J & J O'Brien Pty Ltd v South Sydney City Council

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40611/01 CA 40617/01 LEC 11004/00 LEC 40160/00

HANDLEY JA STEIN JA GILES JA

Monday, 12 August 2002 J & J O'BRIEN PTY LTD v SOUTH SYDNEY CITY COUNCIL

The appellant, J & J O'Brien Pty Ltd, appeals from a judgment of Cowdroy J in the Land and Environment Court. His Honour dismissed Class 4 proceedings brought by the appellant seeking a declaration of invalidity of a demolition and compliance order issued to it by the respondent, the South Sydney City Council. His Honour also dismissed an application brought by the appellant in Class 1 of the court's jurisdiction appealing against the Council's order.

The order required the removal of tiling to the façade of the appellant's hotel, the Marlborough, in King Street, Newtown. The hotel is located within a heritage conservation area under the South Sydney Local Environmental Plan 1998 (the LEP). The appellant submitted a development application to the Council seeking approval for the removal of tiles from the existing façade and to their replacement with new tiles. The Council granted consent to the development application subject to a number of conditions. Importantly, Condition 3 provided that the 'new tiling is to replicate the pattern coursing, details and proportions of the original tiling'.

The appellant indicated to the Council by letter that replacement tiles in the same dimensions as the existing tiles were not available. However, a larger tile (300 x 300 mm) was available. The Council treated the appellant's letter as an application to amend the development consent, which it subsequently refused.

The appellant went ahead with the re-tiling using the larger tiles in breach of Condition 3.

Cowdroy J found the re-tiling required development consent since it constituted the 'carrying out of a work' within the meaning of s 4 of the Environmental Planning and Assessment Act 1979 (the Act). His Honour further concluded that the re-tiling had significantly altered the original appearance of the hotel.

On appeal the appellant submits that his Honour erred in finding that the re-tiling constituted the 'carrying out of a work' and that development consent was required.

The Council contends that his Honour's judgment should be affirmed on the basis that the removal of the existing tiles and re-tiling of the exterior of the premises constituted 'development' under the Act because of s 26 and the 'acts' referred to in that provision, which was controlled by the LEP.

Held per Stein JA, Handley JA and Giles JA agreeing:

1. The reference in s 75(1) of the unamended Act to 'for the purposes of Part 4' means no more than the development control mechanisms in that Part were applicable, except where the subject matter was not amenable to those controls. It must be taken to have informed the meaning and content of the instrument. It is difficult to understand how s 75(1) could not have affected the meaning of 'development' within s 4 when 'development' is pivotal to the operation of Part 4 of the Act.

2. The transposition of the words in s 75(1) of the unamended Act to subpara (f) of the definition of 'development' in the amended Act did not alter the outcome of cl 23 of the LEP.

3. The second part of the Council order, dealing with Condition 3 of the development consent, is valid.

4. There is no reason why the compliance order cannot stand by itself.

5. The order was supportable as a matter of law and is therefore a valid order. - The Minister v Rosemount Estates Pty Ltd (1996) 91 LGERA 31 considered.

6. Sufficient reasons were given for the order. When the order is read as a whole, the reasons for the exercise of the Council's statutory discretions are plain. The re-tiling of the façade of the hotel was inappropriate in a heritage conservation area and contrary to Condition 3 of the development consent. - Van Haasteren v South Sydney City Council (2000) 109 LGERA 252 considered.

7. The appellant is not entitled to say that it did not rely on the development consent in carrying out the work because the Council erroneously believed it was proceeding with regard to the 'erection of a building'. It merely means that the Council took a wrong view as to its powers.

8. The submission that the hearing of a Class 1 appeal is not confined to the reasons articulated in the order cannot be accepted. It derives no support from the words of s 121ZK itself.

9. The trial judge did not fail to exercise his discretion properly.

Both appeals are dismissed with costs. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40611/01 CA 40617/01 LEC 11004/00 LEC 40160/00

HANDLEY JA STEIN JA GILES JA

Monday, 12 August 2002 J & J O'BRIEN PTY LTD v SOUTH SYDNEY CITY COUNCIL Judgment

1 HANDLEY JA: I agree with Stein JA. 2 STEIN JA: Introduction 3 The appellant, J & J O'Brien Pty Ltd, appeals from a judgment of Cowdroy J in the Land and Environment Court delivered on 26 July 2001. His Honour dismissed Class 4 proceedings brought by the appellant seeking a declaration of invalidity of a demolition and compliance order issued to it by the respondent Council on 21 September 2000. The order required the removal of tiling to the façade of the appellant's hotel, the Marlborough in King Street, Newtown. His Honour also dismissed an application brought by the appellant in Class 1 of the court's jurisdiction appealing against the respondent Council's order. Appeals are brought to the court against both decisions of his Honour.

