Kendall Street Developments Pty Limited v Byron Shire Council

Background facts 4 An appreciation of the two questions which the Court is asked to determine is gained from a brief description of the background facts. 5 In proceedings No. (4)0059 of 2002 ("the Class 4 proceedings") the applicant, Kendall Street Developments Pty Limited, sought declarations that certain land at Byron Bay, being Lots 1 and 2 in deposited plan 209133 and Lot 1 in deposited plan 543882 ("the land") enjoyed existing use rights. In order to assert existing use rights the applicant relied upon a development consent granted by the council on 19 February 1991 ("the 1991 consent") for the commercial use of existing buildings on the land. 6 On 9 March 2001 ("the relevant date") Byron Local Environmental Plan 1998 Amendment No. 66 commenced ("the Byron LEP"), under which commercial premises, which were previously a permissible use on the land with development consent, became a prohibited use. 7 In the Class 4 proceedings the council raised as an issue the lawfulness of the use of the land. The Council asserted that the 1991 consent had lapsed prior to the relevant date, being the date upon which the Byron LEP commenced, by the operation of condition D2 of that consent; and since the development consent had lapsed pursuant to that condition, the use of the land at the relevant date was not a lawful purpose within the meaning of s 106 of the Environmental Planning and Assessment Act 1979 ("the EP&A Act"), which defines "existing use"; and/or that the use of the land at the relevant date was not authorised by operation of condition D2 of the 1991 consent. 8 In the Class 4 proceedings I found that the erosion escarpment as defined by the Shire Engineer had come within 50 metres of a building associated with the development and that this had occurred before 9 March 2001, so that condition D2 of the consent operated and the development permitted by the 1991 consent became unlawful prior to that relevant date: Kendall Street Developments Pty Limited v Byron Shire Council [2004] NSWLEC 227. The applicant, therefore, could not rely on the use or uses authorised by the 1991 consent to found a claim for existing use rights within the meaning of s 106 of the EP&A Act. 9 On 13 January 2004 the applicant lodged the present application with the council under s 96 of the EP&A Act, seeking to modify the terms of the 1991 consent in the manner now sought. The modification application seeks to render lawful the use at the relevant date. 10 The applicant has now appealed against the council's deemed refusal of the modification application. It is in this context that the parties have raised the two preliminary questions to be determined by the Court. These questions are: (1) Whether condition D2 of development consent 90/208 granted 19 February 1991 can be the subject of a modification application pursuant to s 96 of the Environmental Planning and Assessment Act 1979 ("the EP&A Act")? (2) If the answer to question (1) is yes, would modification of condition D2 of development consent 90/208 in the manner proposed in the s 96 application [the subject of these proceedings], or at all, render lawful the use of the land at the relevant date for the purposes of s 106 of the EP&A Act? The parties' submissions 11 Mr J A Ayling SC and Mr J B Maston, appearing for the applicant, rely upon the following submissions. As to the first question: (a) The development consent continued to exist as a development consent under the EP&A Act after the erosion escarpment came within the range referred to in the condition, notwithstanding that the development ceased. (b) The development consent remained and remains amenable to modification under s 96 of the EP&A Act. (c) The application was made by the registered proprietor of the land, or its consultant and was therefore made by a person entitled to act on and modify the consent. That entitlement extends to a person who would be entitled to act if the modification were to come into effect. (d) The council has power to modify the development consent since the modification application was lodged with the council before the Court's findings were made (Swadling v Sutherland Shire Council (1994) 82 LGERA 431). (e) A development consent affected by a condition requiring the cessation of the development, is clearly distinct from a development consent that has lapsed. The non-fulfilment or breach of a condition cannot cause the lapse of a consent, nor preclude modification (Pulver Cooper & Blackley Pty Ltd v Johnson (1998) 101 LGERA 76; Australand Holdings Ltd v Hornsby Shire Council (1998) 98 LGERA 312 at 316-317, 321; Tynan v Meharg (1998) 101 LGERA 255 at 258; Dallow v Wagga Wagga City Council, NSWLEC, Pearlman J, 6 February 1997, unreported). (f) The cause of the cessation of the development under the consent can be removed by modification under s 96 of the EP&A Act (MLC Properties v Camden Council (1997) 96 LGERA 52; Hilltop Planners Pty Ltd v Great Lakes Council (2003) 127 LGERA 333 at 343-344). As to the second question: (g) Modification of the consent would operate retrospectively, and if granted, have the consequence that the condition was not breached because the Shire Engineer's findings would not establish breach of the modified condition (Windy Dropdown Pty Limited v Warringah Council (2000) 111 LGERA 299 at 303-304). (h) Modification under s 96 has unlimited temporal operation and should not be limited to apply only from the date upon which modification is granted (Willoughby City Council v Dasco Design and Construction Pty Limited (2000) 111 LGERA 422 at 442 should be distinguished). (i) No question of civil or criminal enforcement arises in either the present proceedings or the class 4 proceedings, so that enforcement rights need not be considered (Dasco Design at 443). 