King & Campbell Pty Ltd v Hastings Shire Council

Land and Environment Court (NSW)|2000-02-01|Before: Sheahan J, Mr J, Talbot J

The applicant alleges that the Senior Commissioner did not discharge his duty to give reasons in regard to the following matters, which were the subject of direct conflict between the parties:

· the amount of 'grants' received by the Council for road works · the excess in funds to be received by the Council based upon an invalid principle of population projection and collection by allotments · the amount of monies to be received by the Council in interest on funds collected on the period of the s 94 plan · the erroneous application of a mathematical principle whereby the percentage of cost to new users were made invalid · the improper nexus between area 12 and costs in other areas of the Local Government Area · the improper use of double counting of assets, maintenance cost and work costs paid for by another fund (open space) · the improper inclusion of commercial and industrial traffic in the apportionment of road work costs · the failure to account for existing s 94 funds already used in the Contribution Plan which will not be refunded

The particularised items identified by the applicant in this ground of appeal were not within the limited scope of s 94(8), which provides the relevant parameters imposed on the Senior Commissioner when hearing this appeal. If he found any condition to be unreasonable, he may consider whether to disallow or amend it.

Upon reading the judgment of Senior Commissioner Jensen, it is clear that he did not find any of the conditions to be unreasonable. He gave reasons for these conclusions in his judgment. There is no statutory requirement that he consider the matter any further.

I, therefore, consider that he fulfilled his duty to give reasons, and I find no error of law with respect to this ground of appeal. Ground (iii) Adjustment of contributions to account for monies received by way of grants and interest

In respect of grants, the applicant complains that the Senior Commissioner was in error in not deducting from the total cost of roadworks the amount of interest received on government grants used by the Council for roadworks before the liability was apportioned between existing users and those users associated with the new development.

Mr Webster, counsel for the applicant, submits that the "actual cost" to Council must be used when calculating "cost" pursuant to s 94. Accordingly, the amounts of money received through government grants and the like must be taken into account when calculating the contribution payable.

In the present case, the evidence indicates that the Council received $500,000 per annum through Roads and Traffic Authority ("RTA") grants (Exhibit 10 p 3). Mr Webster submitted that the new users of the road system received no benefit at all from these grants, there being no reduction in the amount of contribution levied.

Mr Robertson, for the Council, submits that this ground of appeal does not erect a principle of law, but being properly characterised as a question with respect to the effect or construction of the term "cost", as used in s 94, I have concluded that it is a question of law. Life Insurance Co of Australia v Phillips (1925) 36 CLR 60.

I, therefore, turn my attention to the question of whether the Senior Commissioner committed an error of law in dealing with this issue.

Mr Webster referred me to the decision of the Court of Appeal in Allsands Pty Ltd v Shoalhaven City Council (1993) 78 LGERA 435. The headnote of that case records the following decisions: (1) The word 'cost' in the phrase 'recoupment of the cost' in s 94(2A) of the Environmental Planning and Assessment Act 1979 refers to actual cost, even if it has to be estimated, but it is not permissible to apply the provision by estimating current cost and then depreciating it, nor by applying an index to historical cost. (2) Where part of the cost, recoupment of which the council seeks by condition pursuant to s 94(2A), has been subsidised by arrangement with government the condition must exclude recoupment in respect of the subsidy. (3) What is the relevant area for the purposes of s 94(2A) is entirely a question of fact the determination of which by the council and/or the Land and Environment Court on appeal cannot be interfered with on an appeal limited to questions of law. (4) The cost referred to in s 94(2A) is a once and for all cost crystallised at the time of construction and does not include cost of subsequent maintenance in respect of continuous provision.

The Court of Appeal addressed the question of government subsidies towards the building of particular works - in that case arrangements between the Council and the Minister for Public Works regarding the construction of water and sewerage headworks. It was argued that since s 94(2A) was dealing with the public amenities or services provided by Council, recoupment of the cost of providing the amenity could only mean the actual cost to the Council. Mahoney and Meagher JJA both agreed with the judgment of Priestley JA, who stated (at 446): Section 94 entitles the Council as the provider of the amenity or service to impose conditions requiring contributions towards the recoupment of the cost. In cases where, by arrangement with the government, the Council was never liable to anyone for payment of part of the cost of the work, the power to impose a condition requiring contribution towards recoupment of cost cannot be referable to a cost not incurred by Council. … In my opinion it was a legal error on the Council's part to take such unincurred costs into account in fixing the contributions required by condition 21.

It follows from this unanimous decision of the Court of Appeal that it is proper to deduct any relevant RTA grants received by the Council prior to calculating the " cost to the Council " (and consequently the amount required by way of s 94 contribution).