Facts 4 The Marlborough Hotel is located within a heritage conservation area under the South Sydney Local Environmental Plan 1998 (the LEP). The ground floor street frontage of the hotel was clad in ceramic tiles which had existed since the construction of the hotel in 1940. Some of the tiles had become damaged over time and in 1998 the appellant decided to renovate the façade. The appellant was informed by the Council that since the hotel was located in a heritage conservation area, development consent would be required. 5 The appellant submitted a development application to the Council on 5 May 2000 seeking approval for the removal of tiles from the existing façade and to their replacement with new tiles. The application stated that the new tiles would match the pattern and tile dimensions of the existing tiles but the colours would differ from the original. A Statement of Environmental Effects prepared on behalf of the appellant stated that: 'The new tiles will match the dimensions of the original and the details of skirting course tiles and main body with the thin banding will be repeated'. 6 The Council granted consent to the development application on 30 May 2000 subject to conditions. Unsurprisingly, one of the conditions (No 3) provided that the 'new tiling is to replicate the pattern coursing, details and proportions of the original tiling'. 7 I say 'unsurprisingly' because the conditions echoed the appellant's documentation in support of the development application. 8 However, it seems that the appellant may have encountered difficulties in obtaining replacement tiles of the same size as those to be removed. The existing tiles were 150 mm by 300 mm. In a letter to the Council dated 28 June 2000 the appellant indicated that replacement tiles in the same dimensions as the existing tiles were not available. However, a larger tile (300 mm x 300 mm) was available. Council treated the appellant's letter as an application to amend the development consent. 9 An inspection of the hotel on 18 July 2000 revealed that all of the tiles had been removed from the façade. On 24 July 2000 the appellant wrote to the Council stating unilaterally that the re-tiling would take place using 300 mm by 300 mm tiles. On 27 July 2000 the Council indicated that the appellant's proposal was unacceptable. On the next day Council officers warned the appellant's representative, Mr Crawley, not to undertake the re-tiling with tiles of the wrong dimension. Mr Crawley indicated that the re-tiling would proceed. 10 On 10 August 2000 a committee of Council recommended that the application to amend the development consent be refused. Council refused the amendment application on 16 August 2000 and notified the appellant. The appellant did not appeal from this refusal. Neither did it appeal from any condition imposed on the development consent of 30 May 2000, in particular Condition 3. 11 The appellant went ahead with the re-tiling using 300 mm by 300 mm tiles, that is, tiles of a dimension in breach of Condition 3.

The order 12 A notice of a proposed order was served on the appellant concerning the action of the appellant in re-tiling the hotel façade with the larger tiles. The notice of the proposed order was followed by the Council issuing an order on 21 September 2000. The order is in the following terms: ENVIRONMENTAL PLANNING & ASSESSMENT ACT, 1979 SECTION 121B.2(a) - DEMOLITION ORDER SECTION 121B.15(a) - COMPLIANCE ORDER PREMISES 145 KING STREET, NEWTOWN

Dear Sir/Madam You being the owner in respect of the property at abovementioned premises are ordered by South Sydney Council to comply with undermentioned item within 21 days after the service of this Order upon you as (a) The tiles on the front elevation of the Marlborough Hotel, a prominent building within a Heritage Conservation Area, are installed without development consent and should be removed as the tile size is inappropriate. The square tiles will destroy the horizontality of the façade and the pattern and type of tiling on front elevation of the hotel does not reflect the interwar character of the building. (b) Condition No 3 of Development Consent dated 30 May 2000 is not being complied with. You are ordered to:- 1. Remove the unauthorised 300 x 300 tiles from the front elevation; 2. Comply with condition No 3 of the Development Consent dated 30 May 2000. 13 The response of the appellant was to say that the re-tiling was completed. Moreover, the appellant contended that the development application and consent was unnecessary 'and we do not rely on it'. 14 Thereafter the appellant commenced the Class 4 proceedings in the Land and Environment Court seeking a declaration that the order of the Council dated 21 September 2000 was void and a declaration that the tiling of the façade of the hotel did not require development consent. The appellant also launched a Class 1 merit appeal against the order. The Judgment 15 In the Land and Environment Court Cowdroy J found that the re-tiling required development consent since it constituted the 'carrying out of a work' within the meaning of s 4 of the Environmental Planning and Assessment Act 1979 (the Act). He held that the order was valid. His Honour dismissed the Class 4 proceedings. 16 In the Class 1 proceedings, his Honour reviewed the expert evidence relating to the heritage significance of the hotel and its tiling. He said: The tiles as affixed are 300 mm x 300 mm; the coursing is different; and the details and proportions differ. A decorative band of tiles has been inserted in which tiles have been affixed diagonally which bears no relation to the original tiling. As a consequence, the appearance of the hotel is radically altered from its original state. 17 His Honour said that he was not satisfied that the tiles originally proposed by the appellant in its development application were unprocurable. Indeed, the tiles had been ordered by the appellant prior to 18 July 2000. His Honour considered that the appellant had apparently decided to proceed with tiles of its own selection despite Council's protestations. 18 Cowdroy J concluded from photographs of the previous 'Art deco' appearance of the hotel that it was apparent that the appearance had been significantly altered. He dismissed the Class 1 application.

