Macedonian Orthodox Church Incorporated v ACT Planning & Land Authority [2015] ACTCA 32

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY COURT OF APPEAL

Case Title: Macedonian Orthodox Church Incorporated v ACT Planning & Land Authority

Citation: [2015] ACTCA 32

Hearing Date: 19 February 2014 (final submissions filed 27 February 2014)

Decision Date: 17 July 2015

Before: Murrell CJ, Refshauge and Penfold JJ

Decision: (a) The decision of Burns J made on 12 February 2013 refusing leave to appeal is set aside. (b) Leave to appeal to the Supreme Court is granted. (c) Leave to appeal to the Court of Appeal is granted. (d) The appeal is dismissed. (e) The order made by the ACT Civil and Administrative Tribunal in AT 11/123 on 27 April 2012 is confirmed. (f) The decision of the respondent to impose a Change of Use Charge in the amount of $2,058,750.00 is confirmed. (g) The appellant is to pay the respondent’s costs of and incidental to the appeal to this Court. (h) The appellant is to pay the respondent’s costs of and incidental to the proceedings before Burns J.

Category: Principal Judgment

Catchwords: TAXES AND DUTIES – Miscellaneous taxes – change of use charge calculated in connection with development approval – development approval related to variation of leases by subdivision and variation of lease purpose clause, and construction works – change of use charge calculated by reference to value of lease before and after variation – whether after value of lease to be calculated taking account of costs of approved development – whether lease required construction of works approved by development approval – whether conditions of works approval required construction of approved works – significance of reasons given for development approval. APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – In General and Right of Appeal – leave to appeal interlocutory decision – leave to appeal as pre-requisite for exercising statutorily-limited appeal right. Legislation Cited: ACT Civil and Administrative Tribunal Act 2008 (ACT) s 86(3) Land (Planning and Environment) Act 1991 ss 222, 243, 226, 251, 251(a) 252 Land Titles Act 1925 (ACT) ss 59,59, 71 Planning and Development Act 2007 (ACT) ss 7, 180, 202 276, 276(2), 277, 277(3), 351, 358, 358(3)(e) 358(3)(f), 360, 382 Supreme Court Act 1933 (ACT), s 34B Supreme Court Act 1970 (NSW), s 69(3) Territory Plan 2008 Residential Land Use Policies B1

Cases Cited: Arrow International Australia Ltd v Group Konstruct (2012) 7 ACTLR 48 Bowler v Hilda Pty Ltd (2001) 112 FCR 59 Cecelia Spence and Minister for Urban Services [2000] ACTAAT 37 Coulton v Holcombe (1986) 162 CLR 1 Craig v South Australia (1995) 184 CLR 163 Glover v Minister for Planning and Harris [2003] ACTSC 42 Hamilton v Demgold Pty Ltd (1990) 97 ALR 481 Idonz Pty Ltd v NCD Commission (1985) LGRA 99 Kirk v Industrial Relations Court of New South Wales (2010) 239 CLR 531 Macedonian Orthodox Church Incorporated & ACT Planning and Land Authority [2012] ACAT 21 Macedonian Orthodox Church Incorporated v ACT Planning and Land Authority [2013] ACTSC 19 O’Donnell v Environment Protection Authority (2012) 268 FLR 48 Royal Sydney Golf Club v Federal Commissioner of Taxation (1995) 91 CLR 610 Springrange Pty Ltd v Australian Capital Territory and ACT Planning and Land Authority (2010) 174 ACTR 15 Tokich and ACT Planning & Land Authority & Anor [2005] ACTAAT 7 Valuer-General v New South Wales Golf Club (2012) 192 LGERA 105 Westfield Management Limited v Perpetual Trustee Company Limited (2007) 233 CLR 528

Parties: Macedonian Orthodox Church Incorporated (Applicant) ACT Planning & Land Authority (Respondent)

Representation: Counsel Mr P Walker SC (Appellant) Mr C Erskine SC (Respondent)

Solicitors JS O’Connor, Harris & Co (Appellant) ACT Government Solicitor (Respondent)

File Number: ACTCA 17 of 2013 Decision under appeal: Court: ACT Supreme Court Before: Burns J Date of Decision: 12 February 2013 Case Title: Macedonian Orthodox Church Incorporated v ACT Planning and Land Authority Citation: [2013] ACTSC 19

THE COURT:

Introduction

1. Most land in the ACT is held under Crown leases, which contain lease purpose clauses limiting the use that may be made of the land. The appellant, the Macedonian Orthodox Church Incorporated, held a concessional Crown lease over land in Narrabundah that was used for the purposes of the church and its community. A concessional lease is one granted for less than its market value. This particular lease was granted without any payment.

2. There are restrictions on the uses to which a concessional lease may be put. The appellant wished to undertake some development on the land beyond what would be permitted by the terms of the concessional lease. This required the lease to be “deconcessionalised”, which could be achieved by the appellant paying to the Territory the current market value of the lease. The appellant obtained approval to deconcessionalise the lease in July 2003, and in April 2011 the necessary payment (of some $300,000) was made.

3. In 2005, presumably in anticipation of the deconcessionalisation of the lease, the appellant made a development application to subdivide the lease; this would involve surrendering the original lease and accepting separate new leases. The appellant sought two new leases, one attached to part of the land identified as the “church site” and the other attached to the remaining land, described as the “multi-unit residential site”. The appellant also sought lease purpose clauses for the new leases that differed from the lease purpose clause in the original lease; the proposed new lease purpose clauses are, for the church site and the multi-unit residential site respectively, as follows:

To use the premises only for the purpose of Community Use LIMITED TO place of worship and /or religious associated use. To use the land for the purpose of multi-unit housing of not less than one (1) and not more than fifty seven (57) dwellings.

