King, Markwick, Taylor & Ors v Bathurst Regional Council

Proceedings 10041 of 2006 APPLICANTS Jeffrey Markwick and Faye Markwick RESPONDENT Bathurst Regional Council

Proceedings 10042 of 2006 APPLICANT Christina King RESPONDENT Bathurst Regional Council

FILE NUMBER(S) : 41465 of 2005; 41466 of 2005; 41467 of 2005; 10041 of 2006; 10042 of 2006

KEY ISSUES: Judicial Review :- s 94 contribution conditions - not authorised by contributions plan - modification of development consents to delete s 94 contribution conditions and require roadworks - whether Council was satisfied that proposed modification of minimal environment impact and development as modified substantially the same development - severance

Environmental Planning and Assessment Act 1979 s 5, s 76A, s 82A, s 94, s 94B, s 96, s 101, s 121B LEGISLATION CITED: Environmental Planning and Assessment Regulation 2000 cl 32, cl 119(2), cl 122(2) Environment Protection and Biodiversity Conservation Act 1999 (Cth) Threatened Species Conservation Act 1995

Ableton Management Pty Ltd v Gosford City Council (1994) 83 LGERA 97; Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1 KB 223; Attorney-General for the State of New South Wales v Quin (1989) 170 CLR 1; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139; Barnes v Dungog Shire Council (1999) 103 LGERA 269; Benalup Holdings Pty Ltd v Lismore City Council (1993) 81 LGERA 257; Buck v Bavone (1976) 135 CLR 110; Fairfield City Council v N&S Olivieri Pty Ltd [2003] NSWCA 41; Frevcourt Pty Ltd v Wingecarribee Shire Council (2005) 139 LGERA 140; Greek Australian Finance Corporation Pty Ltd v Sydney City Council (1974) 29 LGRA 130; Hill v Green (1999) 48 NSWLR 161; Hillpalm Pty Ltd v Heaven's Door Pty Ltd (2004) 220 CLR 472; Hillpalm Pty Ltd v Tweed Shire Council and Another (2002) 119 LGERA 86; Jarrett and Another v Manly Municipal Council (1997) 99 LGERA 208; Maitland City Council v Anambah Homes Pty Limited [2005] NSWCA 455; Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597; Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611; CASES CITED: MLC Properties and Another v Camden Council and Others (1997) 96 LGERA 52; Moto Projects (No 2) Pty Ltd v North Sydney Council (1999) 106 LGERA 298; Newbury District Council v Secretary of State for the Environment [1981] AC 578; North Sydney Council v Michael Standley & Associates Pty Ltd (1998) 43 NSWLR 468; 1643 Pittwater Road Pty Ltd v Pittwater Council [2004] NSWLEC 685; Parramatta City Council and Another v Hale and Others (1982) 47 LGRA 319; Project Blue Sky Inc and Others v Australian Broadcasting Authority (1998) 194 CLR 355; Puhlhofer and Another v Hillingdon London Borough Council [1986] AC 484; Re Minister for Immigration and Multicultural Affairs and Another; ex parte Miah (2001) 206 CLR 57; Smith v Wyong Shire Council (2003) 132 LGERA 148; The Council of the City of Parramatta v Pestell (1972) 128 CLR 305; Twist v The Council of the Municipality of Randwick (1976) 136 CLR 106; Vacik Pty Limited v Penrith City Council, unreported, Stein J, No. 10242 of 1991, 24 February 1992; Vaw (Kurri Kurri) Pty Ltd v Scientific Committee (established under s 127 of the Threatened Species Conservation Act 1995) (2003) 58 NSWLR 631; Victims Compensation Fund Corporation v Nguyen and Another (2001) 52 NSWLR 213; Wechsler v Auburn Council (1997) 130 LGERA 134; Winn v Director-General of National Parks and Wildlife and Others (2001) 130 LGERA 508; Woolworths Ltd v Pallas Newco Pty Ltd and Another (2004) 61 NSWLR 707

DATES OF HEARING: 31/07/2006, 01/08/2006, 02/08/2006

APPLICANTS Mr T Robertson SC SOLICITORS Booth Brown Samuels & Olney LEGAL REPRESENTATIVES: RESPONDENT Mr M Craig QC with Mr P Clay SOLICITORS McIntosh, McPhillamy & Co

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

41465 of 2005 41466 of 2005 41467 of 2005 10041 of 2006 10042 of 2006

KING, MARKWICK, TAYLOR & ORS Applicants

Jagot J: A. Introduction 1 These three class 4 proceedings and two class 1 proceedings arise from the same facts.

2 The applicants own land along Eusdale Road, Yetholme, in the Council's area. The applicants have the benefit of development consents for subdivision granted by the Council's predecessor (Evans Shire Council). The class 4 proceedings challenge the validity of conditions imposed on the carrying out of the subdivision development. The class 1 proceedings are appeals against orders served by the Council on two of the applicants under s 121B of the Environmental Planning and Assessment Act 1979 ("the EPA Act").

3 During the hearing, the Council conceded that: - (i) its imposition of a condition on each of the original subdivision consents purportedly under s 94 of the EPA Act was beyond power and invalid, (ii) these invalid conditions were not protected by the notices given under s 101 of the EPA Act (see Maitland City Council v Anambah Homes Pty Limited [2005] NSWCA 455), (iii) the Council's final exercise of power with respect to each of the development consents purporting to amend conditions in reliance on a review under s 82A of the EPA Act was beyond power and invalid, and (iv) because the s 121B orders relied upon the subdivision consents as amended by that final exercise of power, the s 121B orders were themselves beyond power and invalid.

4 The Council thus conceded that its first and last exercises of power with respect to the disputed conditions were invalid.

5 The Council submitted that its exercises of power in the middle under s 96 of the EPA Act, deleting the invalid s 94 conditions and imposing a new condition on the subdivision consents, were within power and valid.

6 In the alternative, the Council submitted that any invalid conditions (either as conceded by the Council or as found) were not severable, with the consequence that the subdivision consents as a whole were invalid. The Council said it did not seek a declaration of invalidity of the subdivision consents, but relied upon this circumstance and others in support of its submission that the impugned conditions should not be declared invalid on a discretionary basis.

7 On or about 9 July 2001 the Evans Shire Council adopted a contributions plan for rural roads under s 94B of the EPA Act, as in force at that time.

8 The purpose of the contributions plan was to enable the Council to obtain contributions for the maintenance and improvements of local and regional roads under the control of the Council. The contributions plan commenced operation on 10 August 2001 (cl 1.2). It applied to all development applications that may have an impact on road infrastructure (cl 1.5). Road infrastructure was defined to include any construction that provided protection, support or maintenance for a road surface (cl 1.6). Clause 1.8 provided that the Council could only alter the contributions plan in the manner provided for in the EPA Act and the Environmental Planning and Assessment Regulation 2000 ("the Regulation"). Clause 32 of the Regulation enabled a contributions plan to be amended by a subsequent contributions plan (required to be publicly exhibited in accordance with the other provisions of the Regulation), other than amendments identified in cl 32(3) (in effect, minor typographical corrections, changes to rates to reflect quarterly or annual variations to readily accessible index figures adopted by the plan, or the omission of details concerning works that had been completed).

9 Clause 2.2 of the contributions plan provided that development applicants would be required to contribute to road infrastructure as defined by the provisions of the plan. The clause then set out various alternatives available to the Council including variation of the contribution. Under cl 3, the subdivision of land was identified as a category of development that would increase traffic of a residential nature. Clause 3.2 set out the contributions for subdivision development. The contributions plan said that: - (i) roadwork was expected to cost the Council approximately $115,000.00, (ii) a subdivision enabling the creation of a dwelling was estimated to generate eight vehicle movements per day, (iii) on average, there were approximately 100 traffic movements daily on roads in the area, and (iv) accordingly, the contribution for a subdivision which created an additional dwelling was to be calculated by reference to the formula - the cost of the roadwork x generated additional vehicle movements/average road volume accommodated - $115,000.00 x (8/100) = $9,200.00. Clause 3.2.3 of the contributions plan made the following statement: To require a contribution of $9,200.00 for the creation of a subdivision that enables a dwelling to be established is considered beyond reasonable. As a result, Council proposes to discount the contribution by a factor of approximately 62%. The contribution applicable for creation of a subdivision that will enable construction of a dwelling will be $3,500.00.

