E. Robison Mr. M. Webster of Michell Sillar

In Class 4 of the Court's jurisdiction the applicants have challenged building approval 98/1462, granted by the first respondent ("Council") to the second respondent ("Premier") on 7 April 1998 for the construction of dwelling additions and a garage on premises owned by the third respondent ("Keyseem") at 71 Seaside Parade, Dolphin Point ("71") on the south coast of New South Wales. 71 is zoned Residential 2(a1) under Shoalhaven Local Environmental Plan 1985.

The applicants seek a declaration that the approval is void, and an order restraining Premier and Keyseem "from carrying out any work in relation to" that approval (my emphasis).

The Council and Premier made submitting appearances, save as to costs, and only the applicants and Keyseem were represented at the hearing of the Class 4 proceedings. Exhibit A4 is an agreed bundle of Council documents, admitted by all parties not to include the whole of the contents of the Council's file. The Council declined to allow its officers, and indeed its former officers, to provide statements or swear affidavits in the proceedings.

I granted an exparte injunction on 5 August 1998, pending a hearing on the question of interlocutory relief on 12 August 1998. Lloyd J declined to extend the injunction, and the matter came on for hearing on 7-8 October 1998.

There was some debate, during the hearing, about the imprecision of the pleading on the question of the relief sought. Demolition is not sought, in terms, in the pleadings, but, prior to the commencement of the proceedings, the solicitor for the applicants, in a letter dated 28 July 1998, foreshadowed that the proceedings were aimed at preventing the construction (or completion) of the garage, or securing its demolition.

Mr Newport claims that the applicants left the other parties in no doubt that they wanted demolition if the work were allowed to continue. What might be called a "bare" declaration would, therefore, have no utility. Given that the Council sat out the case, such a declaration would not end the litigation.

Highview Drive is parallel to Seaside Parade, and to the west of it. Both are roughly parallel to the coastline. The general topography of the area results in Seaside Parade having its highest point at the southern end, from where it slopes down generally to the north before veering left in a north-westerly direction.

Easton and McCarthy live respectively at 64 and 66 Highview Drive, 64 being directly to the west of 71, and 66 being adjacent to 64, to its south. 71 slopes generally upwards to the west towards the applicants' houses. Easton has owned 64 since December 1975, and resided there permanently since 1979. McCarthy has owned 66 since 1987, and also resides there full-time. Dolphin Point Reserve occupies the land east of Seaside Parade between it and a cliffline on the coast, over which there is an ocean view enjoyed by 71, 64 and 66.

The applicants' Amended Points of Claim, filed on 10 September 1998, allege that Premier lodged with the Council application 98/1462 dated 12 March 1998 for construction of "dwelling additions & alterations + garage". Keyseem admits the lodgment of the application on 25 March 1998, and indicates that plans were lodged as well.

The relevant building approval, therefore, embraces the demolition and replacement of a garage towards the rear of 71, near its boundary with 64, as a precursor to the renovation of the residence at 71, which renovation is also included in the approval, and to which no objection has been raised. The construction of the new garage had been "externally completed" by the time the proceedings came on for hearing, and, accordingly, the applicants now seek an order for its demolition.

The previous residents at 71, Mr & Mrs Hickey, apparently conducted, as a cottage industry, a picture framing operation within the old garage, which is pictured in Exhibit K5. The exhibits include numerous pictures of the new garage, both under construction and in its current state.

The applicants became aware of the relevant approval only when the old garage, a small, traditional structure, adequate for the accommodation of a single car, was demolished, and the new one began to take shape. The evidence suggests that the plans were sent to Premier, stamped with approval, on 23 June 1998, and that the project started on 29 June 1998. Complaints were made to the Council on or about 27 July 1998.

The applicants object that the new garage is wider, taller, and further away from the dividing fence, than that which it replaced. It is approximately 5.9m tall and 8m x 8m in floor space, being a double garage with a storage "loft" area above, topped with a gabled roof. Easton testified that, had he known about the proposal, he would have complained about both the height and width of the garage building as "the bulk dominates my whole house". He never had any concerns about the old garage.

Both complain that the new garage building "will detrimentally affect the enjoyment of my property, in that it will affect views from my property to the sea, cause overshadowing of my property, affect my privacy, and is likely to affect my property by reason of noise". Both produced photographic evidence of the impact on their views.