12 Mr B W Walker SC and Ms S A Duggan, appearing for the respondent, rely upon the following submissions. As to the first question: (a) The development consent was limited in time so that the development consent was no longer in force upon the occurrence of the facts referred to in condition D2 (EP&A Act, s 80A(1)(c) & (d), formerly s 91(3)(c) & (d); Pulver Cooper, Australand Holdings and Swadling distinguished). From that date there was no development consent in existence that would authorise use of the land or authorise an application under s 96 of the EP&A Act. (b) Once the period of limitation in the condition of consent had been reached, there was no longer any person entitled to act upon the development consent because it had ceased to exist (Coalcliff Community Association Inc v Minister for Urban Affairs & Planning (1999) 106 LGERA 243 at 260). (c) Although the s 96 application was made before the Court's findings in the class 4 proceedings, the development consent ceased to have effect prior to that date. (Coalcliff at 260, 264; Dallow distinguished). As to the second question: (d) No modification of the development consent subsequent to the relevant date can operate to render the use lawful at the relevant date. (e) Section 96(4) of the EP&A Act anticipates a prospective application and should not operate retrospectively for the following reasons: (i) a retrospective operation would be absurd and contrary to the rule of law; (ii) a retrospective application would operate contrary to the trade-offs that occur under modifications, by making previously lawful conduct unlawful; (iii) section 96(4) should be interpreted in its statutory context; (iv) in a statutory scheme where legal standards provide the yardstick by which conduct is measured, it is fundamental that the relevant conduct is governed by the legal regime in place at the time when the conduct occurs (EP&A Act, ss 106, 123, 124 and 125); (v) an act that constituted a breach of the Act when the conduct occurred, remains a breach of the Act, despite any subsequent action (EP&A Act, s 124(3)); (vi) in a statutory system where both consent and prohibition operates from time to time there is a need for transparency, so that a retrospective application would be absurd and an anti-purposive reading of the EP&A Act (eg EP&A Act, s 76A); (vii) where a provision is intended to operate retrospectively, then express words to that effect must be used; (viii) section 96(4) of the EP&A Act contains no reference to retrospectivity, either express or implied; (ix) section 96(4) is a referential provision, providing instructions for the application of the statute where a modification of a development consent occurs; (x) modifications should not have a broader application than development consents in a statutory scheme where development consents themselves do not operate retrospectively; (xi) a retrospective application of the modification would be contrary to a purposive construction of ss 96 and 106 of the EP&A Act (North Sydney Municipal Council v Boyts Radio and Electrical (1989) 67 LGERA 344 at 345; Lemworth Pty Ltd v Liverpool City Council (2001) 117 LGERA 305 at 314). (xii) the decision of Bignold J in Dasco Design should be followed; and (xiii) the decision of Talbot J in Windy Dropdown is distinguishable; or alternatively, was incorrectly decided. (f) If s 96 operates retrospectively, the effect of the modification cannot be used to inform the determination required under s 106 (Moy v Warringah Council [2004] NSWCCA 77 at [62]-[63]; Warringah Council v Moy (2003) 128 LGERA 212 at 227). Conclusions What was the effect of the breach of condition D2? 13 The council granted consent to the development in 1992, imposing condition D2. The council had power to impose condition D2 under s 91(3)(c) and (d) of the EP&A Act, as it then was. Those provisions, which became s 80A(1)(c) and (d) in the EP&A Act as amended in 1997, provided: A condition of development consent may be imposed if: (c) it requires the modification or cessation of development (including the removal of buildings and works used in connection with that development) carried out on land (whether or not being land to which the development application relates); or (d) it limits the period during which development may be carried out in accordance with the consent so granted. 14 Those provisions empowered the council to impose a condition that limited the development in time, by providing that development consent shall cease upon the occurrence of a particular event. 15 In Kendall Street Developments Pty Limited v Byron Shire Council [2004] NSWLEC 227, I held that the events specified in condition D2 had been fulfilled by 17 March 1998, requiring the development to cease. In particular, I considered whether the condition made under the provisions to which I have referred placed a temporal limitation on the development, or alternatively, on the consent (at par [13]): Moreover, a court will strive to give effect to the words used rather than strike down a clause or condition. Accordingly, if necessary to give effect to the condition, I am prepared to read it in the way that the Act allows. The condition obviously requires that the development which is the subject of the consent must cease upon the happening of the particular event. This is what is clearly intended by the condition. A reading of the condition in this way does not, however, assist the applicant. The effect is the same as if the development consent were to cease. If the condition requires the development which is the subject of the consent to cease, then the continued carrying out of that development is unlawful and thus outside the definition of existing use. 16 Accordingly, condition D2 places a temporal limitation on the development, but upon a proper construction of the EP&A Act, does not impose such a limitation on the development consent. In my earlier decision, it had the same practical effect as if the development consent were to cease, but not the same legal effect. The continued carrying out of the development constituted an unlawful use, but the development consent continued to exist. Can condition D2 be the subject of a modification application? 