10 Clause 4.2 of the contributions plan said that the Council had adopted a five year road maintenance program and that: Where appropriate, contributions may be utilised to assist the program in reasonable proximity of the development. Where not practical, contributions may be utilised to generally assist progress of the adopted 5 year program.

11 The Markwicks are the applicants in proceedings 41466 of 2005 and 10041 of 2006. The Markwicks purchased the land at 360 Eusdale Road, Yetholme (lot 3 DP 1035488 and part lot 13 DP 1019234) from Mr Fitch.

12 A report to the Council meeting of 25 October 2002 records that development application 170/2002 proposed an eight lot, staged, subdivision of the Markwick land. The report recommended that the eight lot subdivision be approved, with a condition under s 94 of the EPA Act requiring a contribution of $24,500.00 towards the upgrading of roads (proposed condition 4). This is consistent with the contributions plan rate of $3,500.00 per lot assuming an eight lot subdivision, with a credit for one existing lot. The Council deferred consideration of the application pending a report on the road issue from the Director of Engineering, Mr Swan.

13 On 22 November 2002, a further report was placed before the Council relating to this subdivision. This report made a recommendation to the same effect as the previous recommendation, including proposed condition 4. The report attached a report from the engineer, Mr Swan, which identified the total length of Eusdale Road affected by increased traffic as 2.3 km. The report said that the required improvements to this road included widening, horizontal and vertical alignment improvements, and sealing at a cost of $370,000. Mr Swan set out a calculation for the funding of road improvements to Eusdale Road, being $15,150.00 per lot for the Fitch (Markwick) land, $7,050.00 per lot for the Taylor land and $15,150.00 per lot for future lots. Mr Swan's report concluded: Please note that this variation to Council's Section 94 Plan allows Council to not impose a maintenance contribution on these developments in additional (sic) to these upgrading costs.

That a contribution be received from the developers as per the above schedule for each lot created for the improvement and upgrading of Eusdale Road for a distance of 2.3 km from the end of the existing seal.

14 The Council did not amend the s 94 contributions plan in accordance with the EPA Act and Regulation. The contributions plan authorising s 94 contributions on subdivisions in the amount of $3,500.00 per lot remained in force.

15 On 22 November 2002, the Council resolved that the development application lay on the table until an extraordinary meeting of the Council could be held at the earliest possible date pending consultation between Mr Fitch (the applicant), and the Council's Director of Engineering in relation to the roadwork. The matter was placed before the Council again on 2 December 2002, at which time the Council resolved to grant the development consent, subject to condition 4 requiring payment of a contribution under s 94 of $121,200.00 towards "the upgrading of roads", prior to the issue of the subdivision certificate.

16 On 3 December 2002, the Council issued its notice of determination of the Fitch (Markwick) subdivision, including condition 4 requiring the payment of a contribution under s 94 of $121,200.00 towards the upgrading of roads prior to the issue of the subdivision certificate. The grant of that consent was notified under s 101 of the EPA Act on 25 December 2002.

17 The Markwicks acquired the land from Mr Fitch. They sought to modify the development consent by rearranging the staging of the development, including the staged payment of the s 94 contributions. This modification application was the subject of a report to the Council on 27 June 2003. The Council approved the modification on that date. The Markwicks sought a further modification relating to stage 2 of the subdivision. That modification was the subject of a report to the Council on 26 September 2003, at which time the Council deferred its consideration. On 23 October 2003, a further report was submitted to the Council which proposed a condition requiring the payment of contributions in the amount of $15,150.00 per lot, with a 10% deposit to be paid prior to the issue of the subdivision certificate and the remainder to be paid proportionally as each lot was sold. Apparently, the Council did not adopt the alternative payment arrangements, and the s 94 contributions remained in the amount of $15,150.00 per lot. This prompted a further modification application by the Markwicks on 5 December 2003, which was the subject of a report to the Council on 19 December 2003. On 6 January 2004, the Council issued its approval of the modification application, including condition 3 requiring a contribution under s 94 of $15,150.00 per lot, with a 10% deposit to be paid prior to the issue of the subdivision certificate, and the remainder to be paid proportionally as each lot was sold.

18 On 27 June 2003, the Markwicks paid to the Council $4,450.00 on account of the s 94 contributions payable pursuant to the conditions of the development consent. Subsequently, the Markwicks obtained subdivision certificates, and transferred three lots in the subdivision to third parties.

19 The Taylors are the applicants in proceedings 41467 of 2005. The Taylors lodged a development application proposing the subdivision of land at 165 Eusdale Road, Yetholme (lot 15 DP 846683) into five lots. That application was the subject of a report to the Council on 25 October 2002. The report recommended that development consent be granted to the subdivision, subject to conditions, including a condition that a contribution under s 94 be paid in the sum of $16,000.00 towards the upgrading of roads. In common with the Markwick subdivision, the Council resolved to defer consideration of this development application pending a report on the road issues from the Director of Engineering (see above - the report was the report by Mr Swan). The application was the subject of a further report to the Council on 22 November 2002, which recommended that consent be granted to the subdivision subject to conditions, including a condition that a contribution under s 94 be paid in the amount of $17,500.00. During the meeting, a Councillor asked Mr Taylor if he was happy with the engineer's report and would agree to the contributions. Mr Taylor replied that to the effect that he supposed so, if it meant he could get an approval.

20 The Council resolved to grant development consent, subject to conditions, including a condition that a contribution under s 94 be paid in the sum of $32,250.00. Notice of determination of that development consent issued on 26 November 2002, subject to condition 3 in the following terms: A contribution under s 94 of $32,250.00 being paid towards the upgrading of roads, to be paid prior to the issue of the Subdivision Certificate.

21 The grant of that development consent was notified under s 101 of the EPA Act on 25 December 2002.

22 On 1 November 2003, Mr Taylor wrote to the Council with respect to the development consent. In that letter, Mr Taylor said that he had previously been granted development consent for the same subdivision in 2001, and that the s 94 contributions imposed had been $3,500.00 per lot only. He noted that this development consent had been subject to challenge by a third party. The Taylors had agreed to surrender the development consent, and reapply for the same subdivision. He said that in circumstances where Mr Fitch had sold his land and closed his timber mill factory the traffic on Eusdale Road had decreased, so that the imposition of the contribution of $32,250.00 for road upgrading was unjustified.

23 Ms King is the applicant in proceedings 41465 of 2005 and 10042 of 2006. On or about 5 December 2003, Ms King lodged a development application for the subdivision of land at 365 Eusdale Road Yetholme (lot 2 DP 1022641) into three lots. That subdivision application was the subject of a report to the Council on 27 February 2004. The report referred to the "previous calculation" of s 94 contributions, and recommended that consent be granted to the application subject to conditions, including a condition for payment of a contribution under s 94 of $30,300.00. The Council resolved to grant the development consent, including that condition.

24 On 23 March 2004 (prior to issue of the notice of determination), Mr King sent an email to the Council requesting that the condition be modified to enable them to pay 10% of the $30,300.00 upfront and the balance after selling the blocks. At a Council meeting on 24 March 2004, Mr King addressed the Council. The Council resolved in accordance with its previous decision. On 29 March 2004, the Council issued its notice of determination of the grant of development consent for the three lot subdivision. The consent included condition 4 as follows: A contribution under s 94 of $30,300.00 (plus GST) being paid in accordance with the Council's adopted payment policy.

25 The grant of this development consent was notified under s 101 of the EPA Act on 29 April 2004.

26 On 27 April 2004, Ms King wrote to the Council saying that the s 94 contribution imposed on her subdivision ought to be reviewed by the Council because the s 94 contributions plan only authorised the imposition of a contribution per lot of $3,500.00, whereas the Council had levied contributions on her subdivision in the amount of $15,150.00 per lot - a levy Ms King characterised as "beyond reasonable" based on the contributions plan.

