Masterton Homes Pty Limited v Pittwater Council

Land and Environment Court (NSW)|2003-02-24|Before: Bignold J, Mr P

The Applicant, in a pending class 1 proceeding, being an appeal pursuant to the Environmental Planning and Assessment Act 1979 (EP&A Act), s 97 has raised for determination as a preliminary issue the validity of a condition of development consent for the erection on each of three proposed lots of land situate at Lakeview Parade, Warriewood, an attached "dual occupancy development". The parties mutually seek the determination of the question of law in advance of the hearing on the merits of the class 1 proceeding which is listed on 28 February and 3 March 2002.

The s 97 appeal had originally been filed in respect of the Council's deemed refusal of the Applicant's development application (vide the EP&A Act, s 82(1) but whilst the appeal was pending the Council exercised the power conferred upon it by s 82(2) by determining the development application by granting development consent subject to a deferred commencement condition (s 80(3) ) and other conditions (s 80(1)). Such an outcome is expressed by s 82(3) to "not prejudice or affect the continuance or determination" of the pending appeal, subject to subsection (4) which provides that where development consent has been granted, the Council, with the consent of the Applicant is entitled to have the appeal withdrawn.

The Applicant's response to the Council's determination granting the development consent as expressed in the affidavit sworn 14 January 2003 by its Solicitor is that the Applicant "now proposes to appeal" against two specified conditions of the development consent (one of which is the subject matter of the Applicant's preliminary question of law). Although leave to so amend the originating process has not formally been sought or granted, I do not understand there to be any objection to the appeal being converted from an appeal against the original deemed refusal of the development application to an appeal against the imposition of some specified conditions of the development consent. Whichever basis be relevant, the important fact to note is that the preliminary determination of the Applicant's question of law occurs in the statutory context where the Court is seised of plenary jurisdiction with the power to determine the development application for itself: vide s 83(2)(3) and (4).

This is an important consideration in the present case where the Applicant's preliminary question seeks a determination that a condition of the development consent is ultra vires. Normally, such an issue arises in class 4 proceedings involving the judicial review of the decision of a consent authority to grant development consent, subject to conditions, and in such proceedings, and subject to any question of severance, a successful challenge to the validity of a condition of development consent results in an appropriate declaration that the development consent stands free of the impugned condition.

However, that conventional outcome in class 4 proceedings cannot be automatically transposed to the successful impugning of a condition of development consent in class 1 proceedings (such as in the present case), where this Court is vested with the function and power of determining for itself the development application.

The matters of principle that I have just discussed were not addressed on the hearing of the Applicant's preliminary question of law but I mention them to provide the essential statutory and juridical context for the determination of the preliminary issue that has been raised.

The question of law asks whether the following condition of the relevant development consent is ultra vires: D8. Prior to occupation, a covenant is to be created on the titles of lots 651, 652 and 653 at the applicant's expense that creates a Restriction on Use of Land, the terms of which state that the ownership of the individual dwellings to be constructed on the property cannot be individually assigned by any agreement, dealing or instrument based on the ownership of company shares, in order to give effect to the prohibition on Dual Occupancy subdivision contained in Clause 21F(1) and (2) of Pittwater LEP 1993. B. THE RELEVANT FACTS

The parties have submitted a Statement of Agreed Facts (Exhibit 1) which includes the following facts:
The land to which the subject application relates is described as Lot 65 Section B in Deposited Plan 5464, known as 12 Lakeview Parade, Warriewood (the Land). 2. On 16 December 2002 the Respondent granted consent to the subdivision of the Land into 3 allotments, namely, into lots 651, 652 and 653 respectively (the Subdivision Consent). 3. The application the subject of this appeal seeks, inter alia, the erection of an attached dual occupancy dwelling upon each lot to be created pursuant to the Subdivision Consent (the DO application). 4. The Land is located within Area 3 of the Pittwater Local Environmental Plan 1993 (PLEP 1993). 4.1 The erection of an attached dual occupancy on the Land is permissible with consent by virtue of Clause 21C of PLEP 1993. 4.2 The present DO application is permissible with the consent of the Respondent. 5. On 19 December 2002 the Respondent granted a deferred commencement consent (the Consent) to the DO. 6. Each of the dwellings approved in the consent is capable of separate occupation as a dwelling with its own curtilage and private open space. 7. The consent was granted subject to a number of conditions, including Condition D8. 8. Clause 21F of the PLEP states, relevantly: (1) On or after the day on which Pittwater Local Environmental Plan 1993 (Amendment No. 11) commences, consent must not be granted for a subdivision which creates separate allotments for each of the two dwellings resulting from dual occupancy development carried out in accordance with this Division.