This is the proper test to be applied by the Senior Commissioner. One does not apply the Allsands principle to all grants received, but only to those grants that have been specifically tied to the construction or upgrading of the roads or other works, which will experience increased demand as a result of the proposed development. Untied grants, or Financial Assistance Grants (" FAG grants ") are not so accountable, because the Council has a discretion with respect to how and where it spends such grant money.

The Senior Commissioner dealt with government grants at pages 12-14 of his judgment.

Mr Kerwick gave evidence that the grants given to the Council were from a State Government source and to cater for " out of shire traffic ". Evidence was also given by Mr Brady that the policy of the RTA's funding is that the user pays, so that the future development should pay for itself rather than being funded through grants. The Council's treasurer said that it was Council's policy to apply these grants to its own work attributable to the maintenance of the existing roads hierarchy in the Shire.

The proposition put forward by Mr Webster was that the annual grant amounts should be deducted from the cost of the works before the contribution is correct, but only with respect to those grants tied to the construction or upgrading of roads as a result of the increased demand caused by the development the subject of the development application.

As the Senior Commissioner took no different view or approach I can find no error of law in his approach to the issue of grants .

With respect to the issue of interest , the applicant had filed with the court, apparently on 2 November 1998, a document entitled " Point of Law ", in these terms: At the hearing of this application the Applicant intends to raise the following point of law:- " The failure of a contribution under section 94 of the Environmental Planning and Assessment Act to take account of the earning of interest on monies received during the development program in calculating the charge is a failure to comply with the provision of Section 94(2) of the Act. "

There is a notation on the court file to the effect that the applicant was advised that the point of law would need to be raised " before the List Judge prior to the commencement of the merit hearing ". That does not appear to have been pursued, the List Judge having already set the matter down before " a senior Assessor " (Talbot J on 26 August 1998), after the Chief Judge also had earlier (30 April 1998) dismissed a Notice of Motion for the hearing to be before a Judge.

In any event, the so-called " point of law ", as such, does not appear to have been specifically addressed before the Senior Commissioner.

However, the Senior Commissioner dealt specifically with the Allsands decision in the following terms (page 19 of his judgment): …the matter of Allsands was referred to and clearly on its facts it is significantly different to what was before the Court in this instance. Where in Allsands it is apparent the Council was seeking to reimburse itself for funds expended at an earlier time, in the matter before this Court, the Council is seeking to obtain funds for infrastructure which will be required at a later time. Nevertheless it appears to me that the notion of requiring contributions to achieve an appropriate off-set should as in Allsands , be undertaken on a single charge basis rather than being incremented by interest charges compounding over time.

Allsands decided that " recoupment of the cost " pursuant to s 94(2A) could only refer to the cost to the Council. Accordingly, the Council cannot claim more than its actual costs. Actual cost was held to include any interest payments that the Council incurred when borrowing money to finance the cost of providing public services or public amenities. Priestley JA said (at 447): It seems to me that the words of 94(2A)(a) tend more towards the meaning that the cost towards the recoupment of which conditions may be imposed is the cost to the Council of having put in place public amenities or services in preparation for or to facilitate the carrying out of development in the area, rather than the meaning which would justify the inclusion of this factor in the formula. That is, those words seem to me to convey the meaning that the cost referred to is a once for all cost. The same sense seems to me to be conveyed (although by no means conclusively) by s 94(3A). Such a once for all cost as I think is indicated by the reading of s 94 as a whole would in my opinion include interest payments on moneys borrowed to meet that once for all cost, but not in my opinion the cost of maintaining the physical asset after it has been provided.

Mr Webster submitted that, in computing the amount of a s 94 contribution, " interest " must be applied both ways . If the Council can require contributions for the recoupment of the cost of interest payments on money that has been borrowed and spent (as was decided in Allsands ), then it must also deduct the amount of any interest earned on s 94 money collected, prior to its being spent.

With respect, this submission is misconceived and finds no support in either the terms of s 94 or the judgment of the Court of Appeal in Allsands . It would also erect an almost impossible accounting task for councils in setting the amount of contributions.

Allsands concerned the levying of s 94 contributions pursuant to the regime provided in sub-sections (2A) and (3A), the history of which " retrospective " regime was dealt with at some length by Priestley JA.

The contributions in this case are " prospective " in character, dealing with anticipated expenditure, and are levied pursuant to the regime provided for in s 94(1), (2), (3), etc.

Such contributions are levied " once and for all ", subject to CPI adjustment between calculation and payment; they must be " reasonable "; they must be held in trust; and they must be applied to relevant and appropriate works within a reasonable time.