17 In these circumstances, I turn to consider whether the applicant can apply to the council for modification of condition D2 of the consent. In Windy Dropdown Pty Ltd v Warringah Council (2000) 111 LGERA 299, Talbot J held that a modification application could be made under s 96 which related to development that had already been carried out in its modified form, even where such development contravened the conditions of the development consent. In coming to that conclusion, his Honour noted (at 304) that the development consent, and not the development, is the subject of an application for modification under s 96. In Willoughby City Council v Dasco Design (2000) 111 LGERA 422 Bignold J followed this decision in holding (at 440-441) that it was legally possible for a council to grant approval to a modification application where the modification related to works that had already been carried out in breach of the Act. 18 Considerations of judicial comity and certainty in the law compel me to follow decisions of other judges in the same jurisdiction (Michael Realty Pty Ltd v Carr [1975] 2 NSWLR 812 at 820; La Macchia v Minister for Primary Industries & Energy (1992) 110 ALR 201 at 204; Pancho Properties Pty Ltd v Wingecarribee Shire Council (1999) 110 LGERA 352 at 369-370; Q & R Developments Pty Ltd v Sutherland Shire Council (2001) 117 LGERA 438 at 443). Since the development consent continues to exist in the current circumstances, it follows that the development consent may be the subject of an application for modification, notwithstanding that the development itself has became unlawful. It also follows from the continuing operation of the development consent, that the applicant is entitled to act upon the consent in applying for modification of condition D2 of the development consent. 19 Accordingly, the first question should be answered in the affirmative. I now turn to determine the second question raised for consideration. Would modification of condition D2 render lawful the use of the land at the relevant date? 20 The applicant seeks to assert existing use rights in relation to the land. To establish existing use rights under s 106 of the EP&A Act, the use of the land must have been for a lawful purpose immediately before the coming into force of an environmental planning instrument that would otherwise render such use prohibited. In Kendall Street Developments Pty Limited v Byron Shire Council, I held that the development was unlawful at the relevant date (being the coming into force of the Byron LEP, namely 9 March 2001); and was thus not an existing use as defined in s 106 of the EP&A Act. There would be no utility in the applicant applying for modification of the development consent if it would not render the use lawful at the relevant date. 21 The parties proceeded on the common understanding that in Windy Dropdown, Talbot J held (at 304) that the modification of a consent operated retrospectively. That is, it related back to the grant of development consent that it modified, so that any development carried out in conformity with the consent as modified was deemed to have been carried out in accordance with the consent so modified. A contrary conclusion, however, was reached by Bignold J in Dasco Design at 442. Bignold J held that a modification is effective only from the date that the modification is granted. In these circumstances considerations of judicial comity cannot apply and I am free to examine the question afresh and to depart, as I must, from one or the other of these decisions. 22 Both decisions turn largely upon the operative effect of s 96(4) of the EP&A Act which states: Modification of a development consent in accordance with this section is not to be construed as the granting of development consent under this Part but a reference in this or any other Act to a development consent is a reference to a development consent so modified. 23 It seems to me that there are textual indicators in the Act which suggest that a modification of a consent under s 96 does not have retrospective effect, but rather operates only from the date that the modification is granted. Those textual indicators may be stated as follows: (a) Section 76A, which states that if an environmental planning instrument provides that specified development may not be carried out without development consent, a person must not carry out development unless such a consent has been obtained and is in force and the development is carried out in accordance with the consent and the instrument. Accordingly one must be able to say, on any given day, whether a development is lawful or, if there is a consent, what it is that the consent permits or prohibits. (b) Sections 123, 124 and 125, which enable the bringing of proceedings to restrain a breach of the Act (s 123), the making of orders to remedy or restrain a breach (s 124), and the bringing of prosecutions for a breach (s 125). Such conduct is to be judged by the statutory regime applying at the time of the alleged conduct. (c) Section 106, which defines "existing use" by reference to a use for a "lawful purpose" on the relevant day (being immediately before the use became prohibited). This requires the Court to ascertain a state of affairs, both factual and legal, applying at that time. (d) Section 96 itself. It is a fundamental principle of statutory construction that a statutory provision is presumed not to operate retrospectively unless it says so. It would require clear language in the text of a statutory provision if it was intended to operate retrospectively, and such language is absent here. Moreover, sub-s (2)(a) expressly distinguishes between a consent which was originally granted and one that was modified; that is, it refers to different periods, times or phases. Finally, there are two limbs to sub-s (4). The first limb is a statement that a modification is not to be construed as the granting of development consent. Retrospectivity, if that were intended, would scarcely be achieved by such an expression. The second limb is a referential provision. It explains how to read expressions found elsewhere in the Act. Again, this is not the language of retrospectivity. 