27 On or about 31 May 2004, Ms King paid to the Council the amount of $7,575.00 pursuant to the development consent.

28 Two of the lots within the King subdivision were transferred to new owners in August and September 2004.

Subsequent Events 29 By May 2004, the three applicants (King, Markwick and Taylor) had retained Mr Olney, solicitor, to represent their interests in further dealings with the Council.

30 On 17 May 2004, Mr Olney wrote to the Council on behalf of the applicants about the conditions requiring payment of s 94 contributions "towards the upgrading of roads". Mr Olney sought further particulars of what the amounts related to and how they had been calculated, including identification of the relevant provisions of the applicable contributions plan. The Council responded by letter dated 28 May 2004. The Council referred to "the Road Report" (that is, Mr Swan's report) as the basis for the imposition of the s 94 contributions. The Council said that this report identified that Eusdale Road was significantly inadequate for what was being proposed (that is, by Fitch and Taylor in 2002), and that it was "considered appropriate to vary the contribution so that reasonable access could be provided to the proposed block. This was done in accordance with cl 2.2 of Council's Section 94 Plan". The alternative was to refuse the application on the basis of the inadequacy of road infrastructure. The contribution would be spent entirely on upgrading Eusdale Road for which the Council had allocated $48,000 from its funds in its five year works budget.

31 On 8 June 2004, Mr Olney wrote to the Council observing that the Council had no power to vary the s 94 contributions payable without a formal amendment to the contributions plan, which had not occurred. He advised that he held instructions to commence proceedings seeking declarations that the relevant conditions were invalid. He offered a compromise on the basis that his clients would lodge modification applications seeking to reduce the s 94 contributions to the amount authorised to be levied by the Council's contributions plan, provided that the Council would agree to deal with the modifications in this manner. Further communications then took place between Mr Olney, solicitor, and Mr Crennan, the solicitor for the Council.

32 On 2 July 2004, Mr Crennan advised that the Council could not accept Mr Olney's suggestion because it would "fetter its discretion", and that the Council was also of the view that the road system was inadequate for the traffic to be generated by the developments. Hence, if the s 94 contributions were to be reduced the "Council considers that it will be necessary to impose alternative conditions requiring the applicants to upgrade the road to a satisfactory standard at their own cost".

33 Mr Olney responded on 8 July 2004 to the effect that: - (i) the Council did have the power to rectify its error, (ii) the Council could not impose an alternative condition requiring the applicants to upgrade the road at their own cost, and (iii) the owners had all proposed a modification application as the means of resolution, rather than class 4 proceedings.

34 Mr Crennan responded on 14 July 2004 to the effect that: - (i) the modification required was a modification under s 96(2) of the EPA Act, not s 96(1), (ii) in considering any s 96(2) application, the Council was bound to take into account the considerations under s 79C(1) of the EPA Act (s 96(3)), and (iii) accordingly, there was power to impose alternative conditions. Mr Crennan wrote again on 1 September 2004 providing Mr Olney with certain information as requested.

35 On 25 October 2004, Mr Olney wrote to Mr Crennan summarising advice from Senior Counsel, which noted that applications to modify the consents would be lodged. Failing approval of those modification applications, class 4 proceedings would be commenced seeking declarations of invalidity of the contributions plan, and the invalid s 94 contributions conditions. After further correspondence, Mr Crennan wrote to Mr Olney on 23 December 2004 to the effect that: - (i) the Council would rely upon s 101 of the EPA Act with respect to the impugned conditions, (ii) the Council would rely on an estoppel arising against the applicants to defend the impugned conditions, and (iii) because the Council would not have granted the development consent but for the conditions, the Council would argue in any class 4 proceedings that if the conditions were invalid, the consents as a whole should be declared invalid.

36 On or about 25 October 2004, the applicants lodged modification applications with the Council. The modification applications sought to delete the s 94 condition imposed upon the development consents on the basis that those conditions had been "imposed in the absence of a valid contributions plan or alternatively [were] conditions not authorised by a valid contributions plan and therefore imposed without legal authority". The modification applications also stated that the modifications were "intended to correct this legal error and [are] expected to have no impact apart from this correction".

37 The Council's Manager - Environment forwarded a memorandum to the Council's Director, Planning and Development about the modification applications in the same terms (but for the land, consent and condition references). The memorandum said that the conditions should each be modified to an alternative condition, in effect requiring the applicants to upgrade Eusdale Road themselves. The memorandum did not refer to any of the requirements of s 96 of the EPA Act, other than to the extent that it used the words "modification" and "modified", and recommended that the consents be modified. The memorandum also included a note to the effect that Mr Crennan had reviewed the applications and the suggested amended conditions as there had been legal action threatened.

38 On 1 March 2005, the Council issued to the applicants a notice of modification of development application recording that. This recorded that, pursuant to s 96 of the EPA Act, the Council had modified the development consents by deleting the s 94 conditions and imposing conditions requiring the applicants each to upgrade a lengthy section of Eusdale Road (indeed, largely, the same section of Eusdale Road).

39 The reason given for these additional conditions was: Because it is in the public interest that the design of that [sic] the aspects of the development comply with Council's Engineering Guidelines. Section 79C(1)(c) and (e) of the Environmental Planning and Assessment Act 1979, as amended.

40 On 9 May 2005, the applicants forwarded a joint letter to the Council setting out their concerns with the Council's actions. In that letter, they stated that they had been given a rough estimate by a road contractor of the cost of carrying out works in accordance with the modified conditions of approximately $500,000 to $600,000 (that is about $38,000 to $46,000 per lot). The letter requested the Council to undertake a review of the conditions pursuant to s 82A of the EPA Act, noting that the applicants wished to avoid litigation if at all possible.

41 On 15 June 2005, reports were submitted to the Council with respect to the modified development consents. That report set out the background to the consents, the imposition of the s 94 conditions and the modifications. The report acknowledged that the s 94 contributions imposed on the original development consents were not in accordance with the adopted s 94 contributions plan. The report stated that, because of the state of Eusdale Road, it was appropriate for the Council to have substituted the conditions requiring the upgrade of that road in lieu of the s 94 contribution conditions. The report recommended that the conditions should remain, with the exception of clarifying the extent of the works required. The Council adopted the recommendation in the report. On 17 June 2005, the Council issued (purportedly pursuant to s 96 of the EPA Act) further notices of determination to each of the owners amending the reference to the part of the road to be upgraded.

42 On 6 September 2005, the Council served Ms King and the Markwicks with notice of a proposed order under s 121B of the EPA Act in reliance on items 15 and 17 in the table to that section. The Council notified these applicants of its intention to serve orders pursuant to that section requiring them to comply with the development consent and to carry out works associated with the subdivision - namely, the construction of the roadwork in accordance with the modified conditions.

43 On 8 December 2005, the applicants commenced the class 4 proceedings seeking declarations that the s 94 conditions and roadwork conditions imposed on their development consents were invalid and, in the case of Ms King and the Markwicks, an interlocutory order restraining the Council from serving any s 121B order. In the event, the Council served s 121B orders on Ms King and the Markwicks on 23 December 2005. On 18 January 2006, Ms King and the Markwicks commenced their class 1 proceedings appealing against the s 121B orders.

44 Mr Bridgman, traffic consultant and road safety auditor, gave evidence for the applicants about the unreasonableness of the roadwork conditions to the effect that the upgrading of Eusdale Road was unnecessary. Mr Swan, the former Director of Engineering at Evans Shire Council, gave evidence that the upgrading of Eusdale Road was necessary and appropriate, given the condition of the road and the increased traffic generated by the subdivisions. He said the cost of the roadwork required by the modified conditions would be about $400,000.00 to $500,000.00 depending on site conditions, and subject to design work and survey. I infer that this estimate assumed that the roadwork could all be carried out within the existing road reserve, which is far from clear.

C. The Council's concessions and the remaining issues

45 It is appropriate that I record the concessions made by the Council during the hearing, as they narrowed the scope of the dispute.

46 The Council conceded that: (1) The s 94 conditions originally imposed on the development consents were not authorised by the contributions plan.

(2) The s 94 conditions were not protected from challenge by the s 101 notices ( Maitland City Council v Anambah Homes Pty Limited [2005] NSWCA 455).

(3) Accordingly, the s 94 conditions imposed on the original development consents were invalid.

