McCloy Teralba v Lake Macquarie City Council

The Site and Locality

1. A 414 lot residential subdivision (DA/3478/2002- as amended) is currently being constructed on the overall site in several stages. The particular site that is the subject of this appeal is a residue lot (1801) of that subdivision. It consists of a strip of land which lies between a future road and an existing rail corridor. The approved DA/2413/2007/B proposes to divide this residue lot (1801) into 72 residential lots.
2. The land is in the suburb of Teralba. Part of the overall site consists of an area said to be known to the local people as "Billy Goat Hill". Topographically, that part of the overall site is a knoll and is said to contain the highest point in the local area.

Planning Controls

1. The original consent was issued under the provisions of Lake Macquarie Local Environmental Plan 2004 ('LMLEP2004').
2. The land the subject of the relevant development consent is zoned R2 low density residential. The land proposed to be dedicated which forms part of "Billy Goat Hill" is zoned RE1 Public Recreation under Lake Macquarie Local Environmental Plan 2014 ('LMLEP2014').
3. It is common ground that the subdivision development has commenced and as such the consent would not lapse.

Contentions of the Council

1. The Council contends in Part B of its Statement of Facts and Contentions dated 21/7/2017 (exhibit 2) (CSOFC) that the application for modification of the consent should be refused on the following basis: 1. The development has been levied for monetary contributions for open space and recreation in accordance with the Citywide (2004) Contributions Plan No. 1. 2. The proposed dedication of the land to Council is inconsistent with the Citywide (2004) Contributions Plan No. 1: 1. the land proposed to be dedicated is not identified for acquisition in the Citywide (2004) Contributions Plan No. 1; 2. acceptance of dedication of the land proposed to be dedicated would be inconsistent with cl 3.4 of the Lake Macquarie City Council Development Contributions Plan - Toronto Contributions Catchment 2016 (effective 18 December 2016) ('the 2016 Contributions Plan') as that land is not identified for acquisition; 1. Clause 3.5 details the formula to be used to determine the amount of land dedication required per lot. The formula cannot be applied in this instance because the land is not identified in the 2016 Contributions Plan; 2. The proposed dedication does not meet the requirements of s. 3.6.4 Material Public Benefit in the Citywide (2004) Contributions Plan No. 1: 3. The proposal does not meet the criteria in the Council's s. 94 - Material Public Benefit Policy. 4. Clauses 5.3.1 and 5.4.1 of the Citywide (2004) Contributions Plan No. 1 relate to the amount of land to be dedicated per lot. These sections cannot be applied because the land proposed to be dedicated is not included in the Citywide (2004) Contributions Plan No. 1. 5. Subsequent to the original development approval, the Council repealed the Citywide (2004) Contributions Plan No. 1 and replaced it with the 2016 Contributions Plan. The dedication of the land to the Council as proposed is inconsistent with the 2016 Contributions Plan: (a) the land proposed to be dedicated is not identified for acquisition in the 2016 Contributions Plan; Section 2.13.2 of the 2016 Contributions Plan provides that contributions levied and received under previous plans from 30 June 2015 will be used toward the delivery of community infrastructure of the same facility category identified under the 2016 Contributions Plan in appendix B - Works Schedule; (b) the land proposed to be dedicated is not include in the annexure B -Works Schedule of the 2016 Contributions Plan and accordingly contributions already levied and received under previous plans cannot be applied to this land; (c) monetary contributions for open space land acquisition levied and received under the 2016 Contributions Plan cannot be applied to the land as those funds will be required for local open space and recreation facilities identified in the 2016 Contributions Plan.
2. The applicant tendered a plan showing the location of the subdivision lots and an area coloured green marked "residue area 94,315m2". The plan was received as Exhibit F and it contains specific information as to the contours of the area which contains "Billy Goat Hill" and surrounding land as well as areas of land previously dedicated to the Council with respect to earlier stages of the overall subdivision. These dedications are depicted by red edging and red hatching. Adjoining these has been added three areas of proposed open space edged in blue dashed lines marked respectively stage 21 of 3,420m2, stage 22 of 2,166m2 and stage 23 of 2,622m2. The contours show that the three areas edged in blue encompass the top of the knoll that is "Billy Goat Hill". The three areas so depicted comprise the land proposed to be dedicated by the applicant.

