Ian McKay Pty Ltd v Byron Shire Council

IAN McKAY PTY LTD Applicant v BYRON SHIRE COUNCIL Respondent

1. This is an appeal brought by Byron Shire Council under s 56A of the Land and Environment Court Act 1979 against the decision of Senior Commissioner Jensen.

2. Senior Commissioner Jensen upheld an appeal by Ian McKay Pty Ltd ("the applicant") against the refusal of Byron Shire Council ("the council") to grant development consent in respect of a proposed residential development in Byron Bay. The Senior Commissioner granted development consent subject to conditions.

(1) Whether the Court should decline to entertain this appeal upon the basis that the question it raises was not raised at the hearing before the Senior Commissioner; and (2) If the Court is prepared to entertain this appeal, whether the Senior Commissioner erred in law by misdirecting himself as to the question he was required to answer pursuant to cl 45 of the Byron Local Environmental Plan 1988 ("the LEP").

The grounds of appeal as finally formulated by the council (after leave to amend had been granted) are expressed at some length, but, as Mr Robertson, appearing for the council, properly conceded, in essence they raise only one issue which is the second issue I have set out above.

In fairness to the council, however, I set out in full the amended grounds of appeal in full. They are as follows:

(1) The Senior Commissioner erred in law in miscontruing clause 45 of the Byron LEP by finding that it was sufficient to establish that prior adequate arrangements had been made for the provision of sewerage services to the subject land, that physical infrastructure existed from which it was possible to connect the subject premises to a sewer line and that the land was zoned residential. (2) The Senior Commissioner erred in not finding that the said prior adequate arrangements could only be established by evidence that the Respondent was willing to connect or had approved the connection of a sewerage service to the subject land. (3) The Senior Commissioner erred in taking into account immaterial considerations, being the capacity of Council's sewerage treatment plant to accept sewerage from the subject land, the ability of the said plant to process that sewerage to meet regulatory standards, the quality of effluent likely to be disposed of from the plant, the quality of receiving waters and the sources of potential and actual pollution of them, the extent to which such waters might meet appropriate regulatory standards and the selection of such standards in relation to receiving waters. (4) The Senior Commissioner erred in law in finding that the Respondent bore an onus to provide sewerage services to land zoned residential and in that regard bore an obligation to upgrade its sewerage treatment plant to meet the demands of potential users if such zoned land was fully developed and further or alternatively he took into account an irrelevant consideration being the suggested onus and obligation in finding that the said prior adequate arrangements had been made. (5) The Senior Commissioner erred in taking into account an immaterial consideration being the alleged ability of Council to engage in longterm borrowing which could be later offset by appropriate s. 94 contributions in order to make capital improvements to its sewerage treatment plant. (6) The Senior Commissioner misdirected himself in addressing the question whether the said arrangements should have been made rather than whether they had been made in relation to the subject land.

As Mr Walker SC, appearing for the applicant, raised the first issue at the outset of the hearing, it is appropriate that I deal with that issue first.

A central factor in the case before the Senior Commissioner was the application of cl 45 of the LEP which relevantly provides as follows: The Council shall not consent to the carrying out of development on any land to which this plan applies unless it is satisfied that prior adequate arrangements have been made for the provision of sewerage, drainage and water services to the land …

As explained by the Court of Appeal in Codlea Pty Ltd v Byron Shire Council [1999] NSWCA 399, unreported at pp 5 - 6, "[c]lause 45 mandates refusal of consent by the Council unless it is satisfied that prior adequate arrangements have been made for the provision of sewerage services to the land".

Mr Walker contended that, in the hearing before the Senior Commissioner, the council presented its case upon the basis that what was in issue was a question of merit, namely, whether or not development consent should be refused on the ground of a threatened under-capacity of the West Byron Sewerage Treatment Plant ("the STP"). Mr Walker submitted that the council now wishes to raise in this 56A appeal the question as to whether or not the Court could be satisfied that " prior adequate arrangements" had been made. That point, Mr Walker said, was not taken in the appeal before the Senior Commissioner and the Court cannot entertain it now. He relied upon Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 as authority for this proposition.

In a joint judgment delivered by Latham CJ and Williams and Fullagar JJ in that case, the rule was stated at p 438 as follows: Where a point is not taken in the court below and evidence could have been given there which by any possibility could have prevented the point from succeeding, it cannot be taken afterwards.