(4) The Council did not seek to sustain an argument that the development consents were able to be modified pursuant to s 82A of the EPA Act (and, as noted by the applicant, s 82A(2A) precluded the exercise of any power under that section after the time limited of the making of an appeal under s 97 had expired).

(5) It followed that the purported further modifications of the development consents on 17 June 2005 were invalid. I understand the Council accepted that these approvals could be severed from the consents.

(6) Accordingly, the s 121B orders served on the Markwicks and Ms King (which relied upon the 17 June 2005 modified development consents) were also invalid.

(7) The applicants were not estopped from challenging the validity of the various development consent conditions, but the same considerations were relevant to the exercise of the Court's discretion if the applicants established invalidity.

47 The Council submitted that: (1) Its exercises of power to modify the development consents on 1 March 2005 by deleting the invalid s 94 conditions and imposing the roadwork conditions were valid.

(2) If the 1 March 2005 modifications were not valid, then those modifications were not severable within themselves or from the development consents.

(3) If the 1 March 2005 modifications were severable from the development consents, then the Court would not declare those modified conditions invalid in the exercise of its discretion.

(4) Alternatively, the original s 94 conditions (conceded to be invalid) were not severable from the development consents. Although the Court would not declare the development consents as a whole to be invalid, the Court would decline to declare the original s 94 conditions invalid in the exercise of its discretion. 48 The applicants' final claims with respect to the 1 March 2005 roadwork conditions may be summarised as follows (although I have re-ordered the claims for convenience, given my conclusions). The requirements of s 96 were contravened

(1) If the modification applications were made under s 96(1) of the EPA Act (as I should find was the case), then there was no power to impose any conditions on the approval of those applications.

(2) If the modification applications were made under s 96(2) of the EPA Act (which they were not), then the Council failed to notify or advertise the modification applications as required, and failed to notify the applicant of their rights of appeal against the determination as required.

(3) If the modification applications were made under s 96(1A) of the EPA Act (which they were not), it was not open to the Council to be satisfied that the roadwork conditions were of minimal environmental impact, and the Council failed to notify the applicants of their rights of appeal against the determination to modify the consent as required.

(4) Whatever statutory provision relied on by the Council, the Council did not turn its mind to whether the development to which the consents as modified related was substantially the same development as the development for which the consents were originally granted (or, indeed, that the proposed modification was of minimal environmental impact if s 96(1A) was the source of power). If it did so, it was not reasonably open to the Council to be satisfied with respect to either matter.

(5) The Council had no power to impose the roadwork conditions on the modification approvals, because those conditions were not the subject of the modification applications.

(6) The subject matter of the roadwork conditions was the performance of roadwork beyond the subject land, and thus the roadwork conditions did not relate to the subject matter of the modification applications.

(7) The roadwork conditions were not imposed for a planning purpose because they attempted to avoid the planning requirement to establish a nexus with the demand for the works generated by the development, and to apportion (fairly and equitably) the cost of the works between users.

(8) The roadwork conditions did not fairly and reasonably relate to the development the subject of the consents, because the roadwork bore no relationship to the increase in demand for the road as a result of the proposed developments, were not necessary to achieve access to the proposed developments, and did not apportion the cost between existing and likely future road users of the road, and otherwise involved a cost which the respondent had identified in its contributions plan as unreasonable.

(9) The roadwork conditions were so unreasonable that no consent authority could have imposed them.

(10) If the original s 94 conditions were invalid and a nullity, then the modification applications that led to the 1 March 2005 modification approvals were themselves of no legal effect. Therefore, there was no power to impose the roadwork conditions.

The Markwicks and Ms King not carrying out development

(11) In the case of the Markwicks and Ms King, there was no power to impose the roadwork conditions because the subdivisions authorised by their consents had been completed, and the Markwicks and Ms King were no longer carrying out development within the meaning of s 76A of the EPA Act.

(12) In imposing the roadwork conditions modification approvals, the Council denied the applicants procedural fairness.

49 The Council admitted that if s 96(2) was the relevant source of power cl 119(2) of the Regulation required notification of the modification applications for a period not exceeding 14 days, but that it had not done so. It submitted that this failure to comply with s 96(2)(c) was of no consequence because the power under s 96(1A) was available, and notification was not required pursuant to that section (because neither the Regulation nor any development control plan required notification). The Council also admitted that it had failed to notify the applicants of their rights of appeal in accordance with cl 122(2) of the Regulation, but denied that there was any consequence from its failure to notify the applicants of their appeal rights.

50 The applicants submitted that the applications were made pursuant to, and determined in accordance with, s 96(1) of the EPA Act to "correct a minor error, misdescription or miscalculation". Further, that the reasoning of McClellan J in 1643 Pittwater Road Pty Ltd v Pittwater Council [2004] NSWLEC 685 (that a consent authority may impose conditions when determining an application for modification) did not apply to s 96(1) or, alternatively, was incorrect and should not be followed. The Council disavowed any reliance on s 96(1), and submitted that this power had not been available to it or relied upon by it, as a matter of fact.

51 While it is a matter for an applicant in the first instance to identify the type of application it wishes to lodge, the potential availability of other sources of power means that an applicant's identification cannot necessarily be determinative of the validity of an administrative decision. In this case, the modification application forms do not identify the section pursuant to which the applications were lodged. The forms contain contrary indications. For example, the applications refer to correcting a legal error, but also show that the references to "minor error, misdescription and miscalculation" have been struck through, and refer to the development as modified remaining "substantially the same" (which is not a requirement of s 96(1), presumably because the power in that section extends only to minor errors, misdescriptions or miscalculations).

52 It is sufficient to dispose of this issue to observe that, if the modification applications were intended to engage the power in s 96(1), then that power was not available. The s 94 conditions which the Council imposed on the development consent were invalid (as the Council now concedes), but the source of their invalidity was not a minor error, misdescription or miscalculation. That phrase, in my view, does not embrace the facts of this matter. The power in s 96(1) is not conditioned on the Council's state of satisfaction, but the fact of the modification being to "to correct a minor error, misdescription or miscalculation". There was no error, misdescription or miscalculation, minor or otherwise, with respect to the purported s 94 conditions. Further, and if it is necessary for me to so observe, it seems to me to be clear that 1643 Pittwater did not relate to the power contained in s 96(1) of the EPA Act.

53 Accordingly, the question whether there was power to impose conditions pursuant to an exercise of power under s 96(1) does not arise. In my view, the question then is whether the other potential sources of power (s 96(1A) and s 96(2)) were available. If those sources of power were available, that is a further reason to conclude that the capacity for a consent authority to impose conditions when exercising a power under s 96(1) does not arise. See, for example, the observations of Spigelman CJ in Vaw (Kurri Kurri) Pty Ltd v Scientific Committee (established under s 127 of the Threatened Species Conservation Act 1995) (2003) 58 NSWLR 631, particularly at [56] - [58].

54 As the Council admitted that it did not notify the modification applications as required by s 96(2)(c)(i) of the EPA Act, it is appropriate to deal with that potential alternative source of power first. Section 96(2)(c) qualifies the power of a consent authority to modify a development consent. A consent authority may modify a consent if, amongst other things, it has notified the application in accordance with the Regulations (if the Regulations so require) or a development control plan (if one has been made). In this case, there was no evidence of any applicable development control plan. However, the Council acknowledged that cl 119 of the Regulation would have applied to these modifications applications if they were to be treated by the Council as having been made under s 96(2). Clause 119(1) and (2) provided that: (1) This clause applies to an application under section 96(2) of the Act to which clause 118 does not apply or under section 96AA(1) of the Act to which clauses 117 and 118 do not apply.

(2) An application to which this clause applies must be notified or advertised for a period not exceeding 14 days but otherwise in the same manner as the original development application was notified or advertised.

55 Clause 119(6) provided that: During the period referred to in sub-clause (2) or, if a development control plan provides for a period for notification or advertising of an application, during that period, any person may inspect the application and any accompanying information and make extracts from or copies of them.

56 The Council's failure to notify the modification applications under s 96(2)(c)(i) is fatal to any reliance by the Council on s 96(2) as the source of power or as an alternative source of power for its approval of the modification applications, and imposition of the roadwork conditions.