The Hearing

1. On the second day of the hearing Mr Henry SC who with Ms Irish represented the Council, during their opening address, stated that the Council's position is that there is no power in the Court on this application to impose the Applicant's proposed condition in lieu of the payment under the present condition 45. He stated that this was for a number of reasons which he intended to develop.
2. Mr Tomasetti, senior counsel for the applicant, objected on the basis that the alleged absence of power was a matter which had not been specifically contended. This appeared to be a reference to the CSOFC. Mr Tomasetti suggested that no assertion had been made in the CSOFC that there was "no power in the Court to approve the modification that the Applicant sought".
3. Reference was made by Mr Tomasetti to the decision of the Court of Appeal in Segal v Waverley Council [2005] NSWCA 310, which principally concerned the duty of a Commissioner of the Court to give reasons for decision on the principal contested issues in class 1 proceedings. Mr Henry offered to flag the points that he intended to make. Mr Tomasetti made no objection to me hearing Mr Henry's points. He stated that he would like to know what they were. Mr Henry's points expressed as issues were: 1. The requisite nexus between the proposed development and the dedication of the land on "Billy Goat Hill" is absent such that s. 94(1) is not engaged; 2. The absence of provision for dedication of the land on Billy Goat Hill in the relevant contribution plan is fatal to the modification and the substitution of condition 45; 3. (iii) The monetary contribution that has been levied and the land the subject of the proposed dedication are not the same "planning matter" so that under s. 96(1)(a) of the Act there is no power to impose the condition for the dedication of the land upon deletion of the monetary contribution. Mr Henry indicated that although it is not contended in the Applicant's Statement of Facts and Contentions, there is reliance upon s. 94B (3) of the Act by Mr Mitchell, the Applicant's planning expert. The Council says that the subsection is not engaged because in order for it to be engaged, the condition that has been imposed under s. 94 for the monetary contribution must be unreasonable; 4. As to Mr Henry's final point in relation to the claim by the Applicant that the dedication proposed was justified as a Material Public Benefit in terms of the Act, the Council says that this does not arise, if it does arise it is not made out, and it is a matter that is wholly in the discretion of the Council in any event. Mr Henry stated that some or potentially all of his points arise in response to the Applicants case for the proposed dedication of land.
4. It is true that the CSOFC did not use the language of an absence of "power" in the Court, nevertheless the Council contended that "the proposed dedication of land to the Council was inconsistent with the Citywide (2004) Contributions Plan (No. 1)" and "was not identified for acquisition in [that] contributions plan", and therefore would be "inconsistent" with that plan. Further, the land proposed to be dedicated is not included in the 2016 Contributions Plan and monetary contributions for open space land acquisition cannot be applied to the land: see CSOFC Part B.
5. Mr Tomasetti submitted it was common ground that under the Act the Council can only impose a condition under s. 94 if it is in accordance with the provisions of the relevant contribution plan but that the Court's powers are wider in an appeal such as the present citing the decision of the Court of Appeal in Rose Consulting Group v Baulkam Hills Council [2003] NSWCA 266; and that the parties agree that the land is not identified in the s. 94 Contributions Plan in question.
6. Mr Tomasetti submitted that Mr Henry's points needed to be "specifically contended for". He noted that the Council refers to s. 94B(3) of the Act and its predecessors ss. 94(11) and (12) which were considered in the Rose Consulting case (supra).
7. Mr Tomasetti submitted that s. 94B(3) of the Act remains "highly relevant" and he addressed its operation in detail. He also addressed the suggestion that a material public benefit existed and submitted that it does not arise. As the Council's submission was to the same effect, there is no issue as to that matter.
8. Ultimately Mr Tomasetti submitted that the Council should amend its contentions in accordance with the practice of the Court and otherwise the Council's additional contentions should not be allowed to be made.
9. I decided to reject Mr Tomasetti's application for the following reasons: 1. It is now settled (and accepted by both parties) that the sole provision in the Act authorising the imposition of conditions by way of monetary contribution or the dedication of land is s. 94(1) and that on an appeal to the Court a condition under s. 94 that is of a kind allowed by a contributions plan may be disallowed or amended by the Court because it is unreasonable in the particular circumstances of the case. The power of the Court under s. 94B(3) to disallow a condition of consent by way of appeal can only arise if the Court makes a finding that the existing condition is unreasonable. There is no doubt that once a finding is made by the Court that a condition is unreasonable in the particular circumstances of the case it can disallow or amend the existing condition and substitute a replacement condition provided it is appropriate. Each of the contentions of the Council maintains that the proposed condition should not be replaced. The contentions identified in Part B of the CSOFC could not be determined without consideration of s. 94(1) and s. 94B(3) of the Act. These contentions were expressed by the Council to be "Contentions in reply" [to the applicant's proposal]. 2. No submission was made or could be made that the applicant had not anticipated that the provisions mentioned would provide statutory tests for consideration of the modification application. 3. Mr Henry is correct in submitting that he would have been entitled to raise the statutory provisions and their operation in the present circumstances in response to the Applicant's contentions. 4. Mr Mitchell in his joint report which was tendered by the Applicant addressed s. 94B(3) and s. 94. 5. Both parties have made comprehensive submissions to the Court on the effect of the legislative provisions relied on by the Council. 6. There is no unfairness to the applicant in these circumstances in allowing the contentions to be expressly made during the hearing and there being no practical disadvantage to the applicant, it is unnecessary to formally amend the CSOFC.

