The Council's Position in the Class 1 Proceedings
10 The council's submissions take account of the distinction between the specified criteria for consent of the council as lessor in clauses 19 and 20 of the lease on the one hand and the relevant considerations to be taken into account under s 79C of the Environmental Planning and Assessment Act 1979 ("the EPA Act") in respect of a development application made to the council as consent authority on the other hand.
11 The Queen Victoria Building is operational land under the Local Government Act 1993 ('the LG Act"). The terms of the lease demonstrate that the parties entered into it as a commercial transaction between private individuals. Accordingly the council says the commencement of the class 1 proceedings is an attempt to bypass or circumvent the lease covenants in reliance upon the powers of the Court under s 39(2) of the Land and Environment Court Act 1979 ("the LEC Act"). On any view it is a justiciable dispute between the lessor and lessee over which the Supreme Court has jurisdiction.
12 Furthermore the decisions of this Court and the Court of Appeal, where it has been determined that s 39(2) was available as a source of power for the Court to give the consent of the council to the making of a development application as owner of the relevant land, relate only to situations when the land in question is vested in council as a public road (see Sydney City Council v Claude Neon Ltd (1989) 15 NSWLR 724, 67 LGRA 181; North Sydney Municipal Council v P D Mayoh Pty Ltd (1988) 14 NSWLR 740, 66 LGRA 352; Shellharbour Municipal Council v Rovili Pty Ltd (1989) 16 NSWLR 104, 68 LGRA 231; and Paino v Woollahra Municipal Council (1990) 71 LGRA 62).
13 Therefore the class 1 and class 4 proceedings ought to be stayed to enable the applicant, as lessee to determine what action it proposes to take, if any, under clauses 19 and 20 of the lease. Otherwise the proceedings should be dismissed as there is no prospect of consent to the development application.
The Applicant's Position in the Class 1 Proceedings
14 Mr Ayling SC rejects the submissions made on behalf of council by Mr Craig QC in regard to the status of the land under the LG Act. He claims that the council's functions, powers, rights and duties with respect to public land (including operational land) are in the same category as its functions, powers, rights and duties with respect to public roads and equally different from those of a private individual with respect to land which the latter owns (see the constraints imposed on dealings with land by a council in ss 8, 22 and 23 of the LG Act).
15 Mr Ayling agrees with Mr Craig that the operation of s 39(2) discloses two general categories. Firstly where a council has some statutory function which impinges upon the subject matter of a development application but is not the owner of the land. Conversely the category where the council is the owner of the land the subject of the development application. It is his contention therefore that as the present case is in the second category (in respect of which the cases have been recognised the power of the Court to give owner's consent under s 39(2)) the distinction the council seeks to make by reason of the existence of the lease and its regulation of the legal relationship between the parties is illusory.
16 Mr Ayling also draws attention to clause 34.3 of the lease which provides relevantly:
34.3 Nothing in this Lease contained shall be deemed to prohibit or inhibit the Lessee from exercising any right conferred on it by law to appeal to a court or other appellant tribunal against any decision of the Lessor (in its capacity as the Local Council or the authority charged with the control of development in the City of Sydney)… with respect to the Lessee's use or occupation of the Demised Premises… PROVIDED ALWAYS that neither the Lessee nor the Lessor shall have any right of appeal from any decision or determination of any person made pursuant to a provision of this Lease whereby any such decision or determination is expressed to be final and binding upon both parties.
17 By reason of clause 34.4 and a proper construction of clauses 19 and 20 Mr Ayling says that it is clear that clauses 19 and 20 do not entirely regulate the legal relations between the parties with respect to development. The applicant is not deprived by the lease of its rights accrued under, relevantly, the EPA Act and the LEC Act. It follows therefore that the applicant's entitlement to rely on s 39(2) of the LEC Act for the Court to give, on the council's behalf, the consent to the lodging of the development application remains unaffected by the lease.
Discussion
18 In Claude Neon the Court decided that a council can give its consent to the lodging of an application for development consent by giving development approval and further that s 39(2) places the Land and Environment Court, upon an appeal, in the same position as the council where the application relates to a road owned by the council. Hope JA who delivered the judgment of the Court expressly had regard to the statutory scheme in respect of consents to see whether consent to the application could be given where the consent authority is the owner of the land and that land is a public road (at 728). Later that year Clarke JA in Rovili referred to the observations of Hope JA in Claude Neon noting that the council does not have the power of a private landholder arbitrarily to withhold consent as the council is placed in a special situation when an application is made to it for development approval for the erection of a structure partly on its road (at 112). Furthermore if the council simply does nothing Clarke JA noted that the applicant can appeal to the Court which has all the powers of the council including the power to consent to the lodgement of the application.
19 In Paino Hemmings J recognised the "well-settled" principle that an application lodged without the consent of the owners is not "void" and the necessary consent may be provided any time up to the determination by the consent authority. Hemmings J formed the opinion that, in the circumstances of the case where the application related to development proposed on a public road, the function of the consent to the making of the application could be exercised by the Court pursuant to s 39(2) on behalf of the council. Hemmings J resisted a submission that Claude Neon and Rovili were wrongly decided, as well he might. The circumstances considered by Stein J in Pimas Group Pty Limited v Maritime Services Board of NSW (1994) 82 LGERA 205 were slightly different in that the application for development consent considered in that matter related to the construction of a swimming pool on land owned by the Maritime Services Board. Stein J was not prepared to confine the decision in Claude Neon to its own facts recognising the giving of consent to the application as a planning power for the purposes of the EPA Act and "not a property power". He further found that the granting of the owner's consent to the making of the development application confers no right in property and has no effect on the lease under which the applicant for consent occupied the subject land.
20 Other decisions including McDougall v Warringah Shire Council (1993) 30 NSWLR 258, 80 LGERA 151; Mayoh; and Connery v Manly Council (1999) 105 LGERA 451 show that the underlying consideration for the exercise of power within the meaning of s 39(2) of the LEC Act was whether it was a function the council "had in respect of the matter the subject of the appeal". Although the majority of the cases that I have referred to involve the giving of the consent of the council as the owner of a public road nevertheless I do not consider that the facts of those cases confine the principle to the circumstances where the subject land is a road. As Hope JA observed in Claude Neon at 729 that if the development is one that ought to be approved then the council ought to give its consent. Its failure to do so simply because it wished to frustrate the right of the adjoining owner to obtain approval to a projected structure would be use of its power for an improper purpose, that is, it would be a mala fide abuse of power. If a council considers that it should give consent to a development application it must also consider that it should give consent to the making of the application. The giving of the consent to the making of the development application is a function the exercise of which is basic to the function of the council to grant development approval. To deny the giving of consent to the development application where in all other respects the development application would be approved would amount to a dereliction of the duty and obligation of the council to determine an application for development consent in accordance with the EPA Act.
21 There is, in my opinion, a clear distinction between the exercise of the discretion to give consent to an application for development consent and the approvals referred to in the terms of the lease. It does not follow if development consent is granted that the council is obliged in any way to give its approval as lessor. Although I do not stop to identify the different considerations that would apply, there clearly are different criteria that apply to the consent of a landlord under the terms of its lease and the consent of a consent authority in response to a development application following consideration of the matter required to be considered pursuant to the planning legislation. It is for the same reason that I reject the argument raised by Mr Craig during submissions that the clauses of the lease raise an estoppel against the applicant relying on s 39(2) to circumvent the terms of the lease.