Memel Holdings Pty Ltd v Pittwater Council

SOLICITORS: Mallesons Stephen Jaques

IN THE LAND AND Matter No. 11035 of 1999 ENVIRONMENT COURT Coram: Talbot J OF NEW SOUTH WALES Decision Date: 27 September, 2000

Memel Holdings Pty Ltd Applicant v Pittwater Council Respondent

In an ex tempore judgment delivered on 26 May 2000 after a hearing extending over three days, the Senior Commissioner upheld an appeal against the refusal by the council of an application to subdivide land in Florida Avenue Palm Beach into two allotments. One allotment on which there is an existing house comprises an area of 640 square metres. The other allotment is 671 square metres in area.

Clause 11 of Pittwater Local Environmental Plan 1993 ("the LEP") applies to the subject land as follows:- (1) The aim of this clause is to create more varied allotment sizes, improve residential amenity and enhance the environment in relation to land to which this clause applies.

(2) A person shall not subdivide land within Zone No. 2(a) or 2(b) generally north of Mona Vale Road, Mona Vale and east of Chiltern Road, Ingleside, unless each allotment to be created by the subdivision will have an area of not less than 700 square metres within Zone No. 2(a) or 2(b), exclusive of any access corridor.

It is evident from the judgment of the Senior Commissioner that he recognised the minimum lot size as a development standard and that a SEPP 1 objection was required.

He referred to the two lots as " slightly substandard" .

He identified two "objectives of the instrument" as follows:-

In this instance there are two, the first being associated with the minimum size I have already referred to, 700 m², and the second associated with a requirement to achieve variety , which I think fairly has been suggested as implying flexibility for those seeking to build houses.

If I follow the Commissioner's reasoning correctly, he concluded that the two additional lots could only be seen as increasing the flexibility and variability of land available for housing, as it seemed to him quite clear that the predominant lot size is well in excess of 700 square metres in this locality. This reasoning led to the following conclusion:- So it seems to me that, in this general context, rigidly maintaining the 700 m² standard does not seem to be either reasonable or necessary, provided of course that the development application could be seen in other respects as reasonable.

After dealing with other aspects of the appeal, the Commissioner said:- Given the context of predominantly large blocks in this part of Palm Beach, it seems to me the creation of two blocks close to the LEP standard of 700 m² seems to be generally consistent with my appreciation of the intentions of the objective. Certainly I believe it adds variety. On the basis that no environmental damage is created by what is proposed, explicitly I have concluded that a minor transgression of the development standard in this instance is both reasonable and appropriate. It will be discerned from that characterisation that this constitutes an acknowledgment that the development standard of 700 m² is seen as both unreasonable and unnecessary in this instance.

Arguably, the Commissioner recognised the first stated aim in cl 11(1) of the LEP, to create more varied allotment sizes.

In the context of the SEPP 1 objection, no reference has been made to improving residential amenity or enhancing the environment. Both of these concepts contemplate a positive result out of maintaining the development standard to have an area of less than 700 square metres. Instead he fixes on variety and the lack of environmental damage to justify allowing the objection.

Although delivered over 14 years ago, the statements made by Cripps J in Hooker Corporation Pty Ltd v Hornsby Shire Council (Cripps J, 10601 of 1985, 2 June 1986, unreported) are still regarded as a classic summary of the approach to be taken when considering a SEPP 1 objection. The following appears in the judgment at 6 - 7:- It has been established by a series of decisions in this Court that generally in order to maintain an objection that compliance with a standard is unreasonable or unnecessary, it is first necessary to discern the underlying object or purpose of the standard. To found an objection it is then necessary to satisfy the Court that compliance with the standard is unnecessary or unreasonable in the circumstances of the case. Although the Court has urged a generous application of SEPP No. 1 and has repeatedly declined to attempt exhaustively to define the limits of the dispensing power and, in particular, what is embraced by the expression circumstances of the case , it is now established that it is not sufficient merely to point to what is described as an absence of environmental harm to found an objection. Furthermore, the objection is not advanced, in my opinion, by an opinion that the development standard is inappropriate in respect of a particular zoning. The Court must assume a development standard in a planning instrument has a purpose. See SCMP v. Municipality of North Sydney (15 April 1983, unreported), Gergeley and Pinter v. Woollahra Municipal Council 52 LGRA 400, Claude Neon v. Rockdale Municipal Council (10 September 1985, unreported) and Hooker-Rex Estates v. Hornsby Municipal Council (27 July 1983, unreported). Furthermore it is now established that although the discretion conferred by SEPP No. 1 is not to be given a restricted meaning and its application is not to be confined to those limits set by other tribunals in respect of other legislation, it is not to be used as a means to effect general planning changes throughout a municipality such as are contemplated by the plan making procedures set out in Part III of the Environmental Planning and Assessment Act.