The legislation

4. The relevant legislation has changed during the progress of this matter. The Land (Planning and Environment) Act 1991 (ACT) (the LPEA), under which the development application was made and (apparently) approved was repealed and replaced by the Planning and Development Act 2007 (ACT) (the PDA) shortly after that approval was given. We shall refer to the legislation in general terms as the “applicable legislation”, and cite specific provisions of the repealed LPEA only where necessary. The development approval

5. Under the applicable legislation, lease variations (including subdivisions) as well as building works and uses of land for certain purposes not expressly authorised by a lease all fall within the definition of “development” (LPEA s 222; PDA s 7). Applications for approval of all such activities were made by way of development applications (LPEA s 226). The development application by which the appellant sought approval for the lease variation required to achieve the subdivision, and for the new lease purpose clauses, also sought approval for three sets of construction works, as follows:

(Stage 1) - establish the National Headquarters for the Macedonian Church in Australia on the ‘church’ site including construction of a new community hall, a bell tower, a new Bishop's residence, Baptismal pool, cladding the existing dome of the church with new copper sheets, parking associated with the church and the community hall; (Stage 2) - construction of a multi-unit residential development comprising 56 units with associated car parking; and associated landscaping, paving and other site works.

6. By a decision dated 28 September 2007, the respondent ACT Planning and Land Authority (ACTPLA) approved, on conditions, the three proposals for which approval was sought, namely:

(a) the subdivision;

(b) the variation to the lease purpose clauses; and

(c) the construction works on the church site (the church works), and on the residential site (the residential works), and a third bundle of works consisting of landscaping, paving and other site works.

7. The church works are substantial, and have been costed at around $6 million. As well as a new community hall, Bishop’s residence, Baptismal pool, and a bell tower, the works include the cladding of the church’s existing dome with new copper, which seems to account for a large part of the costs of the proposal.

Change of use charge

8. Under applicable legislation, the lease variation process is subject to the imposition of a change of use charge (CUC) payable by the lessee (PDA s 276). The parties agree that the relevant date for the determination of the CUC was 6 April 2011, and that therefore the Court must consider the provisions of the PDA as in force on that date.

9. A lease variation does not take effect if the relevant CUC is not paid (PDA, s 276(2)).

10. Section 277 of the PDA is relevantly as follows:

277 Working out change of use charge (1) The planning and land authority works out the change of use charge for a variation of a lease as follows: (2) In this section: CUC means the change of use charge payable for the variation of the lease. V1— (a) ...; or (b) for a variation that is a consolidation or subdivision, means the capital sum that the new lease or leases to be granted under the consolidation or subdivision might be expected to realise if— (i) the consolidation or subdivision were to take place as proposed; and (ii) the new lease or leases were genuinely offered for sale immediately after the variation on the reasonable terms and conditions that a genuine seller would require; and (iii) the rent payable throughout the term of the new lease or leases were a nominal rent. V2— (a) ...; or (b) for a variation that is a consolidation or subdivision, means the capital sum that the lease or leases to be surrendered under the consolidation or subdivision might be expected to realise if— (i) no consolidation or subdivision were to take place during the remainder of the term of the surrendered lease or leases; and (ii) the lease or leases were genuinely offered for sale immediately before the consolidation or subdivision on the reasonable terms and conditions that a genuine seller would require; and (iii) the rent payable throughout the term of the lease or leases to be surrendered were a nominal rent. (3) If the capital value assessed as V1 is equal to or less than the capital value assessed as V2, no change of use charge is payable.

11. In general terms, the CUC is calculated as 75% of the increase in the value of the lease arising from the lease variation, which is assessed by reference to the sale value of the lease before variation (the “before” value) and the sale value of the lease or leases as created or varied immediately after the variation (the “after” value).

12. Importantly, the values of the leases are assessed on the assumption that the lease concerned had been:

genuinely offered for sale immediately after the variation on the reasonable terms and conditions that a genuine seller would require …

13. Section 277(3) of the PDA specifies that where the after value is less than the before value, no CUC is payable. There is no hint in the legislation, and counsel for the appellant specifically disclaimed such a suggestion, that the lessee is entitled to a payment from the Territory in such circumstances.

14. In November 2011, ACTPLA determined that the difference between the before value and the after value of the appellant’s lease was $2,740.000, and that therefore a CUC of $2,055,000 was payable.

15. The appellant, however, says that the CUC should be nil. In summary, the appellant argues that the CUC should be nil on the ground that the total value of the new leases are, if anything, less than, and certainly no more than, the value of the original lease. This somewhat surprising conclusion rests on the claim that, as a result of the various processes described at [2] to [6] above, the appellant is obliged to undertake on the church site a development that will cost far more than the value it will add to that site, and that the burden of that obligation attached to the lease of the church site will effectively equal or exceed any increased value of the lease of the residential site, such that there is no increase in value flowing from the lease variation as a whole. That is, the appellant says, the total value of the leases after the subdivision is no more than the total value before the subdivision, and so no CUC is payable.

16. The appellant therefore appealed ACTPLA’s determination to the ACT Civil and Administrative Tribunal (the Tribunal), which affirmed the determination in all respects except that it increased the change in value by $5,000 and the CUC by 75% of that figure (Macedonian Orthodox Church Incorporated & ACT Planning and Land Authority [2012] ACAT 21).

17. The appellant sought to appeal to the Supreme Court from the Tribunal’s decision. Under s 86(3) of the ACT Civil and Administrative Tribunal Act 2008 (ACT), such an appeal lies only with leave. On 12 February 2013, Burns J refused leave to appeal (Macedonian Orthodox Church Incorporated v ACT Planning and Land Authority [2013] ACTSC 19).