57 The test for determining the validity of the modification approvals under s 96(2) is "to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid" (Project Blue Sky Inc and Others v Australian Broadcasting Authority (1998) 194 CLR 355 at [92] - [93]). I am satisfied that it must have been a purpose of the EPA Act that a modification approval under s 96(2), granted in breach of the notification requirements of s 96(2)(c), is invalid. The objects of the EPA Act, in s 5(c), include providing increased opportunity for public involvement and participation in environmental planning and assessment. The language of s 96(2) makes the power to modify conditional upon satisfaction of the matters set out in sub-sections (a) to (d). The notification obligation is "preliminary to the exercise of a function", rather than an obligation "regulating the exercise of a function already conferred" (Project Blue Sky at [94], referred to in Smith v Wyong Shire Council (2003) 132 LGERA 148 at [61]). The EPA Act itself imposed the obligation, even though the details of the obligations are set out in the Regulation. In contrast to s 96(2)(a), which turns on the satisfaction of the Council, s 96(2)(c) turns on the objective fact whether the application has been notified or not. By failing to comply with the notification requirement, the Council ensured that it could not consider any submissions that might have been made in response to the notification as set out in s 96(2)(d). The Council thus deprived itself of the benefit of such submissions. From the terms of s 96(2)(c) and (d), it must be inferred that Parliament attached significance to public involvement in the modification process (see, by analogy, the observation of Spigelman CJ in Smith v Wyong Shire Council at [59]). Any inconvenience that might result from an exercise of power under s 96(2) being invalid by reason of contravention of s 96(2)(c) is incapable of outweighing these factors.

58 Within the framework of a potential alternative source of power, it is apparent that the conditions of any right of the Council to exercise power under s 96(2) were not in fact fulfilled (adopting the language of Spigelman CJ in Vaw (Kurri Kurri) at [56] - [57]). The circumstances relevant to the exercise of the power were not the same. Under s 96(2)(d), there was an obligation to consider submissions, which did not apply to an exercise of power under s 96(1) or, in this case, to an exercise of power under s 96(1A). Accordingly, reliance on s 96(2), as opposed to s 96(1) or s 96(1A), would have led to different consequences for third parties (namely, the right to be notified).

59 For these reasons, any suggestion that s 96(2) of the EPA Act was a source of power authorising the grant of the modification approvals of 1 March 2005 may be put to one side. It follows that the only other potential source of power was s 96(1A). I turn to that section now.

60 The conditions which qualified the exercise of power under s 96(1A) in this case were contained in sub-sections (a) and (b) - namely, that the Council was satisfied that the proposed modification was of minimal environmental impact, and that the Council was satisfied that the development to which the consent as modified related was substantially the same development as the development for which the consent was originally granted and before that consent as originally granted was modified.

61 Both conditions turned upon the state of mind of the Council, rather than the existence of objective facts. This does not mean that the exercises of power by the Council are beyond the scope of judicial review. First, the power to modify a consent under s 96(1A) is available only if the Council, in fact, formed the relevant states of satisfaction. Secondly, the decisions reached must not be affected by any material misdirection in law, and must not be so unreasonable that no reasonable authority could properly have arrived at the decisions (see, for example, Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at [130] - [137] per Gummow J, and the cases there cited).

62 The observation of Moffitt P in Parramatta City Council and Another v Hale and Others (1982) 47 LGRA 319 at 345 applies to the drawing of any inference about the formation of the statutory states of satisfaction. The applicant bears the onus of establishing that the Council (via its delegate) did not form the required states of satisfaction. The onus must be discharged "in accordance with proper legal requirements and by inference not suspicion". Such an inference should be drawn only "after anxious consideration, but when the inference is available and ought to be drawn, the court should…not hesitate to give effect to the inference it has drawn".

63 Where a challenge is brought on the ground of manifest unreasonableness (Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1 KB 223), the applicable principles are clear. There is a "world of difference between justifiable opinion and sound opinion". Whether an opinion is sound or not "is not a question for decision by a court" (The Council of the City of Parramatta v Pestell (1972) 128 CLR 305 at 323). Where an opinion relates to a matter of "opinion or policy or taste", the authority will be "left with a very wide discretion which cannot be effectively reviewed by the courts" (Buck v Bavone (1976) 135 CLR 110 and 118 - 119. Also, Puhlhofer and Another v Hillingdon London Borough Council [1986] AC 484 at 518). The application of the "Wednesbury" principle requires the exercise of proper judicial restraint (Hill v Green (1999) 48 NSWLR 161 at [241]). The impugned decision "must amount to an abuse of power … or be so devoid of plausible justification that no reasonable person could have taken that course" (Woolworths Ltd v Pallas Newco Pty Ltd and Another (2004) 61 NSWLR 707 at [27] and [91]). The ground must be "extremely confined", or else "the gate to judicial review of the merits of a decision or action" would be opened (Attorney-General for the State of New South Wales v Quin (1989) 170 CLR 1). Even a perverse finding of fact does not constitute an error of law, at least where an appeal is limited to "errors of law" (Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 156. See also Bruce v Cole (1998) 45 NSWLR 163 at 189).

64 The first question is - what was the "proposed modification" and what was the development to which the consent as modified would relate? The Council could not form the required states of satisfaction under s 96(1A)(a) or (b) without asking and answering these questions.

65 Although the applicants sought to reduce the monetary contributions payable to the amount to which the Council was entitled, the applicants were not the final arbiters of the proposed modifications or the development to which the consents as modified would relate. In this case, given the conditions it chose to impose, the Council dictated the nature of the proposed modifications and the development to which the consents as modified would relate. For each modification application the Council decided to delete the purported s 94 conditions and to impose the roadwork conditions. The Council modified the consents by requiring the applicants to carry out the roadwork as a condition of the subdivision development. The proposed modification and the development to which the consent as modified would relate thus embraced both aspects of the Council's decision.

66 Accordingly, the Council could not form the requisite states of satisfaction by considering the statutory questions by reference merely to deletion of the s 94 conditions, because the Council modified the consents by deleting the s 94 conditions and imposing the roadwork conditions. As observed by McClellan J in 1643 Pittwater Road at [59], the determination of an application to modify a development consent "does not involve multiple decisions". Rather, the determination "is a single decision which may have multiple consequences". That is so here.

67 The second question is - did the Council turn its mind to the required task or not?

68 There are some matters from which it might be inferred that the Council turned its mind to the required statutory tasks. The application lodged was described as an application to modify a consent, and identified that the development as proposed to be modified (that is, limited to deletion of the s 94 condition) would remain substantially the same as the development approved. The memorandum of 24 February 2005 described the proposed action as the "modification" of the consent. The notice of determination refers to "Section 96", and described itself as "notice to applicant of modification of a development application".

69 There are other indicators that need to be considered that point to the contrary conclusion.

70 The modification applications as lodged were limited to the mere deletion of otherwise invalid conditions. In that context, the representation in the application forms (the development would remain substantially the same) was apt. The modification approvals, however, were not so limited.

71 None of the correspondence from the Council's solicitor addressed, directly or indirectly, the question whether the statutory conditions in s 96(1A) or (2) could be satisfied in the event that the roadwork conditions were imposed. The letter of 14 July 2004 supports the inference that the Council's solicitor had in mind s 96(2) of the EPA Act, not s 96(1A), which gave rise to an additional requirement that the Council be satisfied that the proposed modification was of minimal environmental impact. There is no reference in that letter to the requirement that the Council be satisfied that the development to which the consent as modified relates be substantially the same development as the development for which the consent was originally granted. Rather, the focus was the power to impose conditions on a modification approval.

72 The memorandum of 24 February 2005 contained no reference to s 96(2) or s 96(1A) of the EPA Act. The memorandum said that the Council's solicitor had reviewed the application and the "amended conditions". The memorandum does not mention any requirement to be satisfied in accordance with s 96(2) or s 96(1A) of the EPA Act.