24 The applicant's construction of s 96(4) could lead to absurd consequences. It is, of course, a further principle of statutory construction that if one interpretation leads to absurd consequences and another interpretation does not, then the latter is to be preferred. An example of such absurdity was given by the respondent's senior counsel. Modifications are frequently made by altering conditions of consent. Thus, a consent for a place of public entertainment may have a condition permitting loud music until 3:00 am, Tuesdays to Saturdays. The applicant may wish to also operate on Mondays and may be willing to enter into a trade off - the loud music to cease at 2:00 am. A modification allowing loud music on Mondays but restricting all loud music to 2:00 am is then made. If the applicant's argument is accepted, it would mean that the playing of loud music between 2:00 am and 3:00 am, which was hitherto lawful, would have suddenly become retrospectively unlawful. The Court should not, however, interpret a statute to permit the retrospective imposition of criminal liability for conduct that was not criminal at the times it was engaged in, in the absence of clear words indicating such intention. 25 The view to which I have come is consistent with that of Bignold J in Dasco Design. In that case, as noted above, Bignold J held (at 442 [102]) that a modification is effective to oust the prohibitory effect of s 76A, but only from the date that the modification is granted. Bignold J noted (at [101]) the view of Talbot J in Windy Dropdown, as he understood that judgment, was that the modification approval is effectively related back to the grant of the development consent it modifies. Bignold J preferred the competing answer, that the modification is effective to oust the prohibitory effect of s 76A but only from the date that the modification is granted (at [102]). After noting that the second limb of s 96(4) is a conventional referential provision, Bignold J said (at 442 [104]): [104] Its meaning is, I think, quite clear, namely that whenever a development consent is modified, any reference contained in the EP&A Act (eg ss 76 A and 122) or any other Act to the development consent is to be construed as a reference to the development consent as so modified. However, this does not require a fictional relation back of the modification to the date when the development consent that it modifies, was granted. In other words, just as s 68 of the Interpretation Act 1987 (NSW) requires a reference to an Act to be construed as a reference to that Act "as in force for the time being", but does not require the effect of any legislative amendment to be related back to the date of the original enactment, so s 96(4) is to be interpreted, according to its ordinary and natural sense, as requiring a reference to a development consent that has been subsequently modified to be construed as a reference to that consent as so modified from the date that the modification is granted . 26 In posing the question - does the modification entirely "blot out" or erase any breach of the EP&A Act arising from the operation of s 76A - Bignold J said that the answer is clearly "no". 27 It remains to consider the decision of Talbot J in Windy Dropdown which is suggested to be to the contrary. It is necessary to examine that part of the judgment in which his Honour appears to conclude that s 96(4) operates retrospectively. The key passages are as follows (at 304): [27] The language of s 96 (or the former s 102) itself does not mandate against retrospective development. The only prospective language is the reference to "the proposed modification" in subs 1 A (a). A practical purpose of s 96 is to provide an opportunity to deal with anomalies in design unforeseen at the date of grant of development consent or, as the history of the legislation suggests, to legitimise partial changes that do not have the effect of radical transformation. The original concept of the modification of the details of a consent appears to have been reintroduced by s 96(1), although not in the same terms. [28] Subsection (4) of s 96 is the same as the previous subs (4) of s 102. It expressly distinguishes modification of a development consent from the granting of development consent, thereby suggesting that at least in some respects the consideration and approval of an application for modification is to take place in a different context to the consideration of an application for development consent. Furthermore, the subject of an application made pursuant to s 96 is the development consent, not the development itself. [29] One is then left to ponder how the express words in s 76 A can be reconciled with the lack of a concise formulation in s 96 and a broad construction of s 124(3)(a). [30] Section 76 A as well as s 78 A clearly operate in the context of a prospective proposal whereas a modification of consent pursuant to s 96 operates retrospectively by dint of s 96(4). A modification may or may not alter some aspect of the development itself. That some degree of change is contemplated is recognised by the constraint in s 96(1A) and (2) that the