Similar parameters are traditionally applied to government grant monies paid in anticipation of works.

Relevantly s 94(3) envisages that the Council will earn money from the investment of s 94 funds which it holds in trust, and it specifically provides that such earnings are to be applied to the works which will be done in due course, but within a reasonable time.

It would be extraordinary if the amount of such s 94 contributions should be reduced because of interest earned on " earmarked " grant funds during any period which may elapse between their receipt and the performance of the works envisaged when the grants were made.

In the cases of both s 94 contributions, and the provision of government grants, the funds provided to Council for relevant works erode in value over time as the costs involved in those works rise, and the general aim is for the increase in costs to be covered by any interest earned.

I, therefore, find that the Senior Commissioner committed no error of law in declining to accept such a consideration in determining " cost " within the context of s 94 of the EPA Act. Ground (iv) Recovery of money in excess of cost and/or without nexus

Mr Webster's amended written outline of submission expands this ground of appeal as follows: The alleged incorrect application of the cost and nexus of the Roads by the Applicant was based upon two main factors viz

(a) - there was an incorrect apportionment between existing users and new development creating an invalid nexus with the cost of the works. (See exhibit 16). (b) The basis of distributing those costs was based upon incorrect premise which allowed the Council to collect more than the estimated cost - as this is also reflected in the challenge to the Open Space s 94 Plan, it will be dealt with then, but the same principles are applicable (trips/population not lots).

The first limb of this ground of appeal, as so expressed, is ultimately a question of weight and therefore a question of fact. As Lloyd J observed in Carstens v Pittwater Council [1999] NSWLEC 249 (par 35): … I am mindful that on an appeal from a Commissioner with specialist expertise who has had the benefit of seeing and hearing the expert witnesses and viewing the site, a court of appeal which has jurisdiction to review findings of fact should generally exercise caution in substituting its own opinion for the Commissioner's finding.

It is clear that the Senior Commissioner applied the appropriate nexus principle, paraphrasing the decision of Newbury District Council v Secretary of State for the Environment [1981] AC 578 (see p17 of his judgment).

Following the correct application of the relevant test, the parameters of any nexus between old and new users (and therefore apportionment of the costs) is a question of weight and therefore one of fact and not of law.

It follows that I cannot find an error of law in the first limb of this ground of appeal, despite the complex and extensive apportionment calculations set out in Mr Webster's written submissions.

The second limb of this ground of appeal argues that trips or population should be the appropriate basis for distributing costs, as against the measure which the Senior Commissioner used (lots). I am of the view that the Senior Commissioner applied the correct test, but even if he based his decision upon an incorrect premise, it, being an error of fact, this would not reveal an error of law. Electricity Commission of NSW (trading as Pacific Power) v Arrow (1994) 85 LGERA 418 (" Arrow ").

I, therefore, dismiss the appeal in respect of both limbs of ground of appeal (iv). Ground (v) Recovery of money, in excess of cost, for subsequent spending

The Applicant alleges in this ground of appeal that the Senior Commissioner erred in law by allowing for the recovery of monies in excess of cost and in contravention of s 94, upon the basis that it would be spent at "a subsequent time".

For the reasons advanced in respect of Ground (iv) above I would not disturb the findings of Senior Commissioner Jensen.

However, it is important to note that, on the face of the words of s 94(1) and 94(3), it appears to have been intended by the Legislature that a Council may require, as a condition of consent, the payment of a monetary contribution for public amenities or public services that are going to be provided at some cost, at some point of time in the future. I can, therefore, see no error of law in allowing the collection of money on the basis that it would be spent at "a subsequent time", so long as it is spent within a "reasonable time", in accordance with s 94(3). Ground (vi) Determining the basis for correcting the amounts of contribution

The applicant contends that the Senior Commissioner improperly interpreted s 94(8), in that he misdirected himself in taking the view that the court would not find a condition unreasonable unless:

(i) there is a real travesty of the nexus principle (Page 21.5) (ii) there is a substantial fundamental error in the plan (Page 23.8) (iii) the costing errors have to be 'sufficiently extreme and skewed' before the contribution was 'intrinsically unreasonable' (Page 21.3) (iv) there must be shown 'a quite unacceptable level of s 94 Contribution' (Page 23.9) (v) there must be a 'substantial mismatch between intended services and the funds to pay for them' (Page 24.6)

I do not consider that the above findings and circumstances give rise to an error of law.

As even the submissions put by Mr Webster clearly show, the Senior Commissioner was attempting to use to appropriate test of ' unreasonableness ', pursuant to s 94(8) of the EPA Act. (see, eg, par 1(vi) of Mr Webster's written submissions). Subject to the application of the appropriate test, the question of reasonableness is a question of fact.