Evidence

1. The oral evidence in the hearing of the proceedings was given by the respective expert witnesses for the parties. There were two substantial joint reports. Both involved Mr Paul Mitchell, engaged by the Applicant, a well qualified and experienced town planner. His first joint report was with Deborah Scott who is a qualified and experienced local contributions economist employed by the Council. The second joint report involved Mr Mitchell with Mr David Pavitt who is a qualified civil engineer employed by the Council. He is the principal development engineer of Lake Macquarie City Council. Mr Pavitt was not required for detailed cross examination. Ms Scott and Mr Mitchell were extensively cross examined.
2. In the joint report with Ms Scott, Mr Mitchell described the planning context for s. 94 contributions in order to assess the relative reasonableness of the existing monetary contribution versus the proposed land dedication. He referred to schedules of works for public amenities and services to accommodate forecast increases in population and development. He stressed that these are based on strategic plans and local environmental plans designed to implement the strategic goals. Ms Scott in reply stated that development demand is also based on a number of economic factors, including employment conditions, interest rates, finance availability, population growth and government financial incentives.
3. Mr Mitchell stated: "The relevance of the above to the proceedings is that it is informative to have regard to the strategic planning goals to assist in ascertaining the reasonableness of the modifications sought (sic)." He adds that this is because, unlike the Council, the Court has the power to amend or disallow contributions even if this would be inconsistent with the applicable contributions plan. To do this the Court must be satisfied that the condition is unreasonable in the prevailing circumstances (s. 94B(3)).
4. Ms Scott disagrees that the modification sought is reasonable for the reasons detailed in the Council's contentions in reply, paragraphs numbered [15]-[18].
5. Under the heading "Basis for determining reasonableness" in part 3.2 of the Joint Report (Exhibit 3) Mr Mitchell states: "The principal task in these proceedings is to determine whether the modifications sought by the applicant are reasonable in the circumstances that apply to both applications. In this regard the Court has previously determined that "there is no basis in policy or in the words of a statute for compelling developers to make contributions pursuant to unreasonable conditions merely because mandated or permitted by a contributions plan." [2003] NSWCA 266. Also the Court is able to amend a condition requiring s 94 contributions even when the amendment is sought under the modification provisions of s 94 rather than through the new DA; Arkibuilt Pty Ltd v Ku-ring-gai Council [2006] NSWLEC 502."
6. He then proceeded to set out in section 4.1 of Exhibit 3 (joint report) a discussion of the "purpose of the contribution". Mr Mitchell explains that he had difficulties, in reconciling the figures and the generalised descriptions of contribution purposes in the schedules of the contribution plan to which he had regard and that he found it to be impossible to accurately determine how the monies levied would be spent.
7. Ms Scott responded by indicating that cl 2.13.2 in the 2016 Contributions Plan provides that the monetary contributions from the subject development will be spent in accordance with the Works Schedule in the 2016 Contributions Plan.
8. As subsequently became apparent, Mr Mitchell's difficulties were able to be resolved by a short further joint conference which occurred towards the end of the hearing, the result of which was that Mr Mitchell agreed that the amount of the contributions in condition 45 of the subject development consent were correct and that no error had occurred in the calculation by the Council of the quantum of the monetary contribution as stated in the condition.
9. The next section of the joint report (Exhibit 3) involved a series of questions raised by Mr Mitchell which he addressed. He began at [36] and stated that "the question to be answered is will the subject subdivision create a demand for additional softball courts located some 4.6 kilometres away." Mr Mitchell's answer was: "only to a very minor extent."
10. It became apparent during final submissions that the reference to "softball courts located some 4.6 km away, was an error on Mr Mitchell's part. It emerged that he had not addressed the correct contributions plan. Indeed, Mr Mitchell's analysis of the public benefit was directed to the likelihood of the benefit being derived by the general public for the expenditure of the amount required to be paid for open space and recreation facilities. I can therefore give little weight to his analysis of the expected public benefit. I prefer the evidence of Ms Scott and Mr Pavitt in regard to this aspect.
11. Mr Mitchell states in [57] of Exhibit 3: 'The land dedication would have a strong physical nexus with the subdivision development and would benefit all residents to some degree. It would thus be of overall public benefit.' He concludes 'in my opinion, land dedication would be entirely reasonable.'
12. On the evidence and in the circumstances as they exist, I am unable to find that the existing condition 45 of the consent is unreasonable.
13. I am unpersuaded by Mr Mitchell's evidence and especially his final paragraph (106) which simply asserts that the existing monetary contribution "lacks reasonableness". His evidence failed to address the test in s. 94B(3).