In my opinion, however, no application of the Suttor v Gundowda principle is required in this s 56A appeal. The point which is now raised is whether or not the Senior Commissioner committed an error of law by misdirecting himself in relation to cl 45, that is, whether or not he asked himself the wrong question in relation to that clause. That point was not raised in the hearing before the Senior Commissioner because, self-evidently, it could not arise until the Senior Commissioner had delivered his judgment.

Cases such as Suttor v Gundowda, University of Wollongong and Ors v Metwally [No 2] (1985) 59 ALJR 481, Coulton and Ors v Holcombe and Ors (1986) 162 CLR 1, and Water Board v Moustakas (1994) 180 CLR 491 (all of which were cited in argument) turn on the fact that a point was raised on appeal which, for one reason or another, had not been taken in the court below. In each case, it was held that it was too late to raise the point, because it could possibly have been met by calling evidence below ( Suttor v Gundowda at p 438 and Water Board v Moustakas at p 495) or because parties must be bound by the conduct of their case in lower courts ( Coulton v Holcombe at p 11 and University of Wollongong v Metwally at p483).

This is not such a case. The application and operation of cl 45 was a live issue in the proceedings before the Senior Commissioner from their inception. The council did not simply conduct its case on the merit issue of the adequacy of the STP. It squarely raised as an issue the question of whether "prior adequate arrangements" had been made. That issue was stated unequivocally by the council in issue 1 of the statement of issues it was required to file.

Furthermore, that issue was the subject of evidence furnished by the council. The council tendered a report by Mr Hogan, the council's environmental officer, to which the Senior Commissioner referred at pp 11 - 12 of his judgment. Mr Hogan noted that there was a " "development moratorium" resulting from a heavily overloaded sewerage treatment plant". As later evidence showed, that was a reference to a resolution of the council on 14 August 1997 whereby the council resolved to refuse all development under cl 45 which would result in any additional overload on the STP. Mr Hogan pointed out that the council had concluded that it was not satisfied that "prior adequate arrangements" had been made in terms of cl 45. The council also tendered a report by the council's planning manager to its meeting on 14 October 1997, in which the planning manager stated, as a basis for recommending refusal of the development application, that "prior adequate arrangements" had not been made in accordance with cl 45 based upon the council's "development moratorium" resolution.

That issue did not escape the attention of the applicant's expert, either. The applicant tendered a report from its consulting engineer, Mr B Mackney, and, as the Senior Commissioner noted on pp 14 - 15 of his judgment when reviewing Mr Mackney's evidence, Mr Mackney also dealt with cl 45 and the council's "development moratorium".

I conclude, therefore, that it is proper and appropriate for the Court to entertain this appeal upon the ground of appeal which has been raised.

It is necessary, for an understanding of the claim that the Senior Commissioner erred in law, to set out how the Senior Commissioner dealt with the issue of the application of cl45.

After setting out the terms of cl 45, the Senior Commissioner, at p 5 of his judgment, noted that the council was itself the sewerage authority, and he noted that: … a conclusion as to whether satisfactory arrangements for particularly sewerage have been made will be linked to the capacity of the sewerage treatment works … and the existence of installed sewerage infrastructure.

On pp 11 - 16, under the heading " Sewerage System Capacity", the Senior Commissioner summarised the evidence furnished by both parties on the sewerage system capacity generally, and in particular he referred to the evidence from Mr Hogan and Mr Mackney about "prior adequate arrangements" to which I have earlier referred.

The Senior Commissioner set out his conclusions commencing on p 21 of his judgment. He identified three major issues as arising in the case before him, one of which he stated to be as follows: Accessibility and capacity of the sewerage treatment infrastructure and plant to receive the output of the proposed development.

On pp 24 - 25, the Senior Commissioner set out his conclusions relating to "Sewage Treatment and Sewerage Infrastructure". First, he noted that cl 45 constituted "a potential major hurdle" , there being in the LEP a requirement that "prior arrangements" should be made "as to the form of sewerage service intended".

He continued as follows (I have numbered the paragraphs for ease of reference):