The separation of the new garage from the Easton boundary is 740mm, and Easton testified that the old garage was "12-15ft wide and 18-20ft long" located "half way down the block" or approximately "30-40ft" from the boundary. Other evidence suggests the old separation on the boundary would be more in the vicinity of 4m.

It is common ground that the works carried out so far in accordance with the approval, confined though they may be to the construction of the garage and storage facility, as "stage 1" of the contract, have involved a total cost of $30,000 (see Exhibit K2).

Section 114 of the Local Government Act 1993 ("LGA") (now repealed but in force at the relevant time) provided as follows:

"(1) The council must give notice of an application for approval to erect a building to the persons who appear to the council to own the land adjoining the land to which the application applies if, in the council's opinion, the enjoyment of the adjoining land may be detrimentally affected by the proposed building after its erection.

(2) In forming its opinion, the council must take into consideration the effect that the proposed building would have, after its erection, on the following:

• the views to and the views from the adjoining land

• the likelihood of the adjoining land being detrimentally affected by noise

• any relevant matter in criteria in a local policy adopted under Part 3 by the council.

(3) The council must also give notice of the making of an application for approval to erect a building to persons to whom notice is required to be given under criteria in a local policy adopted under Part 3 by the council.

(4) For the purposes of this section, land adjoins other land if and only if it abuts that other land or is separated from it only by a pathway, driveway or similar thoroughfare.

(5) The notice must be given as soon as practicable after the building application is made to the council and at least 10 days before the council determines the application.

(6) A notice to an association for a community, precinct or neighbourhood parcel within the meaning of the Community Land Development Act 1989 or to a body corporate for a parcel within the meaning of the Strata Titles Act 1973 or the Strata Titles (Leasehold) Act 1986 is taken to be a notice under this section to the owner of each lot within the parcel concerned.

(7) If a parcel of adjoining land is owned by more than one person, a notice to one owner is taken to satisfy the requirements of this section.

(8) A notice must be in an approved form and must include or be accompanied by a plan in an approved form showing the height and external configuration of the building in relation to the site on which it is proposed to be erected."

Notification policies in the Council date back to October 1993, and the Council, at the relevant time, had a local policy on the subject of notification. "Adjacent neighbours" are defined in such a way that it would appear both 66 and 64 qualify as "will be notified" properties. (Indeed, Council's acknowledgment of the application indicates it will be the subject of public advertisement and/or notification).

There is no dispute now that the applicants were not notified of the application and approval. One question before the Court was whether or not there was a decision made by Council not to notify Easton and McCarthy. It is contended, on the applicants' behalf, that any decision not to notify them would be manifestly unreasonable, as the Council allegedly created a legitimate expectation that such an application would be notified to them.

Exhibit A4 includes the Council file in respect of building application 96/1174 in respect of 71, regarding the construction of a deck at the front of the dwelling facing east. Both applicants were notified of that proposal, despite its essentially minor impact on their properties, and did not respond to it. Both have received numerous notifications of proposals for building or development on land nearby.

An officer of the Council (now identified as Mr Peter Ryan) completed, on 1 April 1998, a "Land Check List for Site Inspection" in respect of the subject application, and Ryan signed, on Council's behalf, its approval to Premier, on 7 April 1998. It is worthy of note that neither the demolition of the old garage, nor the construction of the new one, is mentioned in the documents as the approved use and/or development, the approval being endorsed "dwelling extension" only.

In the Check List, the answer "yes" is signified by ticking the box labelled "Y". Some relevant questions on the Check List in evidence were "circled" by Ryan, perhaps to indicate that he saw them as of particular relevance or significance. Those circled and answered "yes", were:

• Question 18. Will existing plumbing or drainage be affected?

• Question 24. Erosion matrix 6-12 - General Conditions?

Two other questions answered "yes", but not circled, are:

• Question 8. Is the building subject to Foreshore Height Code?

• Question 16. Is privacy amenity and general design and appearance satisfactory?

The applicants relied upon affidavit and oral testimony by their planning consultant, Paul Andrew May, who testified that the garage building "will significantly impact upon" the applicants' properties, especially on the question of views "both general and water". The enjoyment of the land both at 64 and 66 would be "detrimentally affected".