18. Four grounds of appeal from the Tribunal decision were relied on before Burns J. In refusing leave to appeal, his Honour referred to all four grounds of appeal. However, the appellant says that his Honour did not deal in full with ground (a), which was as follows:

That the tribunal erred in concluding that neither Clause 3 (a) or 3 (b) of the draft Crown lease for “the Church block”, nor condition 11 of the development approval obliged the appellant to build “the Church works” on “the Church block”. ...

19. Burns J rejected this ground of appeal, and went on to refuse leave to appeal, having considered explicitly only whether Clause 3(a) or (b) imposed any such obligation.

20. The appellant says that his Honour should also have considered whether Condition 11 of the development approval imposed the obligation asserted by the appellant, and that the failure to consider Condition 11 is the ground on which leave to appeal to this Court should be granted.

21. It is in our view implicit in his Honour’s reasons that he considered that Condition 11 could not be used in construing the relevant lease, but it is unfortunately true that his Honour, having referred to the appellant’s reliance on Condition 11 as well as Clause 3, did not go on to make explicit his implicit conclusion that Condition 11 did not help the appellant’s case, thus leaving the appellant to assert that one of its arguments had been overlooked.

The current appeal

22. The appellant now seeks to appeal from Burns J’s refusal of leave. Because that decision was an interlocutory decision, leave is required for the appeal to the Court of Appeal. The application for leave to appeal from Burns J’s refusal of leave was brought out of time by leave given in April 2013, at which point it was also ordered that the application for leave to appeal and the appeal should be heard together. Accordingly, the appellant now seeks the following orders from this Court:

Leave to appeal is granted. The appeal is allowed. The decision of Burns J on 12 February 2013 refusing leave to appeal is set aside and leave to appeal be granted. The appeal to the Supreme Court should be allowed. The order made by the ACT Civil and Administrative Tribunal in AT 11/123 on 27 April 2012 is set aside. The decision of the respondent to impose a Change of Use Charge in the amount of $2,058,750.00 is set aside and that the decision is made in substitution therefore to impose a Change of Use Charge in the amount of $0.00 (nil). The respondent is to pay the Applicant’s costs of and incidental to the appeal to this Court. The Respondent is to pay the Applicant’s costs of and incidental to the appeal and application for leave to appeal in the Court below.

Outline of argument

23. The dispute is, in essence, about what matters are to be taken into account in valuing the lease before and after the subdivision and, in particular, whether the new lease for the church site carries, directly or indirectly, an obligation to undertake the church works that must be accounted for in the valuation.

24. It is agreed that certain matters external to the leases are properly taken into account in valuing each lease; these include “public laws which affect the value of the land, ... including restrictions imposed by planning laws and instruments made thereunder” (Valuer-General v New South Wales Golf Club (2012) 192 LGERA 105 at 114; [36], applying Royal Sydney Golf Club v Federal Commissioner of Taxation (1995) 91 CLR 610 at 624). In the ACT this would include the Territory Plan as well as zoning rules and requirements and certain other instruments made under or for the purposes of the Plan, and possibly other restrictions such as tree preservation orders or heritage listings.

25. In Hamilton v Demgold Pty Ltd (1990) 97 ALR 481, Neaves and Wilcox JJ concluded that a pre-commitment sub-lease which had been agreed between the Commonwealth and one potential purchaser of a lease was not to be taken into account in valuing the lease as at a hypothetical auction date. Wilcox J said at 494-495:

I think that, when the question is stated in this way, the proper application of s 5(1) becomes apparent. The valuer is required to take into account all the advantages and disadvantages which would have flowed to a person who acquired the lease governing the subject site at the relevant day, having regard to the actual terms of the lease, except where they conflict with the specified assumptions. The valuer must assume a fresh lease, as at the relevant day. He or she is not concerned with any contractual rights or obligations which may have subsequently enured to the leaseholder; for example, by the grant of a sub-lease or other interest in the land. But, whatever would have passed with the leasehold interest itself is to be taken into account.

26. Counsel for the appellant said that despite the actual outcome in Hamilton v Demgold, it is authority for the proposition that:

the valuer is required to take into account all the advantages and disadvantages which would have flowed to a person who acquired the lease governing the subject site at the relevant day, having regard to the actual terms of the lease ...

27. The appellant’s argument is that one of the “advantages and disadvantages” flowing to the appellant was the obligation to undertake the church works approved by the development approval.

Clause 3 of the lease

28. There is no dispute that the contents of the new lease for the church site are relevant in the determination of the “after value” and therefore the assessment of the CUC.

29. Clauses 3(a) and (b) (Clause 3) of the new lease for the church site comprise what we shall refer to as a “build and develop clause”; they are as follows:

30. THE LESSEE FURTHER COVENANTS WITH THE COMMONWEALTH as follows: That the Lessee shall within twelve (12) months from the date of the commencement of the lease or within such further time as may be approved in writing by the Authority for that purpose commence to erect an approved development in accordance with plans and specifications prepared by the Lessee and previously submitted to and approved in writing by the Authority; That the Lessee shall within twenty four (24) months from the date of the commencement of the lease or within such further time as may be approved in writing by the Authority complete the erection of the said approved development in accordance with the said plans and specifications and in accordance with every Statute Ordinance or Regulation applicable thereto;

Condition 11 relating to the works

30. As well as referring to the contents of the new lease for the church site, the appellant relies on elements of the approval of the proposed development on the church site, but the relevance of those elements is not accepted by the respondent.

31. The development application was approved on 28 September 2007. The development approval describes the overall proposals, and grants approval “subject to the following conditions imposed pursuant to s 245 of the [LPEA]” (s 245 permitted development approvals to be conditional). The conditions included in the development approval are set out under two separate headings, being:

(i) Conditions relating to the Subdivision of Crown Leases

(j) Conditions relating to the Development.

