Hynes Urban Planners Pty Ltd v Hawkesbury City Council

JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 10093 of 2002

13 January 2003 HYNES URBAN PLANNERS PTY LTD Applicant v HAWKESBURY CITY COUNCIL Respondent Introduction 1 The Applicant has commenced Class 1 proceedings against the Council in relation to the deemed refusal of a development application for Lot 12 in DP 786325 London Place, Grose Wold. 2 The parties agreed on some facts in a Draft Agreed Statement of Facts which is set out below: The Applicant lodged a development application (DA) with the Respondent on 15 November 2001 in respect of Lot 12 DP 786325 being land at London Place, Grose Wold ("Lot 12").

Lot 12 is described as a mostly regular parcel of land having two frontages to London Place (88 metres and 153.3 metres respectively), a southern boundary to the existing lots fronting Grose Wold Road of 320 metres, a rear (western) boundary of 375 metres and a northern boundary to Lot 11 in DP 786325 of 310 metres.

Lot 12 is located on the western side of London Place, Grose Wold, immediately north of the intersection of London Place and Grose Wold Road and has an area of approximately 10 hectares. The DA is for subdivision of Lot 12 into six (6) lots together with construction of effluent disposal systems and access road/s for the purpose of future dwellings to be located on the subdivided lots.

Lot 12 is zoned No. 1 (c1) (known as Rural C1) pursuant to clause 8 of Hawkesbury Local Environmental Plan 1989 (HLEP 1989). Clause 41AA of HELP 1989 applies to Lot 12, it being land shown edged in red on the map marked "Hawkesbury Local Environmental Plan 1989 (Amendment No. 64)". 3 The Council has raised two preliminary points of law for determination. These are: (1) Whether the proposed development comprises designated development for the purposes of the Environmental Planning and Assessment Act 1979 (the EP&A Act), and (2) If the answer to (1) above is in the affirmative, whether the Appeal can be upheld and the development application in its present form be approved. 4 There are essentially two issues that arise in relation to the first question of law: Issue (1) (a) should my decision in Maxwell v Hornsby Council (2002) 121 LGERA 186 be followed whereby if a development falls within or partly within the activities identified in Sch 3 it must be designated development, and, if so, (b) does the development as proposed fall within Sch 3? or Issue (2) if I am wrong in Maxwell and the test is one of characterisation of the purpose of the whole development, is this development properly characterised as residential subdivision so that it cannot be designated development?

Statutory provisions 5 If the application is in respect of designated development it must be accompanied by an environmental impact statement prepared by or on behalf of the applicant in the form prescribed by the regulations (s 78A(8)(a) of the EP&A Act).

6 Designated development is defined in s 4(1) of the EP&A Act as having the meaning given to it by s 77A of that Act. Section 77A provides: Designated development is development that is declared to be designated development by an environmental planning instrument or the regulations.

7 Clause 4(1) of the Environmental Planning and Assessment Regulation 2000 (the 2000 Regulation) provides: Development described in Part 1 of Schedule 3 is declared to be designated development for the purposes of the Act unless it is declared not to be designated development by a provision of Part 2 or 3 of that Schedule. 8 Part 1 of Sch 3 of the 2000 Regulation contains a list of categories of designated development. The relevant clause in Pt 1 of Sch 3 in this case is cl 29 which concerns sewerage systems or works.

9 Under the Environmental Planning and Assessment Regulation 1994 (the 1994 Regulation), Sch 3 contained a preamble to the effect that: development for the undermentioned purposes or development of the undermentioned types is designated development .

10 The Environmental Planning and Assessment Regulation 1980 (the 1980 Regulation) also contained a preamble that was similarly worded to the 1994 Regulation. This preamble has been omitted in the 2000 Regulation, which took effect from 1 January 2001. Issue 1(a) Identifying designated development 11 In Maxwell I determined that the changes to the EP&A Act and 2000 Regulation in relation to designated development now meant the previous "characterisation" approach to determine the dominant purpose of a development no longer applied. If part or whole of a development falls within Pt 1 of Sch 3 of the 2000 Regulation then the development is designated development regardless of what the purpose of that development is. I so held because in my view there are no longer any provisions in the EP&A Act and the 2000 Regulation to suggest that the purpose of a development ought to be determined in deciding if it is designated development.