In addition to the above facts, it should be noted that the Report of the Council's Developer Officer assessing the development application contains the following statement, which I infer is the reason for the imposition of Condition D8 on the grant of the development consent for the attached dual-occupancy development on each of the three proposed lots: It should be noted here that any further subdivision of any Dual Occupancy development is prohibited under Clause 21F(1) and (2) including any Company Title subdivision arrangements and Council has resolved that a suitable condition to this effect be imposed on Dual Occupancy Development consents as advice to the current owner and any future owners of the land. C. THE RELEVANT STATUTORY PROVISIONS

The relevant statutory planning provisions are contained in the Pittwater Local Environmental Plan 1993 (the LEP) and in the EP&A Act. These need to be recited in elaboration of the agreed facts.

As the Statement of Agreed Facts notes, the development consent granted in the present case was granted pursuant to cl 21C of the LEP which provides as follows: 21C. Despite any other provision of this plan, a person may, with the consent of the council, on land within Area 2 or 3 as shown on the Dual Occupancy Map: (a) alter or add to a dwelling house erected on an allotment so as to create 2 attached dwellings; or (b) erect an attached dwelling on an allotment but only if there are not more than 2 dwellings on the allotment after the development has been carried out.

The term "attached dwelling" is defined by cl 5(1) of the LEP as follows: attached dwelling means a dwelling resulting from dual occupancy development attached to another dwelling by a common wall or ceiling where: (a) not more than 2 dwellings are erected on the same allotment of land; and (b) the habitable floor area of each dwelling shares a common wall, ceiling or floor; and (c) the area of the common wall, ceiling or floor is not less than half the area of the wall, ceiling or floor on the respective elevations of each dwelling; and (d) the dwellings have the appearance of a single building;

That same clause defines the referenced terms dual occupancy development and dwelling as follows: dual occupancy development means development that results in 2 dwellings (whether attached or detached)on a single allotment of land (or which would have that result were it not for the fact that the allotment is to be subdivided as part of the development), and it makes no difference if dual occupancy development is described in another way in this or any other environmental planning instrument; dwelling means a room or number of rooms occupied or used or so constructed or adopted as to be capable of being occupied or used as a separate domicile;

Clause 21F was inserted into the LEP on 9 February 1996 by Pittwater Local Environmental Plan 1993 (Amendment No 11). That Plan, by virtue of cl 3 "applies to all land within the area of Pittwater on which dual occupancy development may be carried out". The express aim of that Plan, as expressed in cl 2 was: to prohibit the subdivision of dual occupancy development in Pittwater

Clause 21F is in the following terms: 21F. (1) On and after the day on which Pittwater Local Environmental Plan 1993(Amendment No.11) commences, consent must not be granted for a subdivision which creates separate allotments for each of the two dwellings resulting from dual occupancy development carried out in accordance with this Division. (2) The separate occupation of the proposed lots illustrated by a proposed strata plan relating to the two dwellings resulting from any such dual occupancy development is prohibited. (3) This clause does not apply to any two dwellings resulting from development carried out pursuant to a consent:

(a) granted in accordance with this Division later than 14 days after Pittwater Local Environmental Plan 1993 (Amendment No. 11) was first exhibited under the Act, but only if the application for the consent was made before the expiration of that 14 day period; or (b) granted in accordance with this Division on or after 3 March 1995 and before the expiration of that 14 day period; or (c) granted before 3 March 1995 in accordance with Sydney Regional Environmental Plan No. 12 - Dual Occupancy and Part 2 of Statement Environmental Planning Policy No.25 - Residential Allotment Sizes and Dual Occupancy Subdivision; or (c) granted on or after 3 March 1995 in accordance with Sydney Regional Environmental Plan No. 12 - Dual Occupancy and Part 2 of Statement Environmental Planning Policy No. 25 - Residential Allotment Sizes and Dual Occupancy Subdivision as continued in force for certain development applications made before that date by clause 8 (Saving of certain development applications) of Pittwater Local Environmental Plan 1993 (Amendment No. 6).