32. As already noted, under the applicable legislation lease variations fall within the defined term “development” (LPEA, s 222; PDA, s 7). However, it is apparent (although not specified anywhere in so many words) that the approval document itself uses “subdivision” to refer to the lease changes and “development” to refer to the proposed construction works.

33. The “Conditions relating to the Development” apply to the proposed church works, residential works and associated landscaping, paving and other site works. They are distinct from the “Conditions relating to the Subdivision of Crown Leases”.

34. Condition 11, which appears under the heading “Conditions relating to the Development”, is as follows:

Completion 11. that the approved development shall be completed within 24 months from the date of this approval or within such further time as may be approved in writing by the Planning and Land Authority: Notes: 1. Under section 251 of the Land Act this approval will expire if the development is not commenced within two years after the date of approval. There is no provision in the Land Act to extend the period specified for commencement. 2. Under section 252 the applicant may apply to the Planning and Land Authority for any extension to the period specified for completion, but such an application must be made within the original period specified for completion. The appellant’s argument

35. The appellant’s argument has several steps:

(a) First, the appellant says, Clause 3 of the lease for the church site obliges it to undertake the church works approved in conjunction with the approval of the subdivision.

(b) Secondly, the appellant says, the inclusion of the lease variation and the works proposals in the same development application and development approval creates a necessary link between the lease variation and the works, so that as soon as the lease variation takes effect the appellant has begun to “undertake the development”, and therefore the appellant is also bound by Condition 11, which is not only an aid in the construction of Clause 3 but also imposes a separate obligation on the appellant to complete the development by completing the church works. On appeal, counsel for the appellant reiterated the proposition that Condition 11 “quite independently” requires the improvements to be made on the church site and said that Burns J had erred in only considering Condition 11 as an aid in the construction of Clause 3 of the lease. Finally, the appellant says, once the development is begun by the taking effect of the lease variation, ACTPLA can enforce the obligation imposed by Condition 11 to complete the development works as approved.

36. The conclusion that the appellant asks the Court to draw is that the obligation to complete the church works attaches to the lease for the church site and must therefore be valued for the purposes of assessing the CUC on the lease variation.

37. Another strand in the appellant’s argument is that in a subdivision case, the CUC must be calculated having regard to the total package resulting from the subdivision – that is, the before value for the undivided lease must be compared with the total after value of all the new leases resulting from the subdivision. The Tribunal at [61] found against the appellant on this issue, but in the event it is unnecessary for us to reach any conclusions on the issue.

The respondent’s argument

38. The respondent’s argument also involves several steps:

(a) The respondent says first that Clause 3 of the lease for the church site, which refers to “an approved development”, does not refer to any particular approved development, and in particular does not refer to a development that simply happens to have been approved by the same development approval that permitted the lease variation. The respondent points to the use in Cl 3(a) of the expression “an approved development” (emphasis added). The respondent says that the use of the indefinite article makes it clear that Cl 3 does not refer to any particular approved development. The reference to “the said approved development” (emphasis added) in Cl 3(b) does not detract from this argument, because the reference there is simply to whatever development is commenced in accordance with cl 3(a).

(b) Next, the respondent says that, for the purpose of valuing either of the new leases, there is little or no scope for looking to documents or other information outside the “four corners” of the lease, because the lease is a registered lease under the Torrens system operating in the ACT. (c) In particular, the respondent says, since Clause 3 does not refer to the particular development that was approved when the lease variation was approved, it is impermissible in valuing the lease to consider obligations imposed by the approval of the works described in the development approval, including any obligations imposed by Condition 11.

(d) Finally, the respondent says, even if Condition 11 could be considered, and even if it did impose the obligation asserted by the appellant, there is scope for avoiding the obligation to complete the specific works approved in the development approval, and therefore the cost of the approved works cannot be included in the valuation of the new leases. In particular, the respondent says, the development approval would not bind a purchaser of the lease to complete the approved works unless the sale agreement included the rights under the development approval and the purchaser wanted to complete the approved works. In any other situation, the respondent says, a purchaser could seek approval of a different development proposal. Such a proposal might have quite a different impact on the value of the new leases.

Effect of works approval on purchaser of lease

39. The question whether the works approval would bind a purchaser of the lease was initially raised in questions from the bench. After the hearing, the appellant sought and was granted leave to make written submissions about that issue, and leave was given to the respondent to file submissions in reply.

40. In those submissions, the appellant complains that this issue had not been raised at any point before it was discussed in the Court of Appeal hearing, asserts that if it had been raised the appellant would have sought to bring evidence about the issue, and submits, citing Coulton v Holcombe (1986) 162 CLR 1 at 8, that therefore the matter should not now be considered.

41. In the event we have found it unnecessary to consider the submissions on this issue in reaching our conclusions. Accordingly we express no views about whether these submissions should have been considered, except to say that it is hard to see why the issue of the impact of the approval on a purchaser of the lease had not previously been raised, given that a significant element in the appellant’s case was whether, whatever obligations were imposed on the appellant by the lease directly, the development approval should be considered in assessing the value of the lease if “genuinely offered for sale immediately after the variation” (at [10] above). Whether those obligations would bind a purchaser of the lease immediately after variation would seem to have been fundamental to that assessment.

Clause 3 of the lease

42. Clause 3 of the lease requires the lessee to “commence to erect an approved development in accordance with plans and specifications previously submitted to and approved in writing by the Authority”.

Textual arguments

43. The appellant says that, although the clause refers to “an” approved development, the reference to plans and specifications “previously submitted and approved” requires that approved development to have been approved before the lease commences, and therefore, despite the use of the indefinite article “an”, Clause 3 must be interpreted as referring to the particular development (relevantly, the church works) approved in conjunction with the lease variation.