The respondent relied upon the evidence on affidavit by Peter LeBas, a consultant town planner. He formed the opinion that the degree of view loss was "not significant as relates to quantity or quality in terms of either property". and that the degree of view loss "is not unreasonable" as it "relates to a private view only, enjoyed by a small number of persons".

In response to LeBas, May deposed that the garage building was not in keeping with the character and nature of adjacent development "due to its location and excessive bulk and height". The slope down lots 71 towards Seaside Parade away from 64 and 66 further exacerbates the bulky appearance and height of the garage building when viewed from the applicants' properties.

• The respondent also relied upon an affidavit of a licensed builder, John Bryan Morgan, who was engaged on a 16 week contract to construct the new garage and build the extension to the dwelling at 71. The agreed construction timetable between himself and Keyseem involved the demolition of the old garage on 17 June 1998, excavation for the new garage on 18 June, the pouring of the slab 27-30 June 1998, construction of the frame 20-27 July 1998. He testified that work continued until a stop work notice was served at 11.55am on 5 August 1998. He testified before Lloyd J that safety considerations dictated that the garage should be completed.

• Jeffrey Rogers, a director of Keyseem, testified that the building application was lodged on 25 March 1998, that he entered the building contract with Morgan on 5 June 1998, that he had purchased 71 three years ago and had it leased until January 1998 to Mr & Mrs Hickey. Since January 1998 it has been used by the Rogers family as a weekender. His affidavit denied any evidence of detriment and made clear that "the garage is not being constructed for any intention for proposed dual occupancy".

• Peter James Ryan was employed by Shoalhaven City Council as a building surveyor for approximately 4 years until he resigned from the Council, with his last day of duty being 9 April 1998. After an extended break, he commenced work as a Law Clerk with a district law firm.

As indicated above, the Court did not have before it any statement of evidence or affidavit from Ryan. Tendered as Exhibit 1, was a letter from the solicitors for Keyseem to the solicitors for the applicants indicating what they understood to be the "effect" of the anticipated evidence to be given by Ryan who now works for a district law firm. The Court disallowed an objection to his oral evidence, and, as it transpired, it was crucial to the determination of the case.

Ryan was familiar with the general area, and dealt with the June 1996 verandah proposal, as well as the subject application, of which he became aware shortly after it was received by Council on 25 March 1998.

In the course of his evidence he explained his routine, in that the Check List procedure, involving on-site assessment, facilitates the preparation of a permit. He would go out with the plans and the Check List, look around the site, fill in the boxes, come back to the Council, consider the question of conditions, and prepare a permit in case there is no objection.

On 31 March or 1 April 1998, he took a copy of the subject application, the submitted plans, and the Land Check List, to the site to assess the proposal and complete the list. He testified that he went along the driveway on the northern side of the block, walked past the old garage, opened the plans for the proposed garage and additions and alterations to the house, and approached the Check List systematically, moving through the items. He completed the Check List on site, and the plans subsequently were stamped "approved".

He acknowledged in his evidence that the most pressing consideration would be question 16 (privacy, amenity, general design, appearance, etc). His evidence indicated that as the garage did not have a dwelling component, he did not consider privacy to be really an issue, yet he said he had some concerns about the fact that there was an upper floor area with a window at the back of it. He thought conditions could be imposed to prevent the use of the storage area for habitable purposes. Nonetheless, the people might "congregate" in that area when, for example, moving storage around. If so, they could overlook the pool for a short period.

In further cross-examination about the height of the building he conceded that this garage would be higher than 99% of the double garages in the vicinity. Double garages are not uncommon in the area and putting one on this site was "fairly reasonable". However, it was unusual to have a second storey which made the proposed garage structure "certainly larger than most" and, indeed, larger than that which it was replacing. He also agreed with the expression "larger than normal" and conceded that "the majority of double garages don't have a storage area".

In cross-examination he was asked if he used the Check List "to then issue the approval" and he agreed. He would have signed the document on 7 April 1998 and he left the Council two days later. He gave evidence that he thought the approval had been sent out around the end of June 1998. There is other evidence to suggest that it was sent out on 24 June 1998, or thereabouts.