The appeal 19 The Notice of Appeal alleges that his Honour was wrong to find that the re-tiling constituted the 'carrying out of a work' and further that his Honour was in error in finding that development consent was required. Additionally, his Honour erred in not holding that the re-tiling was not undertaken in breach of the Act. The appellant seeks that the court grant the relief which it failed to obtain below. 20 The Council filed a Notice of Contention. This maintains that his Honour's judgment should be affirmed on the basis that the removal of the existing tiles and re-tiling of the exterior of the premises constituted 'development' under the Act because of s 26 and the 'acts' referred to in that provision, which were controlled by the LEP. It is fair to say that the major proportion of the hearing of the appeal concentrated on the contention. 21 Although the appellant argued, and the respondent denied, that the re-tiling did not amount to the 'erection of a building' under s 4(2)(b) of the Act, I am of the view that it is unnecessary to determine this issue. This is because of my opinion that the appeal may be determined on the respondent's contention. I turn therefore to the contention.

The contention 22 The contention raises the issue not that the re-tiling was 'a work' but rather that it constituted 'development' within subpara (f) of the definition of development in s 4(1) of the Act. The definition of 'development' at the relevant time included: '(f) any other act, matter or thing referred to in section 26 that is controlled by an environmental planning instrument'. 23 This was one of the many amendments effected to the Act by the 1997 Amending Act. It commenced to operate from 1 July 1998. 24 Section 26 concerns the contents of environmental planning instruments, which includes LEPs. Section 26(1) includes sub-para (f) as follows: (f) controlling any act, matter or thing for or with respect to which provision may be made under paragraph (a) or (e). 25 Section 26(1)(b) provides that an LEP may provide for 'controlling … development'. 26 Clause 23 of the LEP provides: 1 The following development may be carried out only with development consent: (a) demolishing, defacing, damaging or moving a heritage item or a building within a heritage conservation area, or

(b) altering a heritage item or a building, work or relic within a heritage conservation area by making structural changes to the exterior, or (c) altering a heritage item or building, work or relic within a heritage conservation area by making non-structural changes to the detail, fabric, finish (including painting of the exterior) or appearance of its exterior, except changes resulting from any maintenance necessary for its ongoing protective care which does not adversely affect its heritage significance, or (d) moving a relic, or excavating land for the purpose of discovering, exposing or moving a relic; or (e) erecting a building on, or subdividing land on which a heritage item is located or which is within a heritage conservation area. 27 Section 34(1) of the Act provides that expressions used in LEPs shall, unless the contrary intention appears, have the same meaning as they have in the Act. See also s 11 of the Interpretation Act 1987. 28 On behalf of the respondent, Mr Ayling SC submits that there is no warrant to read down subpara (f) of the definition of development. While clearly a number of matters included within s 26 are not amenable to development control, the relevant physical work on the hotel was, in a practical sense, amenable to development control and clearly fell within s 26 and cl 23 of the LEP.