44. For several reasons, we consider this argument should be rejected.

45. First, even if the use of “previously” required the plans and specifications to have been approved before the lease variation, this would not mean that Clause 3 could be assumed to identify a unique approved development. More than one proposal for construction works might have been approved in the life of the original lease before the lease variation was approved. The fact that an earlier approval might have expired would not necessarily prevent it fitting the description of having been “previously approved”. It is also possible, even if there had been only one development approved, that more than one set of plans and specifications had been approved during the life of the lease before variation. A further uncertainty would arise if any amendments to any such earlier approved plans and specifications has been made and approved.

46. Secondly, it is apparent from the material appearing in the development approval under the sub-heading “Conditions Relating to the Development” that the development approval has not locked in the plans and specifications for the church works: under the heading “Further Information Required”, Condition 9 requires the applicant (the appellant in this case) to lodge with ACTPLA, for approval, revised versions of several plans, architectural drawings, the access and mobility report, the integrated site plan and landscape plan, and an exterior materials sample board.

47. If the appellant’s argument were correct, construction of the works in accordance with any of the revised proposals that were required by ACTPLA and were approved after the date of the development approval would not satisfy Clause 3, because the plans and specifications ultimately approved and complied with would not have been “previously approved”.

48. That is, if the appellant’s argument were correct, the approval of the subdivision proposal would oblige the appellant to undertake the construction works in the exact form described in the approval, despite the fact that Condition 9 relating to the works requires various aspects of the original works proposal to be varied and submitted for further approval. This would make a nonsense of the approval.

49. Accordingly, the appellant’s argument that “previously” in Clause 3 of the lease means “before the lease took effect” must be rejected, and “previously” must be construed as requiring only that the required development is commenced in accordance with plans and specifications approved before that commencement.

Condition 11 of the works approval

Need to construe Condition 11

65. If it is correct that, in construing the lease, there is no scope for recourse to that part of the development approval that approved the proposed works, then it does not matter what Condition 11 means and there is no need to pursue its meaning. As we understand Burns J’s decision, that is why his Honour did not consider the meaning and operation of Condition 11.

Operation of Condition 11

66. However, the appellant argued that, apart from its impact on the interpretation of the lease, Condition 11 of the works approval imposes an independent obligation, on the appellant as lessee, which should be accounted for in valuing the lease. It is not clear to us how or why an obligation not arising out of the lease could or should be valued in valuing the lease, but the argument seems to be that because the subdivision and the church works were dealt with in the same development application and development approval, the appellant could not expect to have one without the other, and therefore the assessed value of the lease must carry the burden of the works approval (rather than that burden attaching to the appellant).

67. We are satisfied that Condition 11 does not impose an obligation to construct the approved development that:

(a) is independent of the lease; but

(b) burdens the lessee in such a way that it should be accounted for in the CUC valuation.

68. Rather, Condition 11 simply summarises the effect of ss 251 and 252 of the LPEA, which are referred to in the notes to the condition. Those provisions, as in force on 28 September 2007, were as follows:

251 End of approvals (1) An approval to undertake a development (other than a development that consists only of a variation of a lease) ends if— (a) the development or any stage of the development is not begun within the period specified in the approval; or (b) the development or any stage of the development is not completed within the period specified in the approval; or (c) if no period is specified in an approval for the beginning of the development or any stage of the development—the development or stage of development is not begun within 2 years after the day the approval takes effect. Note For when an approval takes effect, see s 249. (2) The end of an approval does not affect anything done under the approval before its end. 252 Extension of time (1) The lessee or occupier of a place in relation to which an approval to undertake a development (other than a development that consists only of a variation of a lease) applies (being an approval that specifies the date for the completion of the development or any stage of the development) may, before the end of the approval, apply to the planning and land authority for an extension of the period within which to complete the development or any stage of it. (2) On receipt of an application under subsection (1), the planning and land authority may extend the period within which the development, or the stage of the development, is to be completed.

69. Condition 11 does not require an approved development to be commenced, but requires it to be completed within a specified period (in this case, 24 months from the date of approval or a longer period approved by ACTPLA). This reflects s 252, which also does not require a development to be commenced, but permits ACTPLA to extend the completion deadline.

70. Section 251, in contrast, permits no extension of the commencement deadline, but nor does it require development to be commenced at all. Rather, the effect of a failure to commence within the deadline is that the approval expires (s 251(1)(a)). This means that, in order to comply with a build and develop clause in a lease, a new development approval would need to be sought, presumably at extra cost and trouble to the lessee but without putting the continued currency of the lease at risk.

71. That is, Condition 11 sets out the effect of s 252 in relation to a development that has commenced, while Note 1 explains that a failure to commence the development will simply lead to the expiry of the development approval. Neither s 251 nor Condition 11 explicitly or implicitly imposes any obligation to undertake the works; at most, Condition 11 repeats the legislative obligation to complete works that have been commenced within time.

72. This explanation of the significance of Condition 11, incidentally, also disposes of counsel’s comment that the appellant did not seek the inclusion of the condition in the development approval and that it was a “requirement” imposed by the respondent. That is no doubt true, but proves nothing; in particular, it does not prove that ACTPLA in including Condition 11 was doing anything more than reminding the appellant of a significant aspect of the legislative framework within which the development approval would operate.

73. The second limb of the appellant’s Condition 11 argument is that once the lease variation is implemented:

(a) the approved development has been commenced;

(b) the lessee is then obliged to complete the development within the specified period; and

(c) the lease is therefore, by the operation of Condition 11, burdened with that obligation.