It should also be noted that, following his finding that the condition was reasonable, the Senior Commissioner had no power under s 94(8) with respect to disallowing or amending it. Ground (vii) The appropriate test of reasonableness

For essentially the same reasons as I have given above I conclude that the appropriate test has been utilised by the Senior Commissioner and this ground of appeal must fail. Ground (viii) Adjustment of the amount of contributions required

This final ground of appeal refers to adjustment for 8 separate items, set out in sub-paragraphs (a) to (h). (a) The amount of grants received by the Council for roadworks I have already dealt with the issue of grants. (b) The excess in funds to be received by the Council based upon the invalid principle of population projection and collection by allotments This ground of appeal raises entirely questions of fact, and must fail. I also note that the Senior Commissioner dealt with this particular question (at p 18 of his judgment), in these terms: In this context, it is clear that an underlying theme of the Applicant's appeal is that the current contributions plan will result in the Council collecting more funds than are justified by the ultimate construction of infrastructure and services associated with residential subdivision. Evidently, if this were to be true then the providers of the funds would be clearly entitled to a reimbursement. However, it is hard to imagine that such a situation could be accurately established before the event, however imaginative the method of analysis might be and as used (sic) to carry out the predicative task. (c) The amount of monies to be received by the Council in interest on funds collected on the period of the s 94 plan I have already dealt with the question of interest. (d) The erroneous application of the percentage of cost to new users Mr Webster submitted that there can be no justification for any nexus other than a relationship of new development (43%) to existing development (57%), and that the amount of contribution payable should, therefore, be capped at 43% of the cost of the public amenities or public services provided. The unanimous decision of the Court of Appeal in Arrow is authority for the proposition that the selection of one method of calculation over another is not an error of law. Although Arrow concerned the valuation of land consequent on a resumption, analogous principles may be applied to the present circumstances. Meagher JA (with whom Kirby P and Handley JA agreed) stated (at 421): I have some difficulty in understanding the force of the evidence in question… However, that is what his Honour found, and the fact that the evidence on which his Honour based his opinion displays some oddity is not sufficient for us to reverse him. Nor, which is more important, does it convert a finding of fact (accurate or inaccurate) into an "error of principle", without which the appeal must founder. Nor is its success enhanced by the fact that the mathematical method by which the figure of $70,000 was reached may have contained an error. I agree with the Mr Robertson's submission, that, if correct legal principles are followed and applied, the selection of one available method of calculation of the relevant contribution over another cannot amount to a error of law, and neither can the making of a mathematical error.

This ground of appeal, therefore, fails. (e) The improper nexus between Area 12 and costs in other areas of the Local Government Area Issues of nexus have been discussed in earlier parts of this judgment, and as this ground raises only a question of fact, it also fails. (f) The improper use of double counting of assets, maintenance cost and work costs paid for by another fund (open space) It is alleged by the Applicant that the Senior Commissioner allowed the improper use of a s 94 condition to require contributions for assets that have been included previously, and/or in respect of which the costs had already been accounted for by another fund. This seems to me to be purely a question of fact. With respect to maintenance works, the Applicant alleges that the contributions required by the Council, as approved by the Senior Commissioner, include amounts which are for the " maintenance " of parks and recreational equipment, which cannot come within s 94(2A). Mr Robertson points to the increased usage resulting from an increase in population (including, significantly, a large increase in the number of children) as the reasons that the existing equipment will need to be replaced sooner than expected. Additionally, existing park equipment will need to be supplemented to accommodate the additional population. Mr Robertson argues that s 94 embraces the concept that if the development required the provision of, or increase the demand for, additional public amenities and public services, then the development should pay for such requirements.

Replacement and or supplementation of existing park equipment falls within this statutory framework, and is not " maintenance " works, which are not appropriate under s 94.

As no maintenance works are in fact included in the conditions of approval imposed by the Senior Commissioner, this ground of appeal fails. (g) The improper inclusion of commercial and industrial traffic in the apportionment of roadwork costs; and (h) The failure to account for existing s 94 funds already used in the Contribution Plan which will not be refunded Again these two grounds of appeal do not reveal a question of law, and must fail. Conclusion and Orders

I conclude that the Senior Commissioner made no errors of law and I accordingly make the following orders:

The Appeal is dismissed.
The applicant should pay the respondent's costs.
All exhibits should again be returned to the parties.

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.

25. Upon reading the judgment of Senior Commissioner Jensen, it is clear that he did not find any of the conditions to be unreasonable. He gave reasons for these conclusions in his judgment. There is no statutory requirement that he consider the matter any further.