(1) Evidently, the thrust of the respondent's case was based on the notion that the onus for making "prior arrangements" was to be seen as landing squarely on the shoulders of the applicant. However, it is the Court's opinion that this clause does not have to be read with that implication. On the contrary, if a sewer line is available in a street so as to allow connection over a reasonable distance at the applicant's costs, then it appears to the Court that in principle the Council has itself made the "prior arrangements" which are required by the clause. (2) Beyond that the existence of a planned residential zone that permits, subject to consent, the type of development proposed in this application, is seen as placing a very clear onus on the Council to ensure that sewerage generated by such uses is properly collected and treated. In this instance, evidently the Council also operates the sewerage treatment plant so that it appears to the Court that the onus is the more potent. In this regard it is also relevant to recall that the Regional Environmental Plan also requires that housing areas not be zoned for unless the Council is satisfied that adequate facilities are available. (3) This could be contrasted to the position that appears to have been taken up by Byron Council in which an alleged incapacity to receive sewerage from permissible uses has underpinned the application of a blanket embargo on development of the type now proposed in the development application. It also suggests to the Court that if a Council assesses the capacity of the sewerage treatment plant as approaching its limit capacity, there is clear obligation to upgrade that system to meet the demands of potential users, where such users are associated with zoned areas and where the uses are permissible with consent. (4) Apart from these considerations, in the matter before the Court, evidence also suggested that the Council has a significant fund set aside for enhancement of the West Byron Treatment Plant which should allow a physical doubling of this installation in the very near future. However, even if the funds are not entirely adequate to achieve this step, it appears to the Court that this is precisely the type of capital installation where long terms borrowing by the Council is appropriate and which later can be offset by appropriate s 94 Contributions. (5) Quite apart from any of these issues, the evidence tends to suggest very strongly that the West Byron Sewerage Treatment Plant has in reality a degree of spare capacity, although perhaps somewhat limited. This is particularly the case given the upgrading works that were carried out during the Easter period in 1999 and which were able to be inspected by the Court with the parties during the course of the proceedings. Beyond that, in numerical terms, it appears clear that the imposition of the effluent load from the proposed development application would be relatively small and impose a slight impact on even the restricted capacity referred to. (6) The Court concludes that in the evidence going to the question of sewerage system, access and capacity, nothing ultimately was revealed that would justify refusing the development application if seen as worthy in other respects.

Ultimately the Senior Commissioner stated a "summary conclusion" on p 28, which, relevantly for the purpose of this s 56A appeal, was as follows: With regard to sewerage infrastructure and the sewerage treatment plant, the Court concludes that "appropriate prior arrangements" for this service have been made by the Council. In addition, the assertion that the sewerage treatment plant was incapable of receiving the output of this development was not sustained by the evidence and does not provide a justification for refusal as asserted by the Council.

Did the Senior Commissioner commit an error of law?

It is an error of law for a Commissioner to misdirect himself, that is, to define otherwise than in accordance with law the question of fact which he has to answer ( Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 156). The council asserts that the Senior Commissioner misconstrued cl 45 and took irrelevant matters into consideration in reaching his decision. The applicant asserts that the Senior Commissioner made no such error - that he correctly defined the question he had to answer and found the facts relevant to that question.

The issue, of course, is what particular factual question was posed for the Senior Commissioner to decide as a consequence of the application of cl 45. Clearly enough, cl45 posed two questions - first, had prior arrangements been made for the provision of sewerage services to the land; and, secondly, was the Court satisfied that those arrangements were adequate.

The meaning of the word "arrangements" in cl 45 was the subject of a decision of Talbot J in this Court, and from that decision an appeal had been taken to the Court of Appeal in the case to which I have earlier referred. The decision of Talbot J ( Codlea Pty Ltd v Byron Shire Council (Talbot J, NSWLEC, 4 December 1998, unreported)) had been delivered before the date of the hearing before the Senior Commissioner.

At par 23, Talbot J said: It is clear from the use of the language in cl 45 and the general context that what must be shown is, at least, a willingness on the part of any relevant authorities to cooperate in a consensual way that may bring the scheme to fulfilment.

The Court of Appeal delivered its decision after the date of the Senior Commissioner's judgment. At par 40, Stein JA set out the passage from the judgment of Talbot J which I have quoted above, and continued by saying "I think that this is a reasonable way of putting it. Its essence is of course consensual …" .

Therefore, at the time of the hearing before him and at the time he delivered his judgment, the Senior Commissioner was faced with the task of deciding, on the facts, whether prior arrangements, in the sense of a "willingness … to cooperate in a consensual way …" had been made, and whether the Court was satisfied that they were "adequate".

Mr Walker submitted that the Senior Commissioner correctly identified the question of fact in this way and that this is demonstrated in the passages I have earlier quoted from pp 24 - 25 of his judgment. The Senior Commissioner noted that there was a "requirement" for "prior arrangements" , and proceeded to make the factual findings that established that "prior arrangements" had been made. By reference to each numbered paragraph of the passages I have quoted, Mr Walker submitted that the facts which the Senior Commissioner found were: first, that the sewer line was available for connection to the land (par 1); secondly, that the land was within a zone in which residential development was permissible with consent and that the land should not have been so zoned unless the council had been satisfied that adequate facilities were available (par 2); that the council itself was the sewerage authority obliged as such to provide sewerage facilities (par 3); and that funds were available, or could be made available, to provide for enhancement of the STP (par 4).