74. It is important to note that ss 251 and 252 distinguish a development involving only a lease variation from other developments, and do not apply to developments consisting only of lease variations. Clearly, a condition to the effect of Condition 11 would not make sense in such a development approval, and Condition 11 is specified to apply to the proposed works rather than to the lease variation (at [33] and [34] above). For these reasons, we consider that the expiry of a development approval relating to works, as provided for in s 251, is not intended to apply to the development approval to the extent that it also happens to provide for a lease variation (although if that conclusion is correct, it is a result that could be made clearer in the legislation).

75. Furthermore, the appellant’s argument implies that, if the approved works are not commenced within the specified period, the whole development approval, not just the works approval but also the lease variation approval, expires. Such a result would raise various complexities, arising in particular from the likelihood that the new leases would have been registered before the expiry of the commencement deadline and the resulting expiry of the development approval. If that expiry were treated as also reversing the variation approval, that would enable a failure to commence approved works to undermine the operation of the Register under the Land Titles Act by retrospectively undoing the creation of a registered lease; such a consequence is a further reason for rejecting the appellant’s claims about Condition 11.

76. These matters in our view dispose of the appellant’s argument that Condition 11, either as it stands or on the basis that the approved development is commenced when the lease variation takes effect, imposes an independent obligation to complete the approved works.

Enforcement of development obligations

77. However, counsel for the appellant submitted that the enforceability of the obligation said to be created by the development approval also supported the argument that it was an obligation that had to be considered in assessing the after value of the new lease.

78. Counsel argued that, apart from the expiry of a development approval, there were other sanctions for failing to undertake an approved development such that the approval effectively obliges the lessee to undertake the development. However, an analysis of those sanctions indicates that whatever the other consequences for the lessee, there is no scope for forcing a lessee to undertake the particular works approved if those works are never commenced. Restriction on transfer of lease

79. First, in general, a lease may not be sold or otherwise transferred until a build and develop clause in the lease has been complied with (PDA s 180). However, in accordance with our conclusions at [51] above, this does not oblige a lessee to undertake any particular works.

Offence of non-compliance with conditions of approval

80. Section 202 of the PDA creates an offence of undertaking a development without complying with a condition of the relevant development approval, as follows:

202 Offence to develop other than in accordance with conditions (1) A person commits an offence if— (a) the person undertakes development; and (b) the person has development approval for the development; and (c) the development approval is conditional; and (d) the person does not comply with a condition of the development approval when undertaking the development. Maximum penalty: 60 penalty units. (2) An offence against subsection (1) is a strict liability offence.

81. This section only applies if an approved development is undertaken (that is, it is commenced), but any of the conditions of the approval are not complied with. Since we have rejected the argument that implementing an approved lease variation amounts to commencing an approved development so as to engage the conditions on the undertaking of approved works, we do not interpret this section as imposing any obligation to commence the approved works.

Controlled activity orders

82. Under s 358 of the PDA, controlled activity orders can be made in relation to a development approval. The relevant provisions are as follows:

(3) A controlled activity order may direct anyone to whom it is directed to do 1 or more of the following: (a) not to begin a development without development approval; (b) not to carry out a development without development approval; (c) to comply with a lease provision or development agreement; (d) to restore any land, or a building or structure on the land, that has been altered, damaged or fallen into disrepair in breach of a lease provision or development agreement; (e) to comply with the terms of a development approval to undertake a development; (f) to carry out a development in accordance with a condition under the development approval that approved the development; (g) to demolish a building or structure, or a part of a building or structure, that has been constructed without development approval or permission required under a territory law; (h) to demolish a building or structure, or a part of a building or structure, that encroaches onto, over or under unleased territory land without approval granted under a territory law; (i) to restore any land, building or structure that has been altered without development approval or permission required under a territory law; (j) to replace with an identical building or structure any building or structure that has been demolished without development approval or permission required under a territory law; (k) to apply for development approval for a building or structure, or part of a building or structure, that has been constructed without development approval; (l) to clean up a leasehold and keep it clean; (m) if the person to whom the order is directed is bound by a land management agreement—to comply with the land management agreement; (n) not to do anything that is a controlled activity whether or not a controlled activity order has been, or could be, made under paragraphs (a) to (m).

83. Counsel for the appellant relies on s 358(3)(e) and (f) as permitting a controlled activity order to be made obliging a lessee (and, under s 360 of the PDA, a successor of the lessee and also an occupier of the lease) to undertake a particular approved development. While noting that the issue was not argued in any detail, we are not persuaded by counsel’s interpretation of the provisions.

84. Section 358(3)(e) permits the making of an order “to comply with the terms of a development approval to undertake a development”. It is not absolutely clear to us what this means, but in our view such an order either:

(a) requires compliance with the development approval in undertaking the development (on the basis that “development approval to undertake a development” is a composite phrase); or

(b) refers only to a development approval that in terms requires the approved development to be undertaken.

85. It does not seem to us that the paragraph can be interpreted as implying that a development approval as such requires the approved development to be undertaken. As already noted, Condition 11 does not go beyond reminding the lessee of the time limit within which the development, once commenced, must be completed (at [71] above). It does not require the development to be undertaken.

86. Section 358(3)(f) permits the making of an order “to carry out a development in accordance with a condition under the development approval that approved the development”. An order under this provision would simply require compliance with a condition stated in the development approval. For instance, in relation to Condition 11, an order could require the lessee or other target of the order to complete, within the relevant deadline, a development that has commenced. If there is no condition requiring a development to be commenced, this provision would not permit the making of an order requiring it to be commenced.

87. Furthermore, as conceded by counsel for the appellant, controlled activity orders are made in the exercise of ACTPLA’s discretion (PDA, s 351) and need not be made at all.