26. I, therefore, consider that he fulfilled his duty to give reasons, and I find no error of law with respect to this ground of appeal.

Ground (iii) Adjustment of contributions to account for monies received by way of grants and interest

27. In respect of grants, the applicant complains that the Senior Commissioner was in error in not deducting from the total cost of roadworks the amount of interest received on government grants used by the Council for roadworks before the liability was apportioned between existing users and those users associated with the new development.

28. Mr Webster, counsel for the applicant, submits that the "actual cost" to Council must be used when calculating "cost" pursuant to s 94. Accordingly, the amounts of money received through government grants and the like must be taken into account when calculating the contribution payable.

29. In the present case, the evidence indicates that the Council received $500,000 per annum through Roads and Traffic Authority ("RTA") grants (Exhibit 10 p 3). Mr Webster submitted that the new users of the road system received no benefit at all from these grants, there being no reduction in the amount of contribution levied.

30. Mr Robertson, for the Council, submits that this ground of appeal does not erect a principle of law, but being properly characterised as a question with respect to the effect or construction of the term "cost", as used in s 94, I have concluded that it is a question of law. Life Insurance Co of Australia v Phillips [1925] HCA 18; (1925) 36 CLR 60.

31. I, therefore, turn my attention to the question of whether the Senior Commissioner committed an error of law in dealing with this issue.

32. Mr Webster referred me to the decision of the Court of Appeal in Allsands Pty Ltd v Shoalhaven City Council (1993) 78 LGERA 435. The headnote of that case records the following decisions:

(1) The word `cost' in the phrase `recoupment of the cost' in s 94(2A) of the Environmental Planning and Assessment Act 1979 refers to actual cost, even if it has to be estimated, but it is not permissible to apply the provision by estimating current cost and then depreciating it, nor by applying an index to historical cost.

(2) Where part of the cost, recoupment of which the council seeks by condition pursuant to s 94(2A), has been subsidised by arrangement with government the condition must exclude recoupment in respect of the subsidy.

(3) What is the relevant area for the purposes of s 94(2A) is entirely a question of fact the determination of which by the council and/or the Land and Environment Court on appeal cannot be interfered with on an appeal limited to questions of law.

(4) The cost referred to in s 94(2A) is a once and for all cost crystallised at the time of construction and does not include cost of subsequent maintenance in respect of continuous provision.

33. The Court of Appeal addressed the question of government subsidies towards the building of particular works - in that case arrangements between the Council and the Minister for Public Works regarding the construction of water and sewerage headworks. It was argued that since s 94(2A) was dealing with the public amenities or services provided by Council, recoupment of the cost of providing the amenity could only mean the actual cost to the Council. Mahoney and Meagher JJA both agreed with the judgment of Priestley JA, who stated (at 446):

Section 94 entitles the Council as the provider of the amenity or service to impose conditions requiring contributions towards the recoupment of the cost. In cases where, by arrangement with the government, the Council was never liable to anyone for payment of part of the cost of the work, the power to impose a condition requiring contribution towards recoupment of cost cannot be referable to a cost not incurred by Council.

In my opinion it was a legal error on the Council's part to take such unincurred costs into account in fixing the contributions required by condition 21.

34. It follows from this unanimous decision of the Court of Appeal that it is proper to deduct any relevant RTA grants received by the Council prior to calculating the "cost to the Council" (and consequently the amount required by way of s 94 contribution).

35. This is the proper test to be applied by the Senior Commissioner. One does not apply the Allsands principle to all grants received, but only to those grants that have been specifically tied to the construction or upgrading of the roads or other works, which will experience increased demand as a result of the proposed development. Untied grants, or Financial Assistance Grants ("FAG grants") are not so accountable, because the Council has a discretion with respect to how and where it spends such grant money.

36. The Senior Commissioner dealt with government grants at pages 12-14 of his judgment.

37. Mr Kerwick gave evidence that the grants given to the Council were from a State Government source and to cater for "out of shire traffic". Evidence was also given by Mr Brady that the policy of the RTA's funding is that the user pays, so that the future development should pay for itself rather than being funded through grants. The Council's treasurer said that it was Council's policy to apply these grants to its own work attributable to the maintenance of the existing roads hierarchy in the Shire.

38. The proposition put forward by Mr Webster was that the annual grant amounts should be deducted from the cost of the works before the contribution is correct, but only with respect to those grants tied to the construction or upgrading of roads as a result of the increased demand caused by the development the subject of the development application.

39. As the Senior Commissioner took no different view or approach I can find no error of law in his approach to the issue of grants.