development to which the consent as modified relates must be substantially the same development. [31] Even if s 124(3) does not ameliorate the strict application of s 76 A , as Mr Leggat suggests it does, a broad construction of s 96 clearly leaves that potential open. The effect of s 96(4) is that any development already carried out in conformity with the consent as modified is deemed to have been carried out in accordance with the consent so modified. On that basis no conflict with s 76 A will arise as the development is deemed to have been carried out pursuant to a consent. [32] Moreover, the broad construction of s 96 leads to a practical result that enables a consent authority to deal with unexpected contingencies as they arise during the course of construction of development or even subsequently, provided of course that the development to which the consent as modified relates is substantially the same development. 28 The argument has focused on the conclusion (in par [30]) that "[s] 76A as well as s 78A clearly operate in the context of a prospective proposal whereas a modification of consent pursuant to s 96 operates retrospectively by dint of s 96(4)", and upon the further conclusion (in par [31]) that "[t]he effect of s 96(4) is that any development already carried out in conformity with the consent as modified is deemed to have been carried out in accordance with the consent so modified". 29 A number of observations may be made about the passages quoted above. Firstly, the whole of the discussion appears to be obiter, in the sense that it was not the central issue for determination in that case. Secondly, there is the statement in par [27] that the language of s 96 does not itself mandate against retrospective development. That however, is not the point. One cannot then conclude from this statement that the section operates retrospectively. If the language is silent on the question then the presumption is the reverse, the principle being that clear or express language is required in order to find retrospectivity. 30 Nothing that is said in par [28] supports a conclusion that a modification operates retrospectively. If anything, the reference by his Honour to a different context, being an application for modification on the one hand and an application for development consent on the other hand, reinforces the view which is contrary to the submission that a modification operates retrospectively. 31 Paragraph [29] does not represent any reasoning to support the retrospective operation of a modification. I would respectfully query what is said to be the lack of a concise formulation in s 96 of the EP&A Act. 32 In par [30] his Honour observes that ss 76A and 78A "operate in the context of a prospective proposal". That is a tautology. All proposals are, of necessity, prospective. The second part of the sentence - "a modification of consent pursuant to s 96 operates retrospectively by dint of s 96(4)" - is, with respect, a conclusion. There is nothing to tell the reader how the conclusion is reached. That is to say, there is nothing in the preceding paragraphs which explain what it is that gives the words of s 96(4) the effect of retrospectivity. The balance of the paragraph does nothing to affect the question of retrospectivity. Therefore, this paragraph does not provide reasoning to support the applicant's submissions. 33 Paragraphs [31] and [32] contain nothing to demonstrate that the presumption against retrospectivity has been displaced in s 96(4). The presumption (or, to be more correct, the principle of statutory construction) against retrospectivity, recognises that the law applies from time to time, so that those who are required to comply with the law may know what laws apply to them at any particular time. To say that a certain statutory regime that once operated at a particular time no longer applies to that particular time generates particular difficulties and can result in absurdities, such as the example given in par [24] above. Talbot J recognises in both pars [27] and [32] that modifications serve the practical purpose of permitting conditions, which did not exist when a consent was granted, to be subsequently taken into account. If that is so, however, then there is no need for retrospectivity so as to have the adaptation to the latest conditions, which did not previously exist, govern the terms of the consent from the beginning. 34 It is to be noted that Talbot J in Windy Dropdown was not asked to expressly consider the question of whether a modification cures the unlawfulness of any development the subject of the modification which took place before the modification was approved. I am not satisfied that Windy Dropdown provides adequate reasoning to support the submission of the applicant that a modification operates retrospectively. My conclusion is, therefore, that the textual indicators to which I have referred, the presumption against retrospectivity, the reasons of Bignold J in Dasco Design, and practical considerations described above, persuade me that any modification can only operate prospectively. 35 For completeness, I answer the two questions for determination as follows: Question (1) Whether condition D2 of development consent 90/208 granted 19 February 1991 can be the subject of a modification application pursuant to s 96 of the Environmental Planning and Assessment Act 1979 . Answer: Yes. Question (2) If the answer to question (1) is yes, would modification of condition D2 of development consent 90/208 in the manner proposed in the s 96 application [the subject of these proceedings], or at all, render lawful the use of the land at the relevant date for the purposes of s 106 of the Environmental Planning and Assessment Act 1979 . Answer: No. I hereby certify that the preceding 34 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.