In Mr Walker's submission, the Senior Commissioner, having made those factual findings to conclude that "prior arrangements" had been made, turned to consider whether or not he was satisfied that they were "adequate". He determined that he was so satisfied, in par 5, by reference to the fact that there was capacity enough in the STP to receive the effluent load from the proposed development.

In my opinion, however, the Senior Commissioner did not define the question he had to answer in accordance with the law as it had by the time of the hearing and his decision been explained by Talbot J. He did not pose for himself the question of fact as to whether it had been shown that there existed a "willingness … to cooperate in a consensual way …" between the council and the developer. Had he done so, his approach to the findings of fact which he was required to make would have been different. He would have had to decide whether a willingness to cooperate in a consensual way was shown by the availability of the sewer line, the residential zoning, the council's obligations as sewerage authority and the availability of funds. In that context, the council's "development moratorium" resolution would be a highly relevant fact, because that resolution clearly has a bearing upon a factual determination as to whether or not "prior arrangements" (in the sense I have outlined) had been made. But the Senior Commissioner did not approach the question in this way and, in par 3, he made only a passing reference to the "development moratorium" resolution.

The matters which the Senior Commissioner took into account no doubt raised the question - why would the council not be willing to enter into an arrangement about the provision of sewerage, when the pipes were there, the land was zoned for residential purposes, and funds were available to pay for an enhancement of the STP? But that was not the question of fact which the Senior Commissioner had to decide. It was instead whether the council was willing to cooperate in a consensual way, not whether it should cooperate in a consensual way.

Evidence about the capacity of the STP was relevant, I think, to a decision as to whether the Court could be satisfied that, if "prior arrangements" had been made, they were "adequate". But the Commissioner had first to decide whether "prior arrangements" had been made, before turning to the threatened or actual under capacity of the STP.

For these reasons, I have concluded that the Senior Commissioner erred in law, and that the ground of appeal has been made out.

In accordance with the foregoing, my formal orders are therefore as follows:

(1) The appeal is upheld. (2) The determination of the Senior Commissioner on 30 July 1999 is set aside. (3) The proceedings are remitted to the Senior Commissioner for determination in accordance with this judgment. (4) The applicant must pay the costs of the council of this appeal, as agreed or as assessed. (5) The exhibits may be returned.

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.

22. The applicant submits that other refreshment room developments in the vicinity have no provision for parking although they were apparently granted development approval subsequent to the implementation of the DCP. In this respect it is submitted that the council by requiring the applicant to meet the parking limits prescribed by the DCP is acting inconsistently. The applicant also submits that the provision of one car space for the upstairs residence is not required, since cl 54 relates to `development' and not to existing structures.

23. The council submits that the two existing parking spaces on the site should not be considered for the purpose of calculating the parking spaces required for the development, pointing out that the first floor dwelling requires one parking space pursuant to Schedule 1 of the DCP. Further, the remaining parking space would be required for a loading bay since cl 60(1) of the DCP states:-

(1) Commercial and industrial development shall include provisions for off-street loading and unloading facilities within the boundaries of the properties..

Sub-clause (2)(a) and sub-clause (2)(b) of cl 60 of the DCP specify the dimensions of the required loading bay. Mr Hallam considered that such provision was essential for loading and unloading of supplies since there may be no on-street demand for parking spaces generated by other businesses. In cross-examination he did however concede that a loading bay could also be used for parking when not required for deliveries of supplies.

24. The applicant submits that a loading bay is not required since the DCP applies to `commercial and industrial development'. The applicant relies upon the definition of `commercial premises' as contained in cl 5 of the LEP and used in Schedule 1 of the DCP. By virtue of cl 4 of the DCP such definition is adopted for the purposes of the DCP. Such definition provides:-

"commercial premises" means a building or place used as an office or for other business or commercial purposes, but does not include a building or place elsewhere specifically defined in this clause or a building or place elsewhere specifically defined in this clause;

Since refreshment rooms are specifically defined, the applicant submits that the site is not `commercial premises' as defined and thus not a commercial development.