40. With respect to the issue of interest, the applicant had filed with the court, apparently on 2 November 1998, a document entitled "Point of Law", in these terms:

At the hearing of this application the Applicant intends to raise the following point of law:-

"The failure of a contribution under section 94 of the Environmental Planning and Assessment Act to take account of the earning of interest on monies received during the development program in calculating the charge is a failure to comply with the provision of Section 94(2) of the Act."

41. There is a notation on the court file to the effect that the applicant was advised that the point of law would need to be raised "before the List Judge prior to the commencement of the merit hearing". That does not appear to have been pursued, the List Judge having already set the matter down before "a senior Assessor" (Talbot J on 26 August 1998), after the Chief Judge also had earlier (30 April 1998) dismissed a Notice of Motion for the hearing to be before a Judge.

42. In any event, the so-called "point of law", as such, does not appear to have been specifically addressed before the Senior Commissioner.

43. However, the Senior Commissioner dealt specifically with the Allsands decision in the following terms (page 19 of his judgment):

...the matter of Allsands was referred to and clearly on its facts it is significantly different to what was before the Court in this instance. Where in Allsands it is apparent the Council was seeking to reimburse itself for funds expended at an earlier time, in the matter before this Court, the Council is seeking to obtain funds for infrastructure which will be required at a later time. Nevertheless it appears to me that the notion of requiring contributions to achieve an appropriate off-set should as in Allsands_, be undertaken on a single charge basis rather than being incremented by interest charges compounding over time._

44. Allsands decided that "recoupment of the cost" pursuant to s 94(2A) could only refer to the cost to the Council. Accordingly, the Council cannot claim more than its actual costs. Actual cost was held to include any interest payments that the Council incurred when borrowing money to finance the cost of providing public services or public amenities. Priestley JA said (at 447):

It seems to me that the words of 94(2A)(a) tend more towards the meaning that the cost towards the recoupment of which conditions may be imposed is the cost to the Council of having put in place public amenities or services in preparation for or to facilitate the carrying out of development in the area, rather than the meaning which would justify the inclusion of this factor in the formula. That is, those words seem to me to convey the meaning that the cost referred to is a once for all cost. The same sense seems to me to be conveyed (although by no means conclusively) by s 94(3A). Such a once for all cost as I think is indicated by the reading of s 94 as a whole would in my opinion include interest payments on moneys borrowed to meet that once for all cost, but not in my opinion the cost of maintaining the physical asset after it has been provided.

45. Mr Webster submitted that, in computing the amount of a s 94 contribution, "interest" must be applied both ways. If the Council can require contributions for the recoupment of the cost of interest payments on money that has been borrowed and spent (as was decided in Allsands), then it must also deduct the amount of any interest earned on s 94 money collected, prior to its being spent.

46. With respect, this submission is misconceived and finds no support in either the terms of s 94 or the judgment of the Court of Appeal in Allsands. It would also erect an almost impossible accounting task for councils in setting the amount of contributions.

47. Allsands concerned the levying of s 94 contributions pursuant to the regime provided in sub-sections (2A) and (3A), the history of which "retrospective" regime was dealt with at some length by Priestley JA.

48. The contributions in this case are "prospective" in character, dealing with anticipated expenditure, and are levied pursuant to the regime provided for in s 94(1), (2), (3), etc.

49. Such contributions are levied "once and for all", subject to CPI adjustment between calculation and payment; they must be "reasonable"; they must be held in trust; and they must be applied to relevant and appropriate works within a reasonable time.

50. Similar parameters are traditionally applied to government grant monies paid in anticipation of works.

51. Relevantly s 94(3) envisages that the Council will earn money from the investment of s 94 funds which it holds in trust, and it specifically provides that such earnings are to be applied to the works which will be done in due course, but within a reasonable time.

52. It would be extraordinary if the amount of such s 94 contributions should be reduced because of interest earned on "earmarked" grant funds during any period which may elapse between their receipt and the performance of the works envisaged when the grants were made.

53. In the cases of both s 94 contributions, and the provision of government grants, the funds provided to Council for relevant works erode in value over time as the costs involved in those works rise, and the general aim is for the increase in costs to be covered by any interest earned.

54. I, therefore, find that the Senior Commissioner committed no error of law in declining to accept such a consideration in determining "cost" within the context of s 94 of the EPA Act.

Ground (iv) Recovery of money in excess of cost and/or without nexus

55. Mr Webster's amended written outline of submission expands this ground of appeal as follows:

The alleged incorrect application of the cost and nexus of the Roads by the Applicant was based upon two main factors viz

(a) - there was an incorrect apportionment between existing users and new development creating an invalid nexus with the cost of the works. (See exhibit 16).