Applicant's submissions

1. Mr Tomasetti noted that the land proposed to be dedicated is currently zoned RE1 Public Recreation pursuant to Lake Macquarie Local Environmental Plan 2014. It was previously zoned 6a open space pursuant to Lake Macquarie Local Environmental Plan 2004. He emphasised that it was identified as 'local open space (RE1)' on the Land Reservation Acquisition Map - Sheet LRA_009A19 referred to in Lake Macquarie Local Environmental Plan 2014. He contended that orderly and economic development of Lot 440 DP 1228495 had seen gradual dedications to Council said to be made in accordance with the original development consent approving the residential subdivision of the overall site.
2. He stated that on that basis the Council was entitled to require by condition that the applicant dedicate land or contribute money to meet the need so generated.
3. He referred to the history of "Billy's Lookout" as identified by the Minister for Planning in the current LEP as being reserved for a public purpose namely the provisions of local open space and has been for a number of years. He notes that there is no proposed planning instrument to alter the present LEP that is or has been the subject of public consultation under the Act and that has been notified to the consent authority under s 79C of the EPA Act in existence. He contended that the Council should take into its ownership the next area of Billy's Lookout for local open space as is contemplated by the LEP. He claimed that there was a proposal by a Council committee to consider rezoning the land, otherwise known as Billy Goat Hill. He submitted there was no logical justification for not continuing to accept land of Billy Goat Hill to meet the demand generated by the development for local open space. He stated that any plan of Council officers to rezone the land to E2 zone is "beside the point".
4. He relied on Mr Mitchell's evidence for the opinion that the demand for local open space generated by the 72-lot subdivision is best met by the further dedication of land on "Billy's Lookout". Mr Tomasetti states that the Court is "not bound by the contributions plan applying to the land". He submitted that the contributions plan appears not to accord with the EPA Act and he urges that the Court should give little weight to it.
5. It was also submitted that the absence of a contributions plan providing for the dedication of the proposed open space is not fatal to the imposition of the proposed additional condition because the Court's powers on appeal are wider than those of the Council.
6. It is asserted in paragraph 46 of the applicant's written submissions, filed 15 November 2017: "The modification application no. DA - 2413/2007/C did not need to assert condition 45 was unreasonable." The Court has the power to modify the development consent even though the condition is not in accordance with the Council's contribution plan.
7. Paragraph (47) of the applicant's submissions asserts that the applicant does contend that the condition should be amended by the Court on appeal because it is unreasonable in the circumstances of the case. The submissions also contend that the dedication of land in lieu of money is "more reasonable".