It is apparent from the terms of cl 21F that prior to Amendment No 11 coming into force, the LEP (in common with the Regional Environmental Plan and Statement Policy that are referred to in subclause (3)) permitted the subdivision of dual occupancy developments. The clear object of cl 21F was to prohibit the subdivision of dual occupancy developments.

The term "subdivision" is defined by the EP&A Act s 4B and that definition applies to the LEP (vide the EP&A Act, s 34(1)) s 4B sates: 4B. Subdivision of land

(1) For the purposes of this Act, "subdivision of land" means the division of land into two or more parts that, after the division, would be obviously adapted for separate occupation, use or disposition. The division may (but need not) be effected: (a) by conveyance, transfer or partition, or (b) by any agreement, dealing, plan or instrument rendering different parts of the land available for separate occupation, use or disposition. (2) Without limiting subsection (1), "subdivision of land" includes the procuring of the registration in the office of the Registrar-General of: (a) a plan of subdivision within the meaning of section 195 of the Conveyancing Act 1919 , or (b) a strata plan or a strata plan of subdivision within the meaning of the Strata Schemes (Freehold Development) Act 1973 or the Strata Schemes (Leasehold Development) Act 1986. (3) However, "subdivision of land" does not include: (a) a lease (of any duration) of a building or part of a building, or (b) the opening of a public road, or the dedication of land as a public road, by the Crown, a statutory body representing the Crown or a council, or (c) the acquisition of land, by agreement or compulsory process, under a provision of an Act (including a Commonwealth Act) that authorises the acquisition of land by compulsory process, or (d) a division of land effected by means of a transaction referred to in section 23G of the Conveyancing Act 1919, or (e) the procuring of the registration in the office of the Registrar-General of:

(i) a plan of consolidation, a plan of identification or a miscellaneous plan within the meaning of section 195 of the Conveyancing Act 1919 , or (ii) a strata plan of consolidation or a building alteration plan within the meaning of the Strata Schemes (Freehold Development) Act 1973 or the Strata Schemes (Leasehold Development) Act 1986.

The EP&A Act, s 80 and s 80A which confer the power to impose conditions on the grant of development consent relevantly provide as follows: 80. Determination (1) General

A consent authority is to determine a development application by: (a) granting consent to the application, either unconditionally or subject to conditions, or (b) refusing consent to the application. 80A. Imposition of conditions (1) Conditions---generally A condition of development consent may be imposed if:

(a) it relates to any matter referred to in section 79C (1) of relevance to the development the subject of the consent, or (b) it requires the modification or surrender of a consent granted under this Act or a right conferred by Division 10 in relation to the land to which the development application relates, or (c) it requires the modification or cessation of development (including the removal of buildings and works used in connection with that development) carried out on land (whether or not being land to which the development application relates), or (d) it limits the period during which development may be carried out in accordance with the consent so granted, or (e) it requires the removal of buildings and works (or any part of them) at the expiration of the period referred to in paragraph (d), or (f) it requires the carrying out of works (whether or not being works on land to which the application relates) relating to any matter referred to in section 79C (1) applicable to the development the subject of the consent, or (g) it modifies details of the development the subject of the development application, or (h) it is authorised to be imposed under section 80 (3) or (5), subsections (5)--(9) of this section or section 94 or 94F.

Since it is s 80A(1)(a), that is the relevant provision in this case, it is necessary to recite s 79C(1) which provides as follows: (1) Matters for consideration---general

In determining a development application, a consent authority is to take into consideration such of the following matters as are of relevance to the development the subject of the development application: (a) the provisions of: (i) any environmental planning instrument, and (ii) any draft environmental planning instrument that is or has been placed on public exhibition and details of which have been notified to the consent authority, and (iii) any development control plan, and (iv) the regulations (to the extent that they prescribe matters for the purposes of this paragraph), that apply to the land to which the development application relates, (b) the likely impacts of that development, including environmental impacts on both the natural and built environments, and social and economic impacts in the locality, (c) the suitability of the site for the development, (d) any submissions made in accordance with this Act or the regulations, (e) the public interest.

The other statutory provision relevant to the determination of the question of law is the Conveyancing Act 1919, s 88E pursuant to which the restriction on use required by Condition D8 is apparently intended to be created. That section relevantly provides: (1) In this section prescribed authority means:

(a) the Crown, (b a public or local authority constituted by an Act, or (c) a corporation prescribed for the purposes of this section.