(b) The basis of distributing those costs was based upon incorrect premise which allowed the Council to collect more than the estimated cost - as this is also reflected in the challenge to the Open Space s 94 Plan, it will be dealt with then, but the same principles are applicable (trips/population not lots).

56. The first limb of this ground of appeal, as so expressed, is ultimately a question of weight and therefore a question of fact. As Lloyd J observed in Carstens v Pittwater Council [1999] NSWLEC 249 (par 35):

... I am mindful that on an appeal from a Commissioner with specialist expertise who has had the benefit of seeing and hearing the expert witnesses and viewing the site, a court of appeal which has jurisdiction to review findings of fact should generally exercise caution in substituting its own opinion for the Commissioner's finding.

57. It is clear that the Senior Commissioner applied the appropriate nexus principle, paraphrasing the decision of Newbury District Council v Secretary of State for the Environment [1981] AC 578 (see p17 of his judgment).

58. Following the correct application of the relevant test, the parameters of any nexus between old and new users (and therefore apportionment of the costs) is a question of weight and therefore one of fact and not of law.

59. It follows that I cannot find an error of law in the first limb of this ground of appeal, despite the complex and extensive apportionment calculations set out in Mr Webster's written submissions.

60. The second limb of this ground of appeal argues that trips or population should be the appropriate basis for distributing costs, as against the measure which the Senior Commissioner used (lots). I am of the view that the Senior Commissioner applied the correct test, but even if he based his decision upon an incorrect premise, it, being an error of fact, this would not reveal an error of law. Electricity Commission of NSW (trading as Pacific Power) v Arrow (1994) 85 LGERA 418 ("Arrow").

61. I, therefore, dismiss the appeal in respect of both limbs of ground of appeal (iv).

Ground (v) Recovery of money, in excess of cost, for subsequent spending

62. The Applicant alleges in this ground of appeal that the Senior Commissioner erred in law by allowing for the recovery of monies in excess of cost and in contravention of s 94, upon the basis that it would be spent at "a subsequent time".

63. For the reasons advanced in respect of Ground (iv) above I would not disturb the findings of Senior Commissioner Jensen.

64. However, it is important to note that, on the face of the words of s 94(1) and 94(3), it appears to have been intended by the Legislature that a Council may require, as a condition of consent, the payment of a monetary contribution for public amenities or public services that are going to be provided at some cost, at some point of time in the future. I can, therefore, see no error of law in allowing the collection of money on the basis that it would be spent at "a subsequent time", so long as it is spent within a "reasonable time", in accordance with s 94(3).

Ground (vi) Determining the basis for correcting the amounts of contribution

65. The applicant contends that the Senior Commissioner improperly interpreted s 94(8), in that he misdirected himself in taking the view that the court would not find a condition unreasonable unless:

(i) there is a real travesty of the nexus principle (Page 21.5)

(ii) there is a substantial fundamental error in the plan (Page 23.8)

(iii) the costing errors have to be `sufficiently extreme and skewed' before the contribution was `intrinsically unreasonable' (Page 21.3)

(iv) there must be shown `a quite unacceptable level of s 94 Contribution' (Page 23.9)

(v) there must be a `substantial mismatch between intended services and the funds to pay for them' (Page 24.6)

66. I do not consider that the above findings and circumstances give rise to an error of law.

67. As even the submissions put by Mr Webster clearly show, the Senior Commissioner was attempting to use to appropriate test of `unreasonableness', pursuant to s 94(8) of the EPA Act. (see, eg, par 1(vi) of Mr Webster's written submissions). Subject to the application of the appropriate test, the question of reasonableness is a question of fact.

68. It should also be noted that, following his finding that the condition was reasonable, the Senior Commissioner had no power under s 94(8) with respect to disallowing or amending it.

Ground (vii) The appropriate test of reasonableness

69. For essentially the same reasons as I have given above I conclude that the appropriate test has been utilised by the Senior Commissioner and this ground of appeal must fail.

Ground (viii) Adjustment of the amount of contributions required

70. This final ground of appeal refers to adjustment for 8 separate items, set out in sub-paragraphs (a) to (h).

(a) The amount of grants received by the Council for roadworks

(b) The excess in funds to be received by the Council based upon the invalid principle of population projection and collection by allotments

This ground of appeal raises entirely questions of fact, and must fail.

I also note that the Senior Commissioner dealt with this particular question (at p 18 of his judgment), in these terms:

In this context, it is clear that an underlying theme of the Applicant's appeal is that the current contributions plan will result in the Council collecting more funds than are justified by the ultimate construction of infrastructure and services associated with residential subdivision. Evidently, if this were to be true then the providers of the funds would be clearly entitled to a reimbursement. However, it is hard to imagine that such a situation could be accurately established before the event, however imaginative the method of analysis might be and as used (sic) to carry out the predicative task.