12 There have now been two decisions of this Court which have considered the same statutory provisions as I had to consider in Maxwell and in both cases the judges have declined to follow Maxwell: Momentum Architects Pty Ltd v Hornsby Shire Council [2002] NSWLEC 192 and Logan-Bald Partnership v Byron Shire Council [2002] NSWLEC 185. Logan-Bald was decided after I heard argument in this matter. 13 The Applicant argued that I should not follow my decision in Maxwell on the basis that:

(i) The approach of Talbot J in Momentum is correct and should be followed. If Parliament had intended such a fundamental change in legal approach to the determination of whether the development is designated, it would have indicated that it so intended through the Second Reading Speech. I was directed to the terms of the Second Reading Speech of the Minister for Planning at the time the major changes were made to the EP&A Act in 1999. There is no mention in the Second Reading Speech of any intention to make major changes to the provisions which relate to designated development. The Applicant further argued, relying on CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at 408 (Brennan CJ, Dawson, Toohey and Gummow JJ), that in Maxwell I should have considered whether such a fundamental change was intended in light of the Second Reading Speech. (ii) Had the legislature intended to reverse established principle then the use of the word development as it appears in s 77A of the EP&A Act and in cl 4 of the 2000 Regulation (development described in Pt 1 of Sch 3) would be inappropriate. This is because the word carries with it an inherent requirement of characterisation as identified in Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157 and subsequent cases. The word "development" has a customary usage, involving notions of characterisation which should be considered in this legislative context. The Act as amended does not disclose a clear intention to reverse the principles of construction established prior to the amendments. (iii) An approach which would have disclosed a clear legislative intention to do as Maxwell found would have been to make changes in s 77A which do not rely on a test dependant on identification of development. For example, "designated development means any development which includes any act, matter or thing referred to in Schedule 3". Such words were not used because the Act as amended does not disclose an intention to reverse the principle of construction established prior to the amendments. 14 The key issue is whether the long standing practice of the Court in applying a test of characterisation to determine the dominant purpose of development for planning purposes, based on Foodbarn and subsequent cases, is still applicable in the context of determining whether a development is designated or not under the EP&A Act and 2000 Regulation now in force. This issue is referred to by Talbot J in Momentum at par 16 where he states that the approach of characterisation in Foodbarn has been applied by the Court of Appeal when it is necessary to determine what is designated development. His Honour cites Bob Blakemore Pty Ltd v Anson Bay Company (Australia) Pty Ltd (Priestly, Clarke and Meagher JJA, NSWCA, 23 March 1990, unreported), CB Investments Pty Ltd v Colo Shire Council (1980) 41 LGRA 271 and Penrith City Council v Waste Management Authority (1990) 71 LGRA 376. The oft quoted passage in Foodbarn appears at 161 and concerns the characterisation of the purposes for which premises were used where there is more than one such purpose. Foodbarn dealt with determining the purposes of development for the definition of existing use rights and has also been the basis for subsequent decisions in this Court and the Court of Appeal which have considered circumstances where there has been more than one use of premises in relation to designated development. 15 In relation to the Applicant's submissions (i) and (ii), while the words of the EP&A Act and 2000 Regulation which now deal with designated development can be argued to be clear on their face, I was not provided in Maxwell with any extrinsic material concerning Parliament's reasoning in making these changes. The Second Reading Speech presented in this case does not refer specifically to the changes made in the EP&A Act and 2000 Regulation which I considered in Maxwell.