Termination of lease

88. Finally, s 382 of the PDA provides for a lease to be terminated and land recovered if there has been a contravention of the lease or of Chapter 11 of the PDA (which relates to controlled activities). There is no suggestion that if a lease were terminated for failure to comply with a build and develop clause by completing an approved development, the land previously subject to that lease was affected by the approved development such that it could only subsequently be leased on condition that the new lessee undertake the particular approved development. As well, it is quite likely that in many cases in which a lease is terminated for failure to comply with a build and develop clause, there has never been a development approval given or even sought.

89. That is, s 382 permits a lessee to be deprived of a lease, but it does not provide any power to require a particular approved development to be completed.

Conclusions about enforcement

90. In summary, none of these provisions obliges a lessee, as such, to undertake any particular development, and nor has counsel for the appellant pointed to any other source of such an obligation.

Reasons for development approval

91. The appellant’s claim, if successful, would see the church works partly funded by what would otherwise have been the community’s share of the increase in the total value of the new leases; that is, the cost of the church works would be set against the whole of the increase in value arising from the appellant’s newly acquired capacity to use part of the original land for a multi-unit residential development, which would effectively eliminate the community’s access to the CUC proportion of that increase in value. In his judgment, Burns J concluded, in effect, that neither ACTPLA nor the community cared about the church works to an extent that would support the appellant’s claim. His Honour said at [38]:

One may well ask: why would the respondent require the appellant to undertake the particular works that constitute the Church works? The lease of the Church block is a lease of private land to a private entity, albeit a religious organisation. There is no obvious public purpose to be achieved, or public benefit to be bestowed, in requiring the appellant to undertake the Church works. It is inherently improbable that the respondent would require the specific Church works to be completed as a term of the lease, as opposed to a term of a separate development application, where there is no obvious planning reason to do so, or public benefit to be conferred.

92. In this case, there was a statutory obligation for ACTPLA to give reasons for its decision to approve the development, because there had been objections to the development application (LPEA s 243).

93. Counsel for the appellant pointed to Kirk v Industrial Relations Court of New South Wales (2010) 239 CLR 531 (Kirk) at 577; [88] and [89] for the proposition that if reasons are incorporated in a decision, they are part of the record. The majority (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ) said:

94. In the present case, a wider statutory context must be considered. In particular, reference must be made to s 69 of the Supreme Court Act 1970 (NSW). Section 69(1) of that Act provides (in effect) that, subject to some exceptions, where the Supreme Court formerly had jurisdiction to grant any relief or remedy or do any other thing by way of writ (whether of prohibition, mandamus, certiorari or otherwise) the Court should continue to have jurisdiction to grant that relief or remedy or do that thing, but should grant the relief by judgment or order, not by issuing a writ. The exceptions to this general provision include habeas corpus and writs of execution but it is not necessary to consider those exceptions further. 89. Of most immediate relevance to the present matter are the provisions of s 69(3) and (4), the text of which is set out earlier in these reasons. It will be recalled that s 69(3) declares that the jurisdiction of the Supreme Court to grant relief in the nature of certiorari includes jurisdiction to quash for error of law on the face of the record and that s 69(4) provides that for the purposes of s 69(3) "the face of the record includes the reasons expressed by the court or tribunal for its ultimate determination". It follows from those sub-sections that, in this case, the reasons given by the Industrial Court (both at first instance and on appeal to the Full Bench) are a part of the record of the decision of each level of that Court. The decision in Craig confining the extent of the record of an inferior court does not apply.

95. There are various reasons for doubting the immediate relevance of the passage relied on from Kirk, but it is sufficient to note that it depended on the existence of a specific statutory provision (s 69(3) of the Supreme Court Act 1970 (NSW)) to the effect that “the face of the record” included the reasons expressed by the court or tribunal. No equivalent ACT provision has been identified; certainly there is nothing similar in s 34B of the Supreme Court Act 1933 (ACT), which is to a similar effect as s 69(1) of the NSW Act. In those circumstances, we do not consider that Kirk detracts from the authority, in the ACT, of Craig v South Australia (1995) 184 CLR 163, in which the High Court concluded at 181 that, in relation to an inferior court, the “record for the purpose of certiorari does not ordinarily include the transcript, the exhibits or the reasons for decision”. That in turn suggests that Kirk provides no basis for us to accept that ACTPLA’s reasons should be considered in interpreting the lease.

c) create a wider range of affordable and sustainable housing choices throughout the ACT that will accommodate population growth and meet changing household and community needs; e) provide increased opportunities for medium and higher density residential development, particularly in areas close to commercial and employment centres, and along major transport corridors.

99. The B1 Residential Land Use Policies also contain an objective referring to community facilities:

j) make adequate provision for needed community facilities within residential areas, and for appropriate commercial activities in selected locations.

100. At 1.6.5 of the Findings, ACTPLA concluded that:

the proposed single storey community hall and the refurbishment of the Church facilities are consistent with the single storey residential developments in Goyder Street.

101. The fact that ACTPLA was satisfied that the proposed development was not inconsistent with these relevant matters does not establish that it had any commitment to the particular details of the proposed church works.

102. At 2.0(a) of the Findings, ACTPLA explained the decision to allow the appellant to deconcessionalise the lease, noting that the site was “grossly under-utilised” and that:

Payment of the concession will afford the opportunity to increase the facilities on the church site to serve the wider community while retaining community use.

103. This was a reason for allowing the deconcessionalisation of the original lease rather than for approving the particular development, but it goes no further than appearing to favour the opportunity to increase the facilities on the church site; there is no suggestion that the development must take any particular form.

104. Finally, under the heading “Reasons for the Decision”, ACTPLA notes that the development application was approved because it was consistent with the Territory Plan. In identifying the “key issues” in its assessment, ACTPLA made it clear that its main concern was that the church works would not have detrimental effects on the surrounding area.