(c) The amount of monies to be received by the Council in interest on funds collected on the period of the s 94 plan

I have already dealt with the question of interest.

(d) The erroneous application of the percentage of cost to new users

Mr Webster submitted that there can be no justification for any nexus other than a relationship of new development (43%) to existing development (57%), and that the amount of contribution payable should, therefore, be capped at 43% of the cost of the public amenities or public services provided.

The unanimous decision of the Court of Appeal in Arrow is authority for the proposition that the selection of one method of calculation over another is not an error of law. Although Arrow concerned the valuation of land consequent on a resumption, analogous principles may be applied to the present circumstances. Meagher JA (with whom Kirby P and Handley JA agreed) stated (at 421):

I have some difficulty in understanding the force of the evidence in question... However, that is what his Honour found, and the fact that the evidence on which his Honour based his opinion displays some oddity is not sufficient for us to reverse him. Nor, which is more important, does it convert a finding of fact (accurate or inaccurate) into an "error of principle", without which the appeal must founder. Nor is its success enhanced by the fact that the mathematical method by which the figure of $70,000 was reached may have contained an error.

I agree with the Mr Robertson's submission, that, if correct legal principles are followed and applied, the selection of one available method of calculation of the relevant contribution over another cannot amount to a error of law, and neither can the making of a mathematical error.

(e) The improper nexus between Area 12 and costs in other areas of the Local Government Area

Issues of nexus have been discussed in earlier parts of this judgment, and as this ground raises only a question of fact, it also fails.

(f) The improper use of double counting of assets, maintenance cost and work costs paid for by another fund (open space)

It is alleged by the Applicant that the Senior Commissioner allowed the improper use of a s 94 condition to require contributions for assets that have been included previously, and/or in respect of which the costs had already been accounted for by another fund. This seems to me to be purely a question of fact.

With respect to maintenance works, the Applicant alleges that the contributions required by the Council, as approved by the Senior Commissioner, include amounts which are for the "maintenance" of parks and recreational equipment, which cannot come within s 94(2A).

Mr Robertson points to the increased usage resulting from an increase in population (including, significantly, a large increase in the number of children) as the reasons that the existing equipment will need to be replaced sooner than expected. Additionally, existing park equipment will need to be supplemented to accommodate the additional population. Mr Robertson argues that s 94 embraces the concept that if the development required the provision of, or increase the demand for, additional public amenities and public services, then the development should pay for such requirements.

Replacement and or supplementation of existing park equipment falls within this statutory framework, and is not "maintenance" works, which are not appropriate under s 94.

As no maintenance works are in fact included in the conditions of approval imposed by the Senior Commissioner, this ground of appeal fails.

(g) The improper inclusion of commercial and industrial traffic in the apportionment of roadwork costs; and

(h) The failure to account for existing s 94 funds already used in the Contribution Plan which will not be refunded

Again these two grounds of appeal do not reveal a question of law, and must fail.

71. I conclude that the Senior Commissioner made no errors of law and I accordingly make the following orders:

2. The applicant should pay the respondent's costs.

3. All exhibits should again be returned to the parties.

Environment Court Act 1979s 56A

Planning and Assessment Act 1979

Local Government Act 1919

CITATION : King & Campbell Pty Ltd v Hastings Shire Council [2000] NSWLEC 11 APPLICANT: PARTIES : King & Campbell Pty Ltd RESPONDENT: Hastings Shire Council FILE NUMBER(S) : 10089 of 1998 CORAM: Sheahan J KEY ISSUES: Section 56A Appeal :- LEGISLATION CITED: Land & Environment Court Act 1979 s 56A Environmental Planning & Assessment Act 1979 s94 Allsands Pty Ltd v Shoalhaven City Council (1993) 78 LGERA ; 435; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139; Brimbella v Mosman Council (1993) 79 LGERA 367; CASES CITED: Carstens v Pittwater Council [1999] NSWLEC 249; Coles v Woollahra Municipal Council (1986) 59 LGRA 133; Collector of Customs v AGFA-Gevaert Ltd (1995) 186 CLR 389; Life Insurance Co of Australia v Phillips (1925) 36 CLR 60; McPhee v Bennett Ltd (1934) 52 WN (NSW) 8; Newbury District Council v Secretary of State for the Environment [1981] AC 578 DATES OF HEARING: 01/09/99, 02/09/99, 07/09/99 DATE OF JUDGMENT: 02/01/2000

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