73 The subsequent report to the Council of 15 June 2005 identified that the s 94 conditions were not authorised by the contributions plan, and stated that "Council accepted that the condition as imposed on the development consent was outside the scope of the s 94 Plan as adopted by Council. Whilst accepting this position it needed to be acknowledged that Eusdale Road required upgrading. Council therefore imposed a condition in lieu which effectively required Eusdale Road to be upgraded to the appropriate standard at the full cost of the applicant". In that report a section was headed "Can Council require Eusdale Road to be upgraded in addition to any s 94 contribution?" The report identified various sources of power to impose such conditions (s 80A, s 79C and s 94), but did not mention s 96 or the requirements of s 96(1A) or s 96(2). This is so despite the fact that the Council then purported to modify the development consents under s 96 yet again.

74 The Council did not identify in any document whether it had turned its mind to the question of notification of the modification applications (as, indeed, was necessary if the relevant source of power is s 96(2)).

75 Leaving aside the substance of the modification approvals, I am satisfied from the evidence to which I have referred that the Council was diverted from its obligations to be satisfied that the proposed modification was of minimal environmental impact and that the development to which the consents as modified related would be substantially the same development as the development for which the consent was originally granted. I infer that the Council was diverted from these obligations for at least two reasons. First, I am satisfied that the Council knew the s 94 conditions could not be sustained if challenged, and was determined to ensure that the applicants had to upgrade the road at their cost, so as not to leave the Council to fund the upgrade that it perceived as necessary. Secondly, the Council was focused on the availability of the power to impose conditions on approval of a modification application as a method to fix the problem it had created by imposing invalid s 94 contributions conditions. These considerations, in my view, plainly operated to the exclusion of all others in the Council's 1 March 2005 modification approvals.

76 Accordingly, whether the source of power was s 96(1A) or s 96(2) of the EPA Act, I am satisfied that the Council did not form the states of satisfaction required as conditions to the exercise of power under those sections. I infer that, instead, the Council received legal advice on the question of power to impose conditions on a modification approval. Having received positive advice to that effect (presumably based upon the decisions in 1643 Pittwater Road and North Sydney Council v Michael Standley & Associates Pty Ltd (1998) 43 NSWLR 468), the Council proceeded to impose the roadwork conditions on that assumption of power, irrespective of the requirements of s 96(1A) or s 96(2).

77 As the Council did not form the requisite states of satisfaction, the power to modify the development consents on 1 March 2005 was not available to the Council. Having regard to the test of invalidity in Project Blue Sky discussed above, I consider that the formation of the relevant states of satisfaction was an essential preliminary to any exercise of power. The consequence of those states of satisfaction not having been formed is necessarily invalidity of the 1 March 2005 modifications.

78 Given this finding, it is not necessary that I deal with the Wednesbury claim with respect to the requirements of s 96(1A). Nevertheless, the conclusions I have reached about that claim support my primary finding that the Council did not consider s 96(1A)(a) or (b) and, thus, was not in fact satisfied as required by those provisions.

79 Two of the s 94 conditions (Markwick and Taylor) referred to the monetary contribution "being paid towards the upgrading of roads", and one (King) required money to be paid at large. None of the s 94 conditions referred to Eusdale Road, or limited the application of the monetary contributions to the upgrading of Eusdale Road. This was consistent with the Council's s 94 contributions plan, which enabled the Council to apply s 94 contributions for roads to all rural roads within the area. Although Mr Swan said that the system did not work in that way when he was the Director of Engineering (that is, monetary contributions would be expended on the specific road servicing the development), the subjective intent of an officer of the Council (or Councillors) could not and did not operate to constrain the Council from using such monetary contributions for the upgrading of roads generally (see, for example, Frevcourt Pty Ltd v Wingecarribee Shire Council (2005) 139 LGERA 140 at [87]).

80 The "development for which the consent was originally granted" within the meaning of s 96(1A)(b) was development for the purpose of subdivision subject to conditions, which included a condition under s 94 for the payment of monetary contributions to the Council. The Council could use these contributions for upgrading rural roads in the area, including Eusdale Road. The Council's subsequent statement of intent that the money would be expended on the upgrade of Eusdale Road (see, for example, the letter of 28 May 2004) did not alter the legal character of the s 94 conditions. The "proposed modification", however, required the applicants to construct Eusdale Road in accordance with the Council's guidelines for engineering works for a distance of up to 1.7 kilometres.

81 Contrary to the Council's submission in this case, the s 94 conditions were not the same "planning matter" as the roadwork conditions (see 1643 Pittwater Road at [52]). The only conclusion reasonably open to a consent authority which turned its mind to the requirements of s 96(1A) (or s 96(2) for that matter) was that, if the roadwork conditions were imposed, the development consents would be radically transformed from consents for subdivision subject to conditions including the payment of monetary contributions into consents for subdivisions and fairly major roadwork.

82 The Council submitted that potential environmental impacts of Eusdale Road being constructed in accordance with the roadwork conditions were not an issue under s 96, because the owners would have to obtain further approval for those works, for example, under the Roads Act 1993. I am satisfied that the Council did not turn its mind to any aspect of these potential environmental impacts as relevant in any way to its purported exercises of power under s 96 (again, for the two reasons I have identified). This is so despite the fact that the Council had before it in the original Taylor application a report by Cenwest Environmental Services dated July 2002 assessing impacts of the proposed subdivision of the Taylor land in terms of flora, fauna and endangered species. That report identified that any requirement to upgrade Eusdale Road had the potential to significantly impact on the Bathurst Cooper Butterfly, a species listed as an endangered species in schedule 1 to the Threatened Species Conservation Act 1995, and subject to a recovery plan prepared in accordance with that Act (and the Environment Protection and Biodiversity Conservation Act 1999 (Cth)) dated June 2001.

83 The Council's submission that further approvals would be required for the roadwork also does not address the fact that the Council, through the modification approvals, imposed an obligation on the applicants (two of whom had already carried the subdivisions) to construct the roadwork. I also note (as an aside) that the submission does not sit well with the Council's conduct of having served s 121B orders on two of the applicants to complete the roadwork absent any such further application having been made and, presumably, with a full appreciation of the fact that s 121O of the EPA Act provides that no development consent is required by a person who carries out work in compliance with a requirement of an order.

84 In my view, no reasonable Council, absent misdirection in law as to what the "proposed modification" constituted within the meaning of s 96(1A)(a), could have concluded that the "proposed modification" was of minimal environmental impact. Properly directed in law, the Council had to appreciate that once it decided to impose the roadwork conditions, the "proposed modification" was both the deletion of the s 94 conditions and the imposition of the roadwork conditions. Any conclusion that the roadwork conditions were of minimal environmental impact would not have been reasonably open to the Council. "Minimal", in the context of s 96 construed as a whole, must take its ordinary meaning of "very small" or "negligible". The construction of up to 1.7 kilometres of road in accordance with the roadwork conditions, on any view of the facts, could not be characterised as of "very small" or "negligible" environmental impact. Had the Council turned its mind to this required statutory matter, I consider that the Council would have recognised that characterising the proposed modification as of minimal environmental impact was so devoid of plausible justification as to amount to an abuse of power.

85 For the same reasons, in my view, no reasonable Council could have come to the conclusion that the essence of the development would remain the same or that the modification did not involve a radical transformation of the development (See Vacik Pty Limited v Penrith City Council, unreported, Stein J, No. 10242 of 1991, 24 February 1992, North Sydney Council v Michael Standley & Associates Pty Ltd (1998) 43 NSWLR 468 at 475B and Moto Projects (No 2) Pty Ltd v North Sydney Council (1999) 106 LGERA 298 at 309). Had the Council turned its mind to this required statutory matter, I consider that the Council would have recognised that characterising the development to which the consent related as modified as substantially the same development was also so devoid of plausible justification as to amount to an abuse of power.

86 As noted, I do not consider that the Council reached manifestly unreasonable conclusions about the statutory requirements, because it did not turn its mind to these requirements. The fact that I consider that such conclusions would have been so devoid of plausible justification as to amount to an abuse of power supports my finding that the Council was wholly diverted from its statutory obligations in this matter, and never considered whether the proposed modification would be of minimal environmental impact or whether the development to which the consent related as modified would be substantially the same development.

87 The applicant submitted that the modification approvals could be severed within themselves. That is, that the part of the approval deleting the s 94 conditions could remain, and the invalid balance be severed pursuant to s 32 of the Interpretation Act 1987.