(2) A prescribed authority may, in accordance with this section, impose restrictions on the use of or impose public positive covenants on any land not vested in the authority, so that the restriction or public positive covenant is enforceable by the authority whether or not the benefit of the restriction or public positive covenant is annexed to other land. (3) A restriction or public positive covenant referred to in subsection (2) may be imposed in relation to land under the provisions of the Real Property Act 1900 by a memorandum of restriction or public positive covenant in the form approved under that Act that:

(a) specifies the prescribed authority that is imposing the restriction or public positive covenant, (b) is executed by that prescribed authority, by the registered proprietor of the land and by each other person who has a registered estate or interest in the land and is to be bound by the restriction or public positive covenant, and (c) is lodged in the office of the Registrar-General, and such a restriction or public positive covenant takes effect when the Registrar-General has made, in the Register kept under that Act, such recordings with respect to the restriction or public positive covenant as the Registrar-General considers appropriate. ………….. (5) Where a restriction or public positive covenant referred to in subsection (2) takes effect, the prescribed authority that imposed the restriction or public positive covenant may enforce it against any person who is, or claims under, a signatory to the memorandum or deed that imposed the restriction or public positive covenant as if that person had entered into a binding covenant with that prescribed authority to observe the restriction or public positive covenant. D. THE COMPETING ARGUMENTS ON THE VALIDITY OF CONDITION D8

Although the competing arguments (both in their written and oral versions) ranged widely ultimately, I think the true scope of the dispute can be reduced to two questions -

(i) whether an arrangement providing for the separate use of different parts of building or land colloquially known as "a company title" or "home unit company" arrangement relevantly falls within the scope of the definition of "subdivision" as adopted and applied by the LEP generally and by cl 21F in particular; and

(ii) whether the requirements of Condition D8 for the creation of a restriction on user or a restrictive covenant exceeds the bounds of what may properly be created and registered pursuant to s 88E of the Conveyancing Act 1919.

In so distilling these two disputed questions, I have accepted as an undisputed fact the Applicant's present intention that the ownership of each of the three lots, when developed by an attached dual-occupancy development, will be vested in a company which will issue shares conferring upon each shareholder the right to exclusive use and occupation of each of the dwellings erected on each lot in the form of attached dual-occupancy development. Without knowing the precise arrangements, I proceed to determine the question upon the basis that the proposed arrangement will reflect what is colloquially known as a "company title" or "home unit company" arrangement cf Magill v Santina Pty Ltd (1983) 1 NSWLR 517.

In my opinion, the intended "company title' arrangement relevantly falls within the scope of the statutory definition of "subdivision" applicable to the operation of the LEP and in particular of cl 21F.

This is because the "company title" arrangement will relevantly render the dual-occupancy development "obviously adapted for separate…..disposition" within the meaning of the statutory definition.

This conclusion is particularly supported by the terms and context of cl 21F of the LEP. Since it is obvious that by its very nature and by definition a "dual occupancy development' (such as that approved by the grant of development consent in the present case) itself divides the land upon which the dual-occupancy development is developed into two parts (each of the two dwellings and their respective curtilages) "that after the division, would be obviously adapted for separate occupation or use' within the meaning of the statutory definition of "subdivision", it is clear that the reference to "subdivision" in cl 21F of the LEP is confined to a reference to the division of the land into two parts "that after the division would be obviously adapted for separate disposition" (my emphasis). The clear intention of the prohibition on subdivision wrought by cl 21F of the LEP is to preclude the "separate disposition" of the two parts of land comprised of each of the two dwellings and their respective curtilages. The fact that the "two parts" have already been created by the carrying out of the "attached dual occupancy" development does not prevent the definition of "subdivision" from operating in respect of the "separate disposition" of those parts, by virtue of the "company title" arrangement. In this respect, it is not to the point that the issue and transfer of shares in the "company title" arrangement does not itself, physically divide the land into two parts, since it is only by virtue of that arrangement that the "two parts" can relevantly be separately disposed of: see the Conveyancing Act, s 23F.

Accordingly, I hold that cl 21F of the LEP relevantly prohibits the separate disposition of each of the dwellings forming part of the approved dual-occupancy development.