He testified that he signed the approval on an assumption that the project had been, or would be, notified to neighbours and that there were no (at least substantial) objections which would preclude the approval being issued.

The building was definitely subject to the foreshore height code, but ticking the relevant item on the list did not indicate that the building satisfied the code. Indeed, his evidence is that "it does not comply" with the code, but his opinion/conclusion is not mentioned anywhere in the document. The building did not comply with the building envelope requirements. He concurred that it was too high at the western end and did not comply with the exemptions. The exemptions from notification policy apply, if at all, only to single-storey structures. He agreed that a garage is one type of Class 10 building, or out-building. An out-building is a Class 10 building and includes a garage.

He agreed that the garage was 0.75m, instead of the minimum 0.9m, from the boundary. A single-storey building, with 0.9m separation, may attract an exemption from the notification requirements, but a two-storey building would not.

He was asked whether he elected not to notify the applicants and his answer was that he did not make any such election. Notification is "an administrative role ... done as part of the project ...". He apparently had no real role in deciding whether the applicants should be notified and, in this case, "had no cause to believe they weren't notified". He assumed that they were, and was unaware that they were not. He believes that they should have been notified and he gave evidence to that effect. He was not prepared to concede that he would not have recommended or taken the step of granting the permit if he had known that the applicants had not been notified. He saw his role as preparing the permit, subject to any objection. 14 days would be allowed for such objections to be received.

He agreed "absolutely" that the adjoining owners at the time may have been adversely affected by the building. He said words to the effect that virtually any development will effect an adjoining property owner.

In terms of s 114 of the LGA, he agreed that he commonly made assessments on the basis that the neighbours would certainly see a development and, in that regard, it may be detrimental to their enjoyment of their property.

He acknowledged his signature on the two approval stamps on the plans and he acknowledged that he was conscious when on site that the proposed garage would be 5.9m or 6m above the level of the natural surface.

It was virtually conceded at the hearing that Council's failure to notify the applicants of the relevant building application amounts to a technical breach of Council's obligation to so notify, which arose both at common law by way of the applicant's legitimate and reasonable expectation that notification would occur, and by virtue of the provisions of s 114 of the LGA.

It is clear from Ryan's evidence that the notification policy then in force caught the relevant proposal, and that the exemptions in the policy did not. Ryan says he would have asked for the proposal to be notified to the neighbours, but it was not his role and he eventually left the Council at the relevant time. Nonetheless, his evidence is that he thought it should have been notified.

There is no evidence of the Council's practice in considering such applications, beyond the practices employed by Ryan while he was in their employment. The Court simply does not know what occurred at the Council, which had complete control over the situation. It may simply have made a mistake. There was no evidence that the Council refused to notify the two applicants in this case - there is no evidence of whether any decision-making process at all was undertaken. Nonetheless, the Council certainly failed or neglected to notify the applicants. There is, therefore, a technical breach of Council's obligation under common law to notify the applicants, who had a reasonable expectation that such notification would occur.

Furthermore, Ryan's evidence gives rise to a clear inference that the Council did not make any decision as contemplated by s 114 of the LGA. On the basis of Ryan's evidence it is difficult to contemplate that Council could have formed an opinion that the enjoyment of the adjoining land would not be detrimentally affected by the proposal. Consequently, I infer that Council did not comply with the notification requirements of s 114. See Hamman & Anor v Lake Macquarie City Council, 40251 of 1997, Pearlman J, 26 May 1998.

The pertinent question is, having found a technical breach, what are the appropriate orders to make to best balance the interests of the other parties in these proceedings, none of whom were responsible for the breach?

The Court has broad powers to order mandatory relief. Mr Robson submits that those powers should not be invoked here as they should be confined to cases where the party affected by such relief has, in some way, contributed to the breach of the law. Even indirectly, Keyseem could not be regarded as having contributed in this way; it was entitled to rely on the consent, and on the presumption of a regularity in affairs between March and June 1998. There was no deliberate flouting of the law. Lloyd J refused, on the grounds of safety, to order the demolition of the partially completed garage. In all the circumstances of the case the better course was to allow the parties affected to continue with the construction. Keyseem's conduct is reasonable and appropriate. It cannot be Keyseem's fault that the building was constructed pursuant to a void consent; in doing so, Keyseem has expended some $30,000.