Consideration

1. It is now common ground between the parties that the land the applicant wishes to transfer is not identified in any s. 94 contributions plan adopted by the Council. The current relevant contributions plan is the 2016 Contributions Plan.
2. The 2016 Contributions Plan was adopted by the Council on 14 June 2005 (amending a contributions plan which came into effect on 6 December 2004). At both of these dates the relevant local environmental plan was Lake Macquarie Environmental Plan 2004.
3. The Council submits that the Court always needs to be satisfied, for the purposes of making its decision and disposing of an appeal, of its power to determine "the subject of the appeal".
4. The modification application was made under s. 96(1A) of the Act. It is not in contest that s. 96(1A)(a) requires the Court as consent authority to be satisfied that the proposed modification is of minimal environmental impact.
5. Section 96(1A)(b) requires the Court as consent authority to be satisfied that the development to which the consent as modified relates is substantially the same development as the development for which consent was originally granted and before the consent as originally granted was modified (if at all). This also is not in contest.
6. Section 96(1A)(c) and (d) respectively require the consent authority to have notified the modification application and to have considered any submissions made. The Council's solicitors notified the objection to DA 2413/2007 of the hearing of these proceedings regarding the modification application no. DA/2413/2007/C, but received no submission or request to speak.
7. Section 96(3) provides that in determining an application for modification of an application under s. 96, the Court as consent authority must take into consideration such of the matters referred to in s. 79C(1) as are of relevance to the development the subject of the application.
8. When an application is made to modify a consent by deleting or varying a condition of consent, the application must be evaluated as required by s. 96(3) and relevant matters referred to in s. 79C(1) must be considered. Provided there is power to impose conditions in respect of a consent to a modification application, the consent authority must be able to determine the application by granting it and deleting the original condition but also by imposing some other conditions relating to the same planning matter; 1643 Pittwater Road Ltd v Pittwater Council, 11 Elvina Avenue Pty Ltd v Pittwater Council Doering v Pittwater Council, 1643 Pittwater Council Pty Ltd v Pittwater Council [2004] NSWLEC 685 at [52] per McClellan CJ (applied by Jagot J in King v Bathurst Regional Council (2006) 150 LGERA 362 at [81], [104]).
9. Deleting that part of condition 45 requiring the payment of the monetary open space contribution depends upon the jurisdiction afforded to the Court under ss. 96(3) and 94B(3), whereas adding the desired condition providing for dedication of "part lot 440 in DP 1228495" as public reserve (now more specifically identified as part of Billy Goat Hill described in figure 3 of Exhibit "F") requires it to be "the same planning matter" as the monetary contributions sought to be deleted.
10. The Council submits, and I agree, that the imposition of the proposed conditions for the dedication of land is unrelated to the monetary open space contribution. In the particular circumstances of the case, the dedication of part "Lot 440 in DP 1228495" is not "the same planning matter" as the monetary contribution sought to be deleted. This is because the consent for subdivision No. DA/2413/2007, which is sought to be modified is subject to condition 45 requiring the payment inter alia of a monetary contribution for open space acquisition which is wholly informed by reference to s. 94 as qualified by s. 94B(1) (and the Citywide (2004) Contributions Plan No.1), whereas (notwithstanding the applicant's assertion "the proposed dedication of land in lieu of a monetary contribution is entirely consistent with the s 94 contributions plan") the proposed additional condition providing for the dedication of land volunteered by the applicant is not; see King v Bathurst Regional Council (supra) at [81], [104]. So much is made clear by Craig J in Australian International Academy of Education Inc v Hills Shire Council (2013) 196 LGERA 1 (an appeal concerning an application pursuant to s 96(1A) of the Act), at [52], [69]-[70] in which Craig J said: 52. The Council accepts that s 94, applied in accordance with the principles I have discussed, is the sole source of power to compel, by condition, an applicant for development consent to dedicate land for a public purpose free of cost. There being no evidence that the Academy volunteered the dedication of the new street in that case, although, even if dedication of the new local street was an element of the Academy's development application, that circumstance would not enliven the power to impose condition 98 in that case.