29 On behalf of the appellant, Mr Hale SC submits that it is important to acknowledge that the LEP was gazetted on 28 April 1998, before the amendments to the Act took effect. 30 The unamended Act relevant at the time of the making of the LEP did not include subpara (f) in the definition of development. He draws attention to s 75(1) of the Act which then provided: In this Part, [Part 4] a reference to development includes a reference to any other act, matter or thing referred to in section 26 which is controlled by an environmental planning instrument. 31 Mr Hale submits that if any act, matter or thing required Council approval under the LEP, but was not 'development' as defined, it was deemed to be development but only for the purposes of Part 4 of the Act. Clause 23 of the LEP is directed to 'development' and not to the control of an 'act, matter or thing'. Mr Hale submits that where the word 'development' is used in cl 23 of the LEP, it means 'development' as narrowly defined by s 4 of the unamended Act. He further submits that when the amendments came into force on 1 July 1998, they did not have the effect of amending the definition of development in each and every environmental planning instrument made prior thereto. 32 Mr Hale notes that the amended Act repealed s 75(1) and relocated it within the definition of development in s 4 and, to that definition it added subpara (e), the demolition of a building or work and subpara (f), quoted above. 33 The appellant submits that the re-tiling of the hotel is outside the genus of (a) to (e) of Section 26 and that subpara (f) does not operate to bring the re-tiling within the definition of development in the Act so as to alter the meaning of development in cl 23 of the LEP.

Consideration 34 In my opinion, the reference in s 75(1) of the unamended Act to 'for the purposes of Part 4' means no more than the development control mechanisms in that Part were applicable, except where the subject matter was not amenable to those controls. It must be kept steadily in mind that when the LEP was made, this section was in the Act. It must be taken to have informed the meaning and content of the instrument. It is difficult to understand how s 75(1) could not have affected the meaning of 'development' within s 4 when 'development' is pivotal to the operation of Part 4 of the Act. 35 It should be noted in passing that the appellant does not submit that cl 23 of the LEP is ultra vires. Rather, Mr Hale submits that cl 23 regulates 'development' within its own terms. He submits however that parts of cl 23 may be ineffective so as to require development consent. In my opinion, the submission gives no recognition to s 75(1) or subpara (f) of s 26 of the unamended Act. 36 The transposition of the words in s 75(1) of the unamended Act to subpara (f) of the definition of development in the amended Act did not, in my view, alter the outcome of cl 23 of the LEP. 37 The parties are in dispute as to whether the LEP operates in an ambulatory fashion. The appellant submits that the words in the instrument must have the meaning that they were intended to have at the time the LEP was made. It is submitted that to hold otherwise would defeat the consultation and public participation processes inherent in the making of the LEP. Those provisions in the Act would, in effect, be bypassed. 38 There are two answers to this proposition. First, while the public consultation process is important, the process is not, as Mr Ayling notes, sacrosanct. For example, an LEP may be substantially affected by a decision of the Minister. Moreover, State Environmental Planning Policies, the highest form of planning instruments, do not have to be preceded by any public participation. 39 The second answer is one of manifest inconvenience. If the appellant's submission is correct, then in order to facilitate the amendments made to the Act, many hundreds of LEPs would have to be amended. 40 However, because of the view I take as to the effect of s 75(1) of the unamended Act and subpara (f) of the definition of development in the amended Act, it is unnecessary to determine the ambulatory nature of the LEP and the application of Birch v Allen (1942) 65 CLR 621.

Is the order severable? 41 In my opinion, the second part of the order, dealing with compliance with Condition 3 of the development consent, is valid. It is accordingly unnecessary to consider whether the order could be maintained on the basis of its being a work with respect to the erection of a building. 42 The appellant submits that the order is not severable. If the first part fails, then the whole order must fall. For my part, I can see no reason why the compliance order cannot stand by itself. The appellant appears to submit that there can be no severance because there is no evidence to support the view that if the Council had been aware that the re-tiling works did not constitute the erection of a building, it would still have issued an order with regard to the breach of Condition 3 to the development consent. In my opinion, this is no basis for the proposition that there can be no severance of the valid from the invalid, assuming the first part of the order to be unsupportable. 43 The two aspects of the order were clearly alternatives, and the compliance order would obviously suit the purposes of the Council in order to achieve its end of having the tiles removed and the development consent complied with by the appellant.

Can the alternative basis be relied on? 44 The appellant's next proposition is that if the order cannot be maintained on the basis originally relied on, the alternative foundation of s 75(1) and subpara (f) in the definition of development cannot be utilised to save the order. The submission maintains that the only question involved is whether the circumstances empowering the Council to give the order existed at the relevant time. 45 The short answer to this submission is that if the Council made a mistake as to its source of power in making the order (or for that matter the development consent), where an alternative source of power exists it may be relied on. So much was made clear by the Court of Appeal in The Minister v Rosemount Estates Pty Ltd (1996) 91 LGERA 31 at 31, 48 and 85. The order was supportable as a matter of law and is therefore a lawful order.