88 In Maitland City Council v Anambah Homes Pty Limited [2005] NSWCA 455 at [162] - [176], Tobias J (with whom Spigelman CJ and Ipp JA agreed) identified the principles applicable to severability. Consistent with the observation of McClellan J in 1643 Pittwater Road at [59], the Council's decisions to delete the s 94 conditions and impose the roadwork conditions were single decisions, with multiple consequences. The relevant decisions modified the consents. I consider that severance of the roadwork conditions from the Council's decisions to delete the invalid s 94 conditions would result in the latter operating in a manner different from the manner in which the whole modification approval would have operated.

89 Accordingly, and having regard to the principles set out in Maitland City Council v Anambah Homes Pty Limited [2005] NSWCA 455 at [162] - [176], the modification approvals themselves are incapable of severance. The modification approvals, however, are readily capable of being severed as a whole from the consents. By such severance, the consents would operate as they operated prior to the invalid modification approvals. Subject to discretionary considerations, those modification approvals should be declared invalid as a whole, and severable from the consents. Because I have considered and rejected the Council's arguments on discretion (see below), I propose to make a declaration of invalidity of the modification approvals. The consents must be treated as if they were not modified on 1 March 2005 or thereafter, given the Council's concessions about the purported 17 June 2005 modifications. As such, I should now deal with the original s 94 conditions. The Council accepts that these conditions are invalid, but submits they are not severable from the consents.

90 There is a significant difference between the modification approvals of 1 March 2005 and the development consents. The modification approvals were each a purported exercise of power under s 96 of the EPA Act, pursuant to which the Council decided to delete the s 94 conditions and impose the roadwork conditions. The deletion of the s 94 conditions in each case was inextricably linked to the imposition of the roadwork conditions. The same conclusions, in my view, cannot be reached with respect to the grant of the development consents. The development consents were granted pursuant to s 80(1) of the EPA Act. That section empowers a consent authority to determine a development application either by refusing consent or by granting consent to the application, either unconditionally or subject to conditions. Section 94 is the exclusive power to impose conditions for the payment of monetary contributions on the grant of development consent.

91 I consider that it would be wrong to approach the question of severance as if the potential different legal operation of the consents if the s 94 conditions were severed is between consents that required the upgrading of Eusdale Road and consents that do not require the upgrading of Eusdale Road. Nothing in the s 94 conditions required the monetary contributions to be expended on the upgrading of Eusdale Road. The required comparison, in my view, is between consents for subdivision that unlawfully required the payment of a monetary contribution to the Council, and consents for precisely the same subdivision that did not unlawfully require the payment of a monetary contribution to the Council.

92 If, contrary to my view, the intention of Mr Swan and other Council officers to expend the monetary contributions on upgrading Eusdale Road affected the legal operation of the s 94 conditions, it would still be wrong to characterise the potential different operation of the consents as consents for subdivision enabling the upgrading of Eusdale Road and consents for subdivision not enabling the upgrading of Eusdale Road. As Mr Swan's evidence disclosed, the Council had available funds to upgrade rural roads in its area, but decided as a matter of policy not to include the whole cost of upgrading Eusdale Road in its five year works program. Hence, the only difference before and after severance would be the removal of one funding source (s 94), which was not available to that extent in any event.

93 For the same reasons, I cannot accept the Council's submission that the consents for subdivision would not have been granted but for the invalid conditions. The Council was never informed and, I infer, never understood that the monetary contributions that it was seeking to extract were beyond power. I can draw no inference that the Council would not have granted the subdivision consents had it appreciated the true legal position. The correspondence from the Taylors supports an inference (which I draw) that the Council had granted development consents for that subdivision in or about 2001 without having imposed the requirements for payments of monetary contributions above and beyond the s 94 contributions plan or the roadwork conditions. The Council's s 94 contributions plan also supports the inference that the Council thought that requiring contributions of more than $3,500.00 per lot was "beyond reasonable". While the Council apparently changed its mind for these subdivisions, there is no basis for me to infer that the Council would necessarily have refused the subdivisions consents, if properly informed about the law. I also consider the observation of Talbot J in Wechsler v Auburn Council (1997) 130 LGERA 134 at 137 applicable - namely, the fact that a "Council may have come to a different decision if it had known the levy … was not enforceable does not mean that the consent will operate differently upon the applicant or produce a different result. The determination of the Council remains a development consent within the meaning of the Act after severance".

94 I am satisfied that severance of the purported s 94 conditions will not result in the balance of the consents operating in a manner different from that in which the whole would have operated. Both before and after severance, the consents will remain consents for the same subdivisions. Given my findings above, the s 94 conditions also cannot be seen as fundamental to, or going to the root of, the consents (see Anambah Homes at [164], citing Greek Australian Finance Corporation Pty Ltd v Sydney City Council (1974) 29 LGRA 130). In particular, nothing in the conditions required the monetary contributions to be expended on upgrading Eusdale Road.

95 The Council raised the question of discretion. I move immediately to that issue, after which I shall briefly address the other grounds of invalidity on which the applicants relied.

96 As Cripps AJA observed in Fairfield City Council v N&S Olivieri Pty Ltd [2003] NSWCA 41 at [82] to [84], it is "one thing to assert that a party who has accepted the benefit of a transaction must also accept its burden, … [but] quite another to conclude that a condition not authorised by law cannot be challenged if the development has been carried out … In planning law there is an evident practical difficulty in attempting to apply the 'benefit/burden' doctrine …". The fact that two of the applicants (Ms King and the Markwicks) have taken up the development consents and carried out the subdivisions, in my view, cannot operate so as to deny them the relief to which they would otherwise be entitled.

97 The conduct of Ms King and the Taylors relied upon by the Council also does not weigh against the grant of relief to which those owners are otherwise entitled. The position of Mr Taylor that he would accept the condition if it meant he could get his development consent, is hardly surprising. I do not infer that he made that statement with an appreciation of the unlawfulness of the Council's actions, any more than I infer that the Council was aware of that fact. In my view, it would be an odd result for the Taylors to be denied relief merely because Mr Taylor acquiesced in the Council acting beyond power. The same reasoning must apply to Ms King and the Markwicks insofar as they paid part of the monetary contributions.

98 None of the other points raised by the Council with respect to exercise of discretion (for example, that the Markwicks purchased the land with knowledge of the conditions, and that the Markwicks and Ms King carried out the subdivisions and presumably profited thereby) warrant denying the applicants relief in this matter. Nor does the fact that the applicants did not exercise their various merits appeal rights (which, for the modification approvals, the Council admits it did not inform them about in any event, contrary to the Regulation).

99 From the correspondence set out above, I infer that the applicants brought these class 4 proceedings as a last resort, having exhausted efforts with the Council to reach a resolution of the issue without litigation. To conclude that the applicants, by having sought to avoid litigation if at all possible, should thereby be denied relief on a discretionary basis does not commend itself to me as appropriate. In my view, Mr Robertson SC was correct in submitting that, in this matter, the Council exceeded its powers with respect to the subdivision consents to the detriment of the applicants. From relatively early on in their respective involvement with the Council, the applicants made the Council aware of their dissatisfaction with the Council's conduct and that they considered the conduct to be unlawful. The applicants then sought to achieve a compromise solution with the Council, which would have enabled the Council to obtain the s 94 contributions to which it was entitled at law. The Council refused to accept this compromise solution but, instead, subjected the owners to further unlawful action through its treatment of the modification applications. At that point, the applicants presumably decided that they had no option other than to approach the Court for relief.

100 In all of these circumstances, I consider that it would be inappropriate for me to deny the applicants relief in the exercise of my discretion. The discretionary considerations, in my view, weigh overwhelmingly in favour of the applicants. As such, I am satisfied that I should declare invalid and sever the s 94 conditions, and otherwise make the appropriate declarations of invalidity with respect to the actions that the Council concedes were invalid. That would be sufficient to bring an end to the matter but, in deference to the other arguments, I make some further observations below.

101 The first aspect of this claim of invalidity relates to the extent of the power of a consent authority (if any) to impose conditions on a modification approval.