16 On one view, if the changes made by Parliament are clear there is no need to refer to the Second Reading Speech for guidance. This is essentially the argument the Council relied on and the view I took in Maxwell. However, the passage referred to by Counsel for the Applicant in the High Court decision in CIC Insurance at 408 (Brennan CJ, Dawson, Toohey and Gummow JJ) is important to consider. The part of the judgment relied on by the Applicant is as follows: Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses " context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy [Attorney-General v Prince Ernest Augustus of Hanover [1957] AC 436 at 461, cited in K&S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 312, 315] . Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd [(1986) 6 NSWLR 363 at 388] , if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent [Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320 - 321] . 17 In considering the circumstances in which Maxwell was decided and the context which must be considered, as referred to in (a) in the passage from CIC Insurance, I note that it was agreed between the parties in Maxwell that the relevant sewerage works did fall within cl 29 of Sch 3. There were therefore no factual circumstances before the Court in which the full ramifications of any change to the existing state of the law could be considered. This case has provided one such opportunity.

18 If the law changed as I found in Maxwell, there is potential inconvenience and improbability of result in that the Court must consider afresh issues of the interpretation of parts of Sch 3 of the 2000 Regulation. For example, in this case there is a need to consider the meaning of parts of cl 29(3) and (4) in a way that may not have been necessary previously. It is also now apparent from this case, Momentum and another matter before me, M&R Civil Pty Ltd v Hornsby Shire Council (Matter no.(1) 0381 of 2002), that a potentially large number of developments which include sewerage systems or works may be designated development if Maxwell is applied, when previously they were not, depending on how judges of this Court interpret cl 29(3) and (4). For example, in Momentum Talbot J held that a sewerage system which includes a wet well, whether for permanent or temporary storage, will be caught by cl 29(3). Many sewerage systems in unsewered areas include wet wells, including systems for individual houses. It is unlikely that Parliament intended such matters to constitute designated development and no adjustments were made to any of the categories in Sch 3 at the time the preamble to Sch 3 was omitted. Given this circumstance it appears that there is a possibility of inconvenience and improbability of result which it is unlikely that Parliament intended.

19 It is also apparent from Momentum and Logan-Bald that there are other views of judges of this Court of the impact of the changes in the EP&A Act and 2000 Regulation which I considered in Maxwell, namely that those changes do not affect the application of the characterisation approach. In Momentum Talbot J did not follow Maxwell on the basis that the existing caselaw still applied despite the legislative changes. His Honour quoted at [17] the following passage from the Court of Appeal in Penrith at 383 - 4 : However, the schedule [3] is not open ended. It is necessary in each case to measure the application as lodged with the various classes specified in Schedule 3. Because the task is one of classification the consideration of the development proposed against the various categories specified in the schedule will inescapably result in decisions which are partly impressionistic, upon which different minds may entertain genuine differences.

…Because the words of the statutory definition may relate to parts only of a development as proposed, it is necessary in performing the task of characterisation to consider the "character and extent and other features of the activities" proposed to decide whether, properly classified for legal purposes , they fit into the definition against which they are being measured. This is what Glass JA suggested in Foodbarn Pty Ltd v Solicitor-General (1975) 30 LGRA 157 at 161. It is what Hope JA said explicitly in CB Investments Pty Ltd v Colo Shire Council (1980) 41 LGRA 270. (emphasis added) 20 In Logan-Bald Cowdroy J also had to consider the test for designated development under the new regime in light of my decision in Maxwell and the decision of Talbot J in Momentum. Cowdroy J set out part of the Second Reading speech for the Environmental Planning and Assessment Amendment Bill by the Minister for Urban Affairs and Planning and Minister for Housing, Mr C Knowles (Hansard, 15 October 1997, at 827) as follows (at [21]): The aim is to align the level of assessment with the complexity and likely environmental impact of a development proposal. The reforms also clarify the assessment and decision-making process for local and State developments and rationalise the range of matters to be considered at the assessment stage.

21 His Honour then stated (at [22] - [23]): As a result of the amendments to the definition of "designated development" in s 4(1) of the EP&A Act and the introduction of Schedule 3 of Regulation 2000, the classification of a use as "designated development" has been made more readily identifiable. If a proposed use is listed in Pt 1 of Schedule 3 to Regulation 2000, that use constitutes "designated development" within the meaning of s 77A. No question arises concerning the "purpose" or the "type" of the proposed use.