25. I reject this submission. Schedule 1 to the DCP applies to parking requirements for specifically defined development whereas cl 60 of the DCP applies to parking space provision for loading and unloading generally at commercial and industrial developments. The development of a refreshment room constitutes a commercial development, even though such development may not be defined as `commercial premises'. Since cl 60(1) of the DCP specifically applies to commercial development, the proposed use is included.

26. Allowing the applicant the most liberal interpretation of Schedule 1, only two parking spaces exist. Such interpretation makes no parking space allocation for the residential use or for a loading bay. Accordingly there is a shortfall of four car spaces. Parking in Blues Point Road is usually in high demand. I reject the survey made by Mr Le Bas on the evening of 15 September 2000 as being representative of typical demand for parking, since it was made during school holidays and simultaneously during the Olympic Games Opening Ceremony. A traffic survey prepared by Mr John Hewitt for different proceedings was also relied upon by the applicant. I reject such survey as representative as it was undertaken during the school holiday period and is therefore unlikely to represent normal parking availability in the subject area. The Court also determines that there is no basis for the allegation that the DCP requirements for parking have been applied inconsistently. An examination of other refreshment rooms establishes that provision for loading and parking has been made at the rear of such premises, or that existing use rights have applied.

27. The development application pays no regard to the parking requirements contained in the DCP but rather relies upon street parking to satisfy the traffic concerns of the council. The kerb and footpath in Blues Point Road have been constructed to prevent parking adjacent to the site frontage to Blues Point Road. There is virtually no parking in Lavender Street near the site. The proposal to seat 36 diners will obviously result in the need for some patrons to drive to the site. The streets are already heavily used for parking as was evident on the view and if each of the existing spaces are allocated for the refreshment room, no parking would be provided for the residence and there would be no provision for a loading bay. I therefore reject the submission, as contained in the report of Mr Le Bas that `there will be no significant change to car parking demand generated by the proposed development when considered relative to other permissible retail uses.'

28. The Court is invited to ignore the obvious shortfall in parking and in so doing, to ignore the requirements of the DCP. Such provisions are not mandatory requirements, but a consent authority would require sound reasons for departing from them since a DCP represents the carefully formulated planning objectives for an area. In the present application no reason exists to justify a departure from the requirements of the DCP.

Issue 4: Effect of the draft local environmental plan ("the draft LEP")

29. The applicant submits that the draft LEP should be ignored on the basis that it remains only a draft. The applicant further submits that cl 68 of the draft LEP was not included in the original draft LEP and therefore should be given little or no weight. Clause 68 of the draft LEP prohibits refreshment rooms in 2(d) zone. The applicant also submits that the savings provision contained in cl 5(3) of the draft LEP applies. Such provision states:-

(3) Where a development application has been lodged but not determined before the commencement of this plan, the environmental planning instruments repealed or amended by this plan shall apply as if this Plan had been exhibited but had not commenced.

30. In accordance with the observations of the Chief Judge in Architects Haywood and Bakker Pty Ltd v North Sydney Council [2000] NSWLEC 138 and Talbot J in Edward Listin Properties Pty Ltd v North Sydney Council (No 2) [2000] NSWLEC 181 and Mathers v North Sydney Council [2000] NSWLEC 84, the Court adopts the council's submissions that the prohibition contained in draft cl 68 is to be given consideration as required by s 79 of the Environmental Planning & Assessment Act 1979 ("the EPA Act").

31. Arising from the judgments of Talbot J and Pearlman J the adoption of the draft LEP is imminent and upon the balance of probabilities the Court is satisfied that cl 68 of the draft LEP will be incorporated in the new planning instrument (see Architects Haywood and Bakker Pty Ltd). The Minister is entitled to alter the draft LEP pursuant to s 70 of the EPA Act in respect of matters of regional significance. Clause 68 is not such a matter and therefore the Court can conclude that it is likely to be incorporated in the final LEP. Since cl 68 was inserted in the draft LEP as a consequence of public submissions following exhibition of the first draft LEP it is to be given more, rather than less consideration by the Court. When implemented cl 68 of the draft LEP will prohibit refreshment rooms in the 2(d) zone and not merely permit such use with consent. The Court therefore gives due force to such clause and upholds the council's submission that cl 68 of the draft LEP warrants rejection of the development application.

32. The evidence establishes that the development application is contrary to the planning objectives of the locality and that there is no adequate provision for on site parking. In addition, the draft LEP prohibits the development of refreshment rooms in the 2(d) zone. For these reasons the development application is rejected and the appeal dismissed.

2. Development application no 706/00 for a refreshment room at 171 Blues Point Road McMahons Point is determined by refusal of consent.