As with cl 11 in this case, it has now become a common practice for the objectives of a particular development standard to be identified in the planning instrument. It is not a difficult task to appreciate what the draftsperson's intentions were when providing for a development standard for subdivision. The words of cl 11(1) are clear and unambiguous.

Even if the Senior Commissioner did not agree in principle with the aims expressed in cl 11(1), he was nevertheless obliged to have regard to them. It was not sufficient in the course of his judgment to coincidentally deal with amenity questions generally, particularly where he has been careful to express his approach to the SEPP 1 objection in such concise terms.

The failure to identify the objectives of the development standard and then to consider whether, in the light of those objectives, it was unreasonable or unnecessary to apply the development standard in the subject case means that the Senior Commissioner fell into legal error on a matter which was fundamental to the ultimate decision.

The successful achievement of his task was further eschewed by explicitly founding his decision to allow the SEPP 1 objection on the basis that no "environmental damage is created by what is proposed". As Cripps J observed in Hooker , it is not sufficient merely to point to "absence of environmental harm" to found an objection.

Mr Graham QC, appearing for the respondent on the appeal, the applicant in the proceedings, raised an argument that because the issue in the appeal was not raised at the original hearing the appellant could not now rely upon it ( Coulton and Ors v Holcombe and Ors (1986) 162 CLR 1).

The issue of identifying the objectives of the development standard and the consideration of them as part of the determination of the SEPP 1 objection was clearly raised at the hearing before the Commissioner. The council's and applicant's witnesses referred to them and they were addressed by counsel appearing for the council during formal submissions. The submission by the respondent to the appeal that the council addressed the matter for the first time on appeal cannot be substantiated.

Not only am I satisfied that the Senior Commissioner omitted to explicitly deal with two of the stated objectives in the context of the SEPP 1 objection, he appears also to have devised a concept of flexibility related to the benefit of developers or the building of houses. This concept is not readily discernible as a stated legislative intent of the control imposed by the development standard. The drafter in my view would be looking to the result in town planning terms rather than the opportunity in development terms. The words are clear and unambiguous ( Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (1981) 147 CLR 297).

Finally, I cannot comprehend what the Commissioner was addressing in terms of an objective when after stating there were two he went on to say "the first being associated with the minimum lot size" . That appears to be no more than an identification of the nature of the control itself.

In all of the circumstances, the exercise of the dispensing power pursuant to SEPP 1 has miscarried and it is appropriate that the appeal be allowed and the matter be redetermined in a way which takes account of these reasons.

The appellant council submitted orally that the matter should not be referred back to the Commissioner for determination as he displayed a predilection to approval giving rise to an apprehension of bias.

The High Court in Livesey v New South Wales Bar Association (1983) 151 CLR 288 laid down the principles of applying the law relating to disqualification through bias as follows at 293 - 294:- … [T]hat principle is that a judge should not sit to hear a case if in all the circumstances the parties or the public might entertain a reasonable apprehension that he might not bring an impartial and unprejudiced mind to the resolution of the question involved in it.

Although as Meagher JA observed in Australian National Industries Ltd and Ors v Spedley Securities Ltd (in Liq) and Ors (1992) 26 NSWLR 411 at 449 the matter is to be "judged from this austere and unrealistic standpoint" , an uninformed third party bystander might not understand that the Commissioner should be regarded as capable of putting aside evidence and findings of fact previously decided and bring an impartial mind to the determination of the matter.

Upon the principles established by the High Court which are conveniently set out in the judgments in Spedley , it is open to argument that it could be considered inappropriate for the same Commissioner to hear the case. That matter is ultimately one for the Chief Judge or the Senior Commissioner to decide.

26. The question of costs was not argued and although the Court would in the circumstances where an appellant has been successful generally exercise its discretion in favour of the appellant, the question of costs will be formally reserved.

27. The formal orders of the Court are:- 1. The appeal is allowed.

2. The judgment of the Senior Commissioner is set aside.

3. The proceedings are remitted for rehearing before a Judge, Commissioner or Commissioners as determined by the Chief Judge in accordance with s 30 of the Land and Environment Court Act 1979.

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