However, whilst the task of classification of an activity as "designated development" has been simplified by the amendments, the obligation of the consent authority to characterise the use proposed for the whole development remains. Where a proposed use includes a use which is designated development the latter may be a subordinate or ancillary use. Accordingly it is necessary to determine the dominant purpose of the development. 22 His Honour then set out passages from Foodbarn, Penrith and Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404 and concluded that an environmental impact statement would only be required under s 78A(8)(a) of the EP&A Act where "the "designated development" use is the dominant or the sole or independent purpose" (at [25]). His Honour continued: The legislative changes created by the Amending EP&A Act and Regulation 2000 do not operate to displace such test. The real and substantial purpose of the development must still be determined to establish its true character. That is, the ability to readily classify a use as "designated development" resulting from the amendments does not lead to the conclusion that the whole use necessarily assumes the character as one of "designated development", if only part of the use is so classified. 23 I consider the issue as to whether I should follow Maxwell is finely balanced because, as I stated in Maxwell, the legislation now does not refer to the purpose of development in either the definition of development or the parts of the 2000 Regulation dealing with designated development, is arguably clear on its face and was a change in keeping with the objects of the Act. There is, however, a long standing approach by the judges of this Court in characterising the dominant purpose of a development based on Foodbarn and the Court of Appeal in Penrith. The judgments of Talbot J in Momentum and Cowdroy J in Logan-Bald held that approach is not prohibited by the changes to the Act and 2000 Regulation in relation to designated development. I am also minded to accept the first two submissions of the Applicant set out in par 13. (I simply note the third argument of the Applicant as I do not find that submission as persuasive as the first two submissions). Given the lack of clear direction from Parliament that it intended to change the law as I found in Maxwell, and the problems that arise in relation to the application of Maxwell to the clauses in Sch 3 (see par 18), on balance I consider I should not follow my decision in Maxwell. Accordingly, the approach in this matter should be one of characterisation of the purpose of development to determine if it is designated.

The answer to issue (1) is that Maxwell should not be followed.

Issue 2 24 The issue now arises as to whether this development should be characterised as being for rural residential subdivision of land so that it cannot be designated development. The proposed development 25 The Applicant's development application states that the proposed development is a six lot subdivision (including five residential lots). The Statement of Environmental Effects which accompanied the development application includes details of a sewage treatment plant on a triangular portion of land within the subdivision and an effluent disposal area on a separate larger rectangular portion of land. All five residential lots are piped to the treatment plant from which treated sewage is piped to the effluent disposal area for underground irrigation.

Applicant's arguments 26 The Applicant submitted that the character and extent of the development, namely a community title rural residential subdivision, which incorporates an on-site sewerage system wholly to subserve the rural residential purpose, cannot be characterised as designated development even if it fits within cl 29(3) and/or (4) of Pt 1 of Sch 3. I should note that the Applicant also argued that the on-site sewerage system did not meet the description in cl 29(3) or (4). Depending on how I decide the issue of characterisation it may not be necessary to consider those arguments.

27 The Applicant relied on Lyne v Moree Plains Shire Council (1999) 110 LGERA 120 in which Pearlman J held that the development application there in question was in respect of subdivision only and not in respect of both subdivision and sewerage works, so that no consent had been sought for the sewage removal works.

28 The Applicant also argued that there was interdependency between the subdivision and the sewerage system because of the provisions of the HLEP. The HLEP states that objective (a) for Zone No. 1(c) (Rural "C") is "to primarily provide for a rural residential living style with "on-site" collection of water and disposal of waste". Clause 13(6) of the HLEP provides: In determining an application for consent for a subdivision in accordance with this clause the Council must consider: … (b) whether the land is capable of on-site effluent disposal where no reticulated sewerage system is available … 29 Clause 41AA(4) of the HLEP provides: The Council may grant consent for the subdivision of land to which this clause applies only if: … (b) a geotechnical assessment has been undertaken to demonstrate the land is adequate for the on-site disposal of effluent in accordance with best practice … 30 The Applicant relied on these clauses to argue that the sewerage works must be considered when determining the application in relation to the subdivision. I note this was similar to the position of the applicant in Lyne who also argued it was necessary to furnish details of a proposed sewage removal system to the council so that it could make a proper assessment of the proposed subdivision as required by the relevant LEP. Council's arguments 31 The Council's submissions reviewed a number of the major cases which have considered characterisation and submitted that these emphasised that a key issue to consider is whether one use is subsumed by the other more "dominant" use. A use which can be said to be ancillary to another use is not automatically precluded from being an independent use of the land: see CB Investments, O'Donnell, Penrith and Canyonleigh Environment Protection Society Inc v Wingecarribee Shire Council (1997) 95 LGERA 294. The Council submitted that development of the land for a subdivision in circumstances where later development applications may result in development on the lots within the subdivision, but where there is no further development proposed as part of this application, would suggest that a sewerage system as proposed should not be characterised as a subdivision as the sewerage system is not interdependent with the subdivision. The sewerage system could not be said to be subsumed in the development described as community title subdivision, but rather the sewerage system is an independent use. In contrast to Canyonleigh where Bignold J held there was a relationship between the sewerage system and the first stage of the development approved, in this case the subdivision per se gives rise to no link of itself to any sewerage system or work.