No reasons given for order? 46 The appellant makes a further submission that the compliance order is invalid because no reasons were given in the order to support it. The recitation of the failure to comply with Condition 3 is said not to be a reason. Mr Hale submits that it simply repeats the circumstances which enliven the power. Section 121L of the Act requires reasons to be given. 47 However, this argument defies the reality of the order. The order should be read as a whole. When this is done, the reasons for the exercise of the Council's statutory discretions are plain. The work that was done by the appellant was inappropriate in a heritage conservation area and contrary to a specific condition (No 3) of the development consent, which condition was aimed directly at ensuring that the work would be appropriate. The reason why the size of tiles utilised by the appellant is seen as inappropriate is made very apparent from the second sentence of paragraph (a) of the order.

48 In any event, I cannot accept that the circumstances which enliven the power to give an order can never be identical to the reason for exercising the power. I accept Mr Ayling's submission that the fact that work is non-complying may be capable of constituting both a basis for and reason for taking action. Common sense dictates this. In this regard, it may be that if Van Haasteren v South Sydney City Council (2000) 109 LGERA 252 is authority for a proposition of general application, it goes too far and should not be accepted without qualification in cases where the statement of the circumstances enlivening the power is sufficient without more to make plain to the recipient the basis and reason for the decision to issue the order. 49 In my view, the recipient of the subject order could be in no doubt as to the rationale for the giving of the order.

Appellant not relying on the consent 50 The appellant by his ever ingenious counsel runs a further argument, namely that in replacing the tiles the appellant was not relying on the development consent that it had obtained on 30 May 2000. Assuming, as I have found, that development consent was required, the appellant had not complied with Condition 3. Mr Hale submits that the basis for the development consent must have been the erection of a building. If there was no power to grant a consent on that basis, then the appellant was entitled to say that it did not rely on the development consent in carrying out the work. This is so, he submits, even if there is an alternative source of validity of the order, ie the 'development' route. 51 In my opinion, the appellant's argument must fail. If the Council erroneously believed it was proceeding with regard to the 'erection of a building', and there is an alternative source of power, the appellant cannot escape responsibility by saying 'I am not relying on the consent'. It means no more than the Council took a wrong view as to its powers. 52 A reading of the order reveals that the Council did not rely solely on the 'erection of a building' route but also on the non-compliance with the consent. 53 In my opinion, the appeal in the Class 4 proceedings should be dismissed.

The Class 1 Appeal 54 Section 121ZK(1) of the Act provides that a person on whom an order is served may appeal to the Land and Environment Court. Subsection (4) provides that on hearing the appeal the court may do any of the following: (a) revoke the order, or (b) modify the order, or (c) substitute for the order any other order that the person who gave the order could have made, or (d) find that the order is sufficiently complied with, or (e) make such order with respect to compliance with the order as the Court thinks fit, or (f) make any other order with respect to the order as the Court thinks fit.

55 Mr Hale accepts that the appeal is an appeal de novo. However, he submits that it is confined to the circumstances which gave rise to the giving of the order in the first place. He submits that it cannot be used to empower the court to by-pass the requirements of ss 121D to S of the Act and, in effect, to serve another order altogether. In other words, he submits that the hearing of the appeal is confined to the reasons articulated in the order. 56 The submission cannot be accepted. It derives no support from the words of s 121ZK itself. There is no doubt that the appeal is a hearing de novo. That is the way in which it proceeded before Cowdroy J and the parties called evidence from expert witnesses who were not before the Council. 57 In my opinion, there is no reason to confine the appeal to the reasons articulated in the order in the first place. The width of the powers of the court in s 121ZK(4) belie the submission of the appellant. The hearing of the appeal is not confined in the manner suggested by the appellant. 58 The appellant further submits that the trial judge's discretion miscarried in that his consideration extended beyond the reason for the giving of the order in the first place. In view of what I have just said, this submission has no legs. Further, I cannot see that his Honour took into account matters which were outside his purview, given the nature of the appeal and the powers in the court set forth in s 121ZK(4). Nor am I able to understand how it can be said that he failed to exercise his discretion. He clearly did. 59 Lastly, it is submitted that his Honour erred in finding that the evidence of Ms Van Aierop suggested that the required tiles were readily available at the time, in that it was a finding not open on the evidence. However, this misstates his Honour's finding, which was that he was 'not satisfied that the tiles … were unobtainable'. This refusal to find the fact was available on the evidence and cannot be regarded as an error of law. 60 The appeal against the dismissal of the Class 1 proceedings should also be dismissed.

Orders 61 Both appeals dismissed with costs. 62 GILES JA: I agree with Stein JA. **********

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