The Court's difficult role in exercising its discretion is to balance the rights of the individuals affected, in the context of the public interest. In proceedings such as these, the Court cannot step into the Council's shoes and re-evaluate the development application.

If the approval is not declared void, the Council retains the power to vary it. Keyseem could also seek a building certificate and, if the Council refused such a certificate, reasons must be given, or the applicant notified of appropriate necessary works required for such a certificate to be issued. Mr Robson indicated that he would advise Keyseem to make a s 106 application to reduce the size and scale of the garage.

It is also important to note that declaring the consent void also invalidates the proposed renovations to the house. That would be a significant loss and imposition on Keyseem, and it was conceded several times during the evidence and submissions, on behalf of the applicants, that there was no real issue about those renovations, at least on the information so far made available to the applicants.

Mr Newport submits that the interests of all parties could be satisfied by making the following order:

"That the Third Respondent cause the demolition of the garage at the subject premises unless the lawful approval or certification is obtained from the Council".

On the question of discretion, the Court has considered the principles collected by Stein JA in the Court of Appeal in Tynan & Ors v Meharg & Anor, 16 September 1998, (at pp 6-7), and the following factors:

• both the applicants and Keyseem can be regarded as "innocent" parties. The applicants cannot be accused of delays. Even the pouring of the slab indicating the imminent erection of the double garage would not give the applicants a clear clue that the proposed building would have the bulk of a two-storey double garage.

• the breach of the law is serious. It is not "merely technical"; it is a denial of natural justice. The applicants were denied a basic right. The absence of fault does not reduce the seriousness of the breach. One cannot draw any conclusions from the evidence, or make any assumptions, regarding the likelihood of the Council granting consent if the applicants had been heard.

• the applicants concede that the demolition of $30,000 worth of work creates some hardship on the part of Keyseem. However, it must be borne in mind that relief must be "proportionate", and that this is really only a garage/storage building for a weekender, presumably designed so as to facilitate renovation of that weekender.

• the risk of an order to demolish was clear to the Third Respondent no later than 5 August, if not 28 July 1998, when the applicants' solicitor's warning letter was sent, and Premier and Keyseem have had plenty of opportunity to make appropriate applications to the Council to remedy their situation.

• there is clear harm to the environment, at least so far as the applicants are concerned.

• the applicants, and their planner Mr May, expressed no concerns regarding the proposed renovations to the house at 71.

The applicants are clearly entitled to relief. See Nelson & Ors v Burwood Municipal Council & Anor (1991) 75 LGRA 39 at 43-44. However, the third respondent, Keyseem, is also entitled to an opportunity to remedy the situation in which, through no fault of its own, it finds itself.

In these circumstances the Court should make the declaration sought in prayer 1 of the Class 4 application. If it were to make the order set out in prayer 2, the third respondent Keyseem, would automatically and immediately be prevented from carrying out the apparently acceptable building work on the house. In those circumstances I decline to make that order, but I am prepared to make the order which has been suggested by Mr Newport.

Mr Newport submits that the applicants would be clearly entitled to their costs, simply because they had to go to Court to remedy their difficulty.

On the other hand, Mr Robson submits that the third respondent Keyseem had indicated to the Court that it had a defence to the applicants' claim, and, at least, was entitled to the opportunity to make an argument on the question of discretion. He further submits that, in the absence of the Council, who in its submitting appearance had reserved its position on costs, the Court should make no costs order at this stage, but should publish its reasons for judgment and allow the question of costs to be properly negotiated and/or argued in due course.

In all these circumstances, the most appropriate course for the Court to follow is to formally reserve the question of costs. In my view, however, the applicants clearly have a prima facie entitlement to their costs, and it may be that all parties, on the publication of this judgment, might be able to reach agreement on the question of costs.

1. Declares that building approval 98/1462 granted on 7 April 1998 by the first respondent to the second respondent for "dwelling extensions" at lot 9 DP 201727, 71 Seaside Parade, Dolphin Point, is void.

2. Orders that the third respondent Keyseem Pty Limited cause the demolition of the garage at the subject premises, unless the lawful approval or certification is obtained from the Council within 3 months of the date of this judgment.

44. All the exhibits may be returned. Dated: 15 December 1998

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