32 In relation to Lyne the Council firstly submitted that it was decided on its own facts and secondly, that her Honours remarks at [26] - [36] are only obiter. The Council therefore submits that the development application in this case is properly characterised as both for subdivision and a sewerage system or works and is therefore designated development. The Council further submits that Mr Ireland's arguments in Lyne, especially at [34] highlights the dual character of the development application. Finding on Issue (2) 33 While the Council referred to most of the major cases which have considered characterisation in this Court the most relevant decision is that in Lyne. While the Council's counsel's argument as to why the sewerage system was an independent use, suggesting that Lyne was not relevant to this application was an interesting one, I consider Lyne to provide relevant and appropriate guidance to the matter before me. In Lyne her Honour said a [22]: Accordingly, the critical issue for determination in order to answer the first preliminary question of law is whether the development application "is in respect of designated development".

The determination of that issue requires the Court to decide whether or not, on the facts, the development application is only in respect of a subdivision of the specified allotments into rural residential lots (as the applicants contend) or whether the development application is in respect of both subdivision and sewerage works (as the Council contends). If the development application is only in respect of subdivision, then s 77(1)(d) has no operation, because subdivision does not fall within any description of designated development in Pt 1 of Sch 3 of the Regulation. 34 Applying that statement to this development I note that the development application is for the subdivision of six lots and the description of the proposed development is subdivision of land. There is no construction certificate applied for as part of the development application. There is a statement of environmental effects prepared and lodged in support of the development application with the Council. This refers, inter alia, to the proposed sewage treatment plant and effluent disposal area. I note that the HLEP requires the Council to consider when determining an application for subdivision whether the site is capable of on-site effluent disposal where no reticulated sewerage system is available, so that an applicant for subdivision in Zone No 1(c) would be required to provide to the Council the information contained in the applicant's statement of environmental effects. 35 I accept the Applicant's submission that this is not a development application for subdivision and sewerage works but only for subdivision. Accordingly, even if the proposed sewerage system did fall within cl 29(3) and/or (4) I would not hold that the proposed development should be characterised as designated development. In doing so I am applying the primary finding of her Honour in Lyne. 36 The Applicant also put forward a number of arguments as to why cl 29(3) and (4) did not apply to the proposed sewage disposal system which arguments were opposed by the Council. These issues were essentially: (i) Is the rectangular effluent disposal area which is connected to but separate from the sewerage treatment plant located in the triangular area "part of" the sewerage system or works for the purposes of cl 29(3) and cl 29(4)? (ii) Does the system involve storage of sewage within the meaning of cl 29(3)? (iii) What does "equivalent capacity" mean in cl 29(4)

It is not necessary that I deal with these issues given my finding on Issue (2) . Conclusion 37 Question 1: Whether the proposed development comprises designated development for the purposes of the Environmental Planning and Assessment Act 1979.

Answer: The proposed development does not constitute designated development under the EP&A Act.

Question 2: If the answer to (1) above is in the affirmative, whether the Appeal can be upheld and the development application in its present form be approved.

Orders

1. The question of costs is reserved.
2. The exhibits may be returned.

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