102 Although the applicant submitted that I ought to find that 1643 Pittwater Road was wrongly decided, I decline to do so. Leaving aside considerations of comity, I also have to consider that 1643 Pittwater Road arose from the strong reservations expressed by Mason P (with whom Sheppard AJA agreed) in Michael Standley about the correctness of the decision in Benalup Holdings Pty Ltd v Lismore City Council (1993) 81 LGERA 257.

103 I agree with the conclusion in 1643 Pittwater Road that for a modification under s 96(2), there is power to impose conditions on a modification approval, subject to the overriding constraint imposed by that section of satisfaction that the development as modified remain "substantially the same". The logical corollary would be that if any condition was imposed on a modification approval under s 96(1A), the condition must meet the constraint of satisfaction that the modification be of "minimal environmental impact". In this case, for the reasons above, I have found that the Council did not turn its mind to either constraint.

104 I have also concluded above that I must reject the Council's submission that the roadwork condition related to "the same planning matter" as the s 94 conditions. It is obviously difficult to define the extent of the power to impose conditions in advance of any actual exercise of power. The "same planning matter" formula used by McClellan J at [52] in 1643 Pittwater Road, in my view, was not intended to suggest that any condition whatsoever, impinging upon the same topic no matter how tangential to it, would be within power.

105 I accept the applicants' submissions that, on the particular facts in this case, the roadwork conditions were so far outside the scope of the modification applications that the modification approvals incorporating the roadwork conditions were not authorised by the implied conditioning power in s 96. It seems to me that the facts are analogous to the observations of Stein JA in Winn v Director-General of National Parks and Wildlife and Others (2001) 130 LGERA 508 at [206] - [211]. That is, the roadwork conditions had the effect of so significantly altering the modifications for which approval had been sought, that the approvals were not approvals of the modification applications at all. They were a unilateral act by the Council outside power.

106 One rationale identified by Stein JA in Winn for the existence of the principle that the consent must be capable of being characterised as a consent to the application lodged, is the potential for diminution of the participation rights of objectors (at [210]). This rationale, in my view, applies equally to modification applications. In this case, potential objectors had no opportunity to comment on the imposition of conditions on the subdivision consents requiring the upgrading of Eusdale Road - in circumstances where that very activity had been identified in the documents before the Council as potentially having a significant impact on a threatened species. As such, I am satisfied that this ground of challenge to the validity of the roadwork conditions should also be upheld.

107 The applicants submitted that the roadwork conditions did not satisfy the Newbury test (Newbury District Council v Secretary of State for the Environment [1981] AC 578 - that conditions on a development consent be for a planning purpose, fairly and reasonably relate to the development, and not be so unreasonable that no authority would have imposed them). The difficulty with application of the Newbury test to the present facts is that it was formulated with respect to conditions of development consents, rather than modifications of development consents.

108 Although any condition imposed on a modification approval must itself satisfy the Newbury test, I would characterise the application of that test as one referable to the overall development, not the mere modification (see, by analogy, Michael Standley and 1643 Pittwater Road). In this context, the Newbury test imposes requirements additional those in s 96, and the requirement that the modification approval be capable of being characterised as an approval of the application that has in fact been lodged. Outside the context of all of those constraints, I consider that the roadwork conditions would not necessarily have contravened the Newbury conditions. It also necessarily follows that I am not persuaded that I should hold the roadwork conditions manifestly unreasonable by reason of their content.

109 The applicants claimed that as the s 94 conditions were invalid and a nullity, the modification applications were themselves of no legal effect. The power under s 96 is to modify a consent. That power includes the power to modify conditions which are part of the consent. In this case, the subdivisions consents founded the power to make the modification applications irrespective of the invalidity of the s 94 conditions. As such, I need not address the submission made by Mr Robertson SC that the s 94 conditions were completely without legal effect from the outset, based upon the reasoning in Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597. It also seems to me that the context considered by the High Court in Bhardwaj was different. If necessary, I would adopt the reasoning of Lloyd J in MLC Properties and Another v Camden Council and Others (1997) 96 LGERA 52 at 59 - 61, that there was capacity for the modification applications to be lodged and determined in accordance with law.

The Markwicks and Ms King not carrying out development

110 This claim was based upon the effect of the decision of the High Court in Hillpalm Pty Ltd v Heaven's Door Pty Ltd (2004) 220 CLR 472 to the effect that a person cannot be in breach of the EPA Act unless they are carrying out development. I do not accept the submission that because the Markwick and King subdivisions had been carried out and completed, there was necessarily no power to impose additional conditions on approval of modification applications. The decision in Hillpalm, in my view, turned on its facts. I do not understand Hillpalm to mean that, immediately upon issue of a subdivision certificate and the sale of certain subdivided lots within a subdivision, all conditions of subdivision consent necessarily become unenforceable. Nor do I understand it to mean that a person may not lodge an application for modification of a subdivision consent where the subdivision has been completed.

111 Mr Robertson SC made extensive submissions to the effect that the existence of the full merit right of appeal did not displace the obligation to afford the owners procedural fairness. Moreover, he submitted that the imposition of conditions requiring the expenditure of some $400,000 or $500,000 on roadwork (when the owners had sought nothing more than to delete invalid s 94 contributions conditions) breached the Council's obligations to afford the applicants procedural fairness.

112 I do not intend to do a disservice to these comprehensive submissions by my considerably more attenuated reasons for not accepting this claim. The Council made two answers to this claim. First, if the Council had an obligation of procedural fairness beyond the provisions of the statutory scheme, the obligation was discharged through the letter from its solicitor stating that, if modification applications were lodged, such conditions would be imposed. Secondly, the appeal right provided the applicants with the relevant and exclusive remedy for any breach of procedural fairness.

113 I consider the Council's first answer compelling. The letter from the Council's solicitor of 2 July 2004 stated that if the s 94 conditions were altered to reduce the monetary contribution, then the "Council considers it will be necessary to impose alternative conditions requiring the applicants to upgrade the road to a satisfactory standard at their own cost". Although Mr Robertson SC submitted that this warning was not renewed after the applications were lodged, and ought properly to be characterised as nothing more than a threat of another abuse of power by the Council, I consider that the letter still operated to discharge any procedural fairness obligation to which the Council was subject. See, by analogy, Victims Compensation Fund Corporation v Nguyen and Another (2001) 52 NSWLR 213.

114 My concern about the Council's second answer to this claim is that to attempt to test questions about the application or enforcement of procedural fairness obligations against the facts of this case is likely to be inappropriate, as I have already found that the statutory power did not enable the Council to impose the roadwork conditions. I consider that while the appeal rights available under s 96(6) of the EPA Act should generally operate to confine the relief available in the event of any denial of procedural fairness (Hill v Green (1999) 48 NSWLR 161 at 197), there may be cases in which the presence of that right is not a complete answer to a denial of procedural fairness, whether that denial be as against an applicant or third parties (Twist v The Council of the Municipality of Randwick (1976) 136 CLR 106 at 111, 116 and 118). The factors identified by McHugh J in Re Minister for Immigration and Multicultural Affairs and Another; ex parte Miah (2001) 206 CLR 57 at 99 - 102 would be relevant in this regard. Given my conclusion on the facts of this matter, I do not need to address this question or the question whether there is any divergence of authority in this Court as to the effect of Twist (see, on the one hand, Hillpalm Pty Ltd v Tweed Shire Council and Another (2002) 119 LGERA 86, Barnes v Dungog Shire Council (1999) 103 LGERA 269, and Ableton Management Pty Ltd v Gosford City Council (1994) 83 LGERA 97, and on the other hand, Jarrett and Another v Manly Municipal Council (1997) 99 LGERA 208).

115 For the reasons given, I conclude that orders must be made in the class 4 proceedings in which I declare invalid: - (i) the final purported modifications of the development consents of 17 June 2005, which should be severed from the consents, (ii) the purported modifications of the development consents on 1 March 2005, which should be severed from the consents, (iii) the purported s 94 conditions imposed on the original development consents, which should be severed from the consents, and (iv) the s 121B orders served on the Markwicks and Ms King. Orders must be made in the class 1 proceedings dismissing the appeals, because the s 121B orders are invalid. Costs may be argued in all the proceedings, if not agreed between the parties. I direct the parties to file within 7 days agreed or competing versions of orders reflecting my conclusions. ****************************

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