11. As Craig J explained in his decision: The power to impose a condition of development consent is found in s 80A of the EPA Act. As cases such as Fairfield City Council v N & S Olivieri Pty Limited [2003] NSWCA 41 and Maitland City Council v Anambah Homes Pty Ltd [2005] NSWCA 455; (2005) 64 NSWLR 695 make clear, the power to impose a condition requiring the dedication of land is constrained by s 80A(1)(h) to one "authorised to be imposed"(relevantly) by s 94. The fact that dedication of land may be volunteered does not authorise the imposition of a condition requiring dedication if that obligation cannot be sustained by reference to s 94 as qualified by s 94B(1).
12. Consequently, the relevant monetary contribution in the present case has been levied for the purpose stated in the 2004 contributions plan; whereas the proposed dedication of land is not referred to in that plan and it is unrelated to the purposes of that plan.
13. Thus, the Council submitted, and I accept, a nexus is required between the dedication of land and the subject of the applicant's proposed additional condition and need or likely need. I agree that this is simply not established in the circumstances of the present case. The need for something more than mere "benefit" is required: AIAE v Hills Shire Council (supra) per Craig J at [80], citing Tobias JA (Mason P and Young CJ in Eq agreeing) in Lake Macquarie City Council v Hammersmith Management Pty Ltd [2003] NSWCA 313; 132 LGERA 225 at [41]-[42]. In the joint reports, at best, nothing more than "mere benefit" is posited by Mr Mitchell and at its highest, the applicant's case is that the proposed dedication of land is one possible way of addressing any requirement for open space generated by the 72 lot subdivision. That case does not satisfy the requisite nexus: because it implicitly accepts that the dedication of the land identified (the blue rectangles in figure 3 of Exhibit F in the present case) may or may not be necessary to satisfy any demand for open space generated by the 72 lot subdivision.
14. It is also submitted by the Council that even if the relevant nexus required by s. 94(1) had been demonstrated, the absence of a contributions plan providing for the dedication sought is fatal to the imposition of the proposed additional condition: noting that Dixon C, applying AIAE v Hills Shire Council (supra), found that an offer to accept a condition on a modification application is impermissible if there is no power to impose the condition in the first place, and noting also the decision of Jagot J in Progress and Securities Building Pty Ltd v Burwood Council (No. 2) (2008) 158 LGERA 102 at [35]-[36].
15. Mr Henry observed that no part of the modification application or the letter which accompanied it in the present case asserted that condition 45 was unreasonable in the particular circumstances of the case. Rather, it was positively asserted that "the value of the contribution as assessed and recorded within the conditions of consent are to be relied upon": see Exhibit 1, Tab 35, p 315. The applicant has not challenged reasonableness for the purposes of s. 94B(3) other than by the mere assertions referred to earlier. The Council submits that the applicant does not contend that the condition under s. 94 determining the monetary open space contribution should be "disallowed or amended by the Court on appeal because it is unreasonable in the particular circumstances of [the case]", even if it was determined in accordance with the relevant contributions plan. The Council adds that the applicant has compounded the omission by misstating the relevant test as to whether the dedication of land in lieu of money is adequate or reasonable.
16. Further, even if the incorrect test propounded by the applicant (ie whether a monetary contribution in lieu of the proposed dedication of land is unreasonable is applied, the applicant has not demonstrated that this test is satisfied). It is common ground that the monetary contribution has not yet been paid. Accordingly the funds the subject of the contribution are required for the delivery of open space and recreational facilities identified in the 2016 Contributions Plan (cl 2.13.2). The land proposed for dedication is not identified in the 2016 Contributions Plan; and the development contributions recreation and land plan Toronto contribution catchment 2015-2030 provides that the respondent does not consider natural areas (including bushland) to be usable recreation lands and will not accept these lands as an offset for the requirement to provide land for open space under s. 94.
17. The uncontested evidence of Mr Scott, the Council engineer, is that the proposed land dedication would not reduce the demand for recreation facilities, which would now need to be funded without the applicant's monetary open space contributions.
18. For these reasons, I have determined to refuse the modification application No. DA/2413/2007/C.

Orders

1. Accordingly, I make the following orders: 1. The application to modify condition 45 of the development consent DA/2413/2001 is refused. 2. The appeal is dismissed. 3. The Exhibits may be returned.
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3. Acting Commissioner Maston

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. Decision last updated: 08 January 2018