This conclusion puts beyond argument the validity of Condition D8 as a planning condition since it clearly is a condition that "relates to a matter referred to in s 79C(1) of relevance to the development the subject of the consent" within the meaning of s 80A(1)(a), namely the LEP and in particular cl 21F thereof.

The second question should be answered negatively notwithstanding the imprecise and convoluted manner in which the required restriction on use is expressed by Condition D8. This is because it is tolerably clear that the intention of the required restriction is to prohibit the separate disposition by way of a "company title" arrangement of each of the dwellings forming part of the approved dual-occupancy developments on each of the three proposed lots.

Viewed as a matter of substance a more appropriately worded restriction on use (ie one drafted to achieve the clear intent of Condition D8) would in my judgment fall within the scope of a "restriction on the use of land" within the meaning of s 88E of the Conveyancing Act.

The Applicant submitted that within the context of conveyancing and of the operation of the Conveyancing Act, the expression "restriction on the use of land" should not adopted the broad concept of "use" that is conventionally employed in town planning law. No authority was cited for the proposition and in my judgment, it is unsustainable. Restrictive covenants affecting land use have a long pedigree extending far beyond the beginning of town planning legislation. There is no reason, in terms of policy or precedent, for giving a limited scope and meaning to the expression "use of land" in a conveyancing context.

In Registrar-General v Lee (1990) 19 NSWLR 240, Mahoney JA in the following passage at 248 discussing the concept of "subdivision" gave it a wide scope in a "conveyancing sense" when he said: In order to do this it is necessary to consider the meaning of subdivide in the definition. The term is one which conceptually may mean different things. For example, it may refer to a physical division of land into different parts. It may refer to a division of ownership or title. Thus, if A sells part of a single area of land to B, it may be said that the land is divided or subdivided even though the two areas remain contiguous and there is not physical division of the single area. And the term may, I think, be used in a conveyancing sense. Thus, if a plan be drawn up showing an area divided into several lots, the term subdivision may, in its ordinary sense, be applied to what that plan has done even though there is no physical division between the lots and they remain in the ownership of a single person. In so far as the acts or transactions referred to in par (a) or par b) would, under the general meaning of subdivision , be described as such, they would constitute a subdivision in the second sense; in so far as what is contemplated in par (c) would be such, it would be so in the third sense.

For the foregoing reasons, I would hold that the substance of the requirement in Condition D8 for the creation of a restriction on the use of each of the three proposed lots is achievable pursuant to the Conveyancing Act 1919, s 88E. E. CONCLUSIONS AND ORDERS

For all of the foregoing reasons I hold that Condition D8 of the development consent is not ultra vires.

This conclusion of course does not address the merits for the imposition of Condition D8. It is simply concerned with its validity.

I should also record the Applicant's formal submission, in view of the settled state of authority in this Court (see Fortunate Investments Pty Ltd v North Sydney Council (2001) 114 LGERA 1) that the condition was ultra vires because a condition may never be imposed so as to require the creation under the Conveyancing Act of a restriction on use of land. Consistent with settled authority, I would reject the Applicant's formal submission. In passing, however, I should note the recent decision of the Court of Appeal in Hillpalm v Heaven's Door (2002) NSWCA 301 as to the self-sufficiency of conditions of development consent and their enforceability with precedence over the indefeasibility of title provisions of the Real Property Act 1900.

Accordingly, the Applicant's question of law is determined by holding that Condition D8 of the development consent is not ultra vires.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

CITATION : Masterton Homes Pty Limited v Pittwater Council [2003] NSWLEC 44 revised - 27/02/2003 APPLICANT: Masterton Homes Pty Limited PARTIES : RESPONDENT: Pittwater Council FILE NUMBER(S) : 10667 of 2002 CORAM: Bignold J KEY ISSUES: Question of Law :- Validity of condition of development consent LEGISLATION CITED: Environmental Planning and Assessment Act 1979, ss 80 and 80A Conveyancing Act 1919, s 88E Fortunate Investments Pty Ltd v North Sydney Council (2001) 114 LGERA 1; CASES CITED: Hillpalm v Heaven's Door (2002) NSWCA 301; Magill v Santina Pty Ltd (1983) 1 NSWLR 517; Registrar-General v Lee (1990) 19 NSWLR 240. DATES OF HEARING: 06/02/03 written submissions 10/02/03, 12/02/03, 18/02/03 DATE OF JUDGMENT: 02/24/2003

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