105. It is possible that, if there had been no proposal to expand the community facilities on the church site, ACTPLA might have been less receptive to the application to subdivide the block and build up to 57 residential units on one of the new leases (although given the reference to the site being “grossly under-utilised” and the B1 Residential Land Use Policies quoted at [98] above, this is by no means certain). However, there is nothing in the development approval that indicates any interest by ACTPLA in the appellant undertaking the specific, very expensive, works identified in the development application and approval.

106. We do not consider that Burns J misjudged the nature or level of ACTPLA’s interest in the undertaking of the church works.

Conclusions

107. We are satisfied that the “after value” assessed for CUC purposes is the value of the new lease or leases to the extent that it reflects the effect of the lease variation on the scope for using the leased land. The after value should in general not account for the lessee’s particular plans for the new lease as distinct from the general possibilities open to any holder of the lease by reason of the change that has been made by varying the original lease or replacing it with a new lease or new leases. Of course, the after value would need to account for the lessee’s particular plans if those plans had been incorporated in the new lease or leases.

108. That is not this case. For the reasons given above:

(a) the new leases issued to the appellant do not include an obligation to undertake the particular works that happened to be approved by the same development approval that permitted the issue of the new leases;

(b) the works approval included in that development approval is not available to be considered in interpreting (or valuing) the new leases;

(c) neither Condition 11, nor any other condition relating to the works approval, imposes any obligation on the lessee that is independent of the leases but required to be taken into account in valuing the leases;

(d) the original CUC, as adjusted by the Tribunal in its decision, has been calculated by reference to the appropriate matters.

Whether leave should be given

109. Before this Court, the question is whether leave should be given for an appeal against Burns J’s interlocutory decision to refuse leave to appeal from the Tribunal.

110. Before Burns J, the question was whether leave should be given as a pre-requisite to the exercise of a statutorily-limited appeal right.

111. The criteria for the grant of leave in the two cases differ. In O’Donnell v Environment Protection Authority (2012) 268 FLR 48 at [76] to [78], Penfold J set out the two relevant sets of tests:

112. Counsel referred me to the well-settled test for the giving of leave to appeal from an interlocutory decision, being a test involving sufficient doubt and possible injustice, as reflected, for instance, in the recent comments of the Court of Appeal in Preston v Dukes [2012] ACTCA 29 at [14], as follows: The ordinary principles that govern a grant of leave to appeal are well established, as McHugh, Kirby and Callinan JJ said in Bienstein v Bienstein [2003] HCA 7; (2003) 195 ALR 225 at 231 [29], namely an applicant for leave must establish that the decision in question is attended with sufficient doubt to warrant the grant of leave and must also show that substantial injustice will result from a refusal of leave to appeal. 77. However, in Eastman v CSH, the Court of Appeal had indicated agreement with the views of Lander J in the decision under appeal, David Harold Eastman v Commissioner For Social Housing [2010] ACTSC 71 that different criteria are applicable where leave is required not for an appeal from an interlocutory decision but as a pre-requisite to the exercise of a statutorily-limited appeal right, saying: Here, taking up the Master’s inaccurate paraphrase of the principles in Niemann, [Lander J] said that whether a decision of the tribunal were attended by doubt or the applicant would suffer an injustice if the decision were allowed to stand were not relevant considerations on an application for leave to appeal under s 125 of the Residential Tenancies Act. His Honour stated (at [67]): The statutory criterion for an application under s 125 which must be made out is whether the applicant can identify a question of law. To obtain leave the applicant also needs to show at least an arguable case that the Tribunal erred in its consideration of that question of law. Finally, an applicant needs to show that if the question of law were determined in the manner contended for by the applicant the decision of the Tribunal might have been different in the sense that it might have been more favourable to the applicant: see Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 per Mason CJ at 353 and Toohey and Gaudron JJ at 384 in dealing with an “error of law”. The plain intention of the legislature is to provide a filter for appeals from the tribunal. What is tolerably clear from the plain words of the section is that it is insufficient to point to a question of law. Something more is required. We agree with the primary judge that it is necessary for an applicant to demonstrate that he or she has at least an arguable case, that the tribunal has erred in its resolution of a question of law and that the result of the error [sic] would have been more favourable to him or her. Otherwise, it would be futile to grant leave. We are not convinced that whether the applicant would suffer a substantial injustice if the decision were allowed to stand is irrelevant but, absent an arguable case, it will certainly not justify a grant of leave. Nothing in Niemann suggests otherwise. We did not, however, hear full argument on this question and it is unnecessary to resolve it in this case. On either approach, for the reasons which follow, Mr Eastman must fail. 78. Relying on the Court of Appeal’s comments, the matters I need to consider in deciding whether to give leave to appeal as a pre-requisite to the exercise of a statutorily-limited appeal right are: (a) whether a question of fact or law has been identified; (b) whether there is at least an arguable case that the Appeal President erred in his resolution of that question; and (c) whether the correct resolution of that question would be more favourable to the appellant.

Orders

116. Accordingly, we would make the following orders:

(a) The decision of Burns J made on 12 February 2013 refusing leave to appeal is set aside.

(b) Leave to appeal to the Supreme Court is granted.

(c) Leave to appeal to the Court of Appeal is granted.

(d) The appeal is dismissed.

(e) The order made by the ACT Civil and Administrative Tribunal in AT 11/123 on 27 April 2012 is confirmed.

(f) The decision of the respondent to impose a Change of Use Charge in the amount of $2,058,750.00 is confirmed.

(g) The appellant is to pay the respondent’s costs of and incidental to the appeal to this Court.

(h) The appellant is to pay the respondent’s costs of and incidental to the proceedings before Burns J.

I certify that the preceding one hundred and sixteen [116] numbered paragraphs are a true copy of the Reasons for Judgment of the Court.

Associate:

Date: