Meriton Apartments Pty Limited v Council of the City of Sydney

10 In 1952, the site was acquired by the British Motor Corporation, subsequently known as British Leyland, for purposes associated with, initially, automobile importation and, from the late 1950s onward, for automotive manufacture. Relevant to matters that I need to determine, as will be discussed later, the automotive manufacturing workforce on the larger site peaked at about 7000 workers in 1964. 11 In 1975, the Commonwealth government acquired the site for use as a naval stores depot. 12 In 1996, the site was acquired by Landcom, the New South Wales government's land development arm, and was subsequently transferred by this body to the Roads and Traffic Authority. The precise date of this transfer is not relevant as the transfer continued ownership of the property in State government hands. 13 The parties agree that, in 2002, the State government disposed of the site to private development interests. 14 At the time of its disposal to private development interests, it had been vacant for some time. As it is a matter requiring analysis later in this decision, I note that the site was vacant as at the date of the Commonwealth census in 2001. 15 It follows, therefore, that in the period between the peak workforce and the present, the site has been in public ownership for 27 out of 45 years - a ratio to which I will return. Credits for past populations 16 The contributions plan makes provision for the circumstances under which a credit may be granted for past occupation of a site, whether for residential or industrial purposes, when assessing contributions to be levied on a new development. This credit is designed to reflect the extent to which the past population would have created a demand for public services and facilities. The terms of the provision acknowledging this are set out later. This credit ensures that the contributions levied on new development merely compensate the council for the cost of meeting the increased demand for public services and facilities generated by the new development. 17 The contributions plan strikes a rate for such credit and, like the contributions levied, the rate of the credit is adjusted by having regard to movements in the Consumer Price Index. 18 The credit to be given for an industrial worker is struck at a rate representing 1/5 of the credit given for a past resident. In these proceedings, the relevant calculations derived from the contributions plan are agreed between the parties. The issues 19 The first issue between the parties is whether or not any credit should be granted for past industrial or commercial occupation of the site in light of the provisions of the contributions plan relating to a cut off time for the calculation credits set by defining a population for the site at the date of the 2001 Commonwealth census. 20 The second issue is the extent to which a credit should be granted, as a matter of discretion, if I am satisfied that there is some appropriate basis upon which to grant some credit. 21 It is common ground between the parties that, if the merits of the case warranted some adjustment in favour of the company, provided there is some appropriate basis for doing so, I am not strictly obliged to follow the precise terms of the contributions plan (see Rose Consulting Group v Baulkham Hills Shire Council [2003] NSWCA 266; (2003) 58 NSWLR 159; (2003) 129 LGERA 165). The terms of the contributions plan 22 There are, in essence, two significant provisions of the contributions plan to which I must have regard. The first of these, at 2.15, is that importing the 2001 Commonwealth census date into the plan as a critical factor in determining credits for past occupation. These provisions are as follows: For the purposes of this Contributions Plan, from it's [sic] 'in force date' forward, credit for the population of past development will be determined to exist for the purposes of granting a credit only in the following circumstances:

1. …………………….; or, if the site has already been vacated, 2. For the population that has vacated the site for the purposes of redevelopment and/or as a result of changing economic trends since the most recent census on which the Contributions Plan is based. For the purposes of this plan, that means the 2001 Census. 3. ……………………. If a site the subject of a development application, notwithstanding the presence or otherwise of vacant buildings on the site, was vacated at the time of the most recent census on which the Contributions Plan is based and, therefore no population from that site was counted as part of the 2001 Census population cited in this Contributions Plan, then no part of that former population can be construed as 'present' or 'deemed to exist' for the purposes of securing a credit under this plan.

23 In addition, the contributions plan makes specific provision for credits to be given for past industrial or commercial occupation. It does so in the following terms: 4.16 Workforce Occupancy Rates It is the preference of the City of Sydney that actual worker numbers, both historic (for the purpose of calculating any past credit due to a development site) and proposed (where known) are used for the purposes of calculating the nett contribution applicable to any development proposal. Actual demand is generated by actual people - therefore actual, documented, numbers best reflect both past and future demand. Where the number of workers is known with reasonable certainty and is provided as part of the Development Application and is deemed to be reasonable 5 on assessment, then that number of workers will be accepted for the purpose of assessing the total contribution for that particular development. It is recognised, however, that actual figures may not always be reasonably possible to obtain. Accordingly these industry or statistical standards are provided as a safety net allowing a reasonable estimate to be made of past and future demand in the absence of actual data.

24 Finally, for completeness, as earlier noted, the contributions plan sets a basis for adjusting the required contributions and the resultant calculations, in this case, have been agreed by the parties if such calculations are to be called upon.

Previous decisions concerning the council's contributions plans 25 Mr Russell SC, counsel for the company, took me to two previous decisions by Brown C dealing with the question of credits to be given for prior occupation of a site. These decisions are Meriton Apartments Pty Limited v South Sydney City Council (unreported - 12 September 2001) and Maygood v City of Sydney Council [2008] NSWLEC 1112. 26 Both of these decisions were given, as I understand it, in the context of a contributions plan framework that was either generally similar to that which applies in these proceedings or which was the same as that which applies in these proceedings. In either case, I do not understand there to be any material difference in the contributions plan framework for consideration of the matters raised in each of those cases compared to that in the present case. 27 The company relies on the approach taken by Brown C in each of the earlier cases in rejecting a fixed cut-off date based on a census night population. The adoption of such an approach is central to the company's case. 28 I should note, at this point, that Mr Russell relies on the decision of the Court of Appeal in Segal & Anor v Waverley Council [2005] NSWCA 310; (2005) 64 NSWLR 177 for the proposition that, if I do not propose to follow the approach taken by Brown C in the earlier cases, that approach having been put by the company as central to its case in these proceedings, I am obliged to provide cogent reasons why I have not done so. 29 The reasoning process in the earlier of Brown C's decisions, in 2001, in my view, provides greater assistance in the approach I should take in this instance. The second of them merely provides confirmation of his continuing adoption of that reasoning process. Meriton v South Sydney considerations - workforce numbers 30 The site in the 2001 case involved premises that had been a manufacturing concern operated by Australian Consolidated Industries, the glass company. The manufacturing workforce engaged on the site, at its peak, was known with reasonable precision. The question, in that case, related to a credit being sought for the whole of the parcel of land that had previously comprised the manufacturing operation. 31 In addition, as set out in Brown C's decision at (29), a reasonably accurate history of fluctuation of the workforce on that site was known over a lengthy period of time. 32 In this case, the land upon which the company is erecting the apartment block merely forms a small portion of a larger former industrial site - being 7,994 m² out of 244,680 m² of the British Motor Corporation's total site. 33 There is no precise evidence available concerning the activities that took place within the industrial building that was located on this element of the larger site. There is also no precise evidence available of the number of employees of the British Motor Corporation who worked within that building in 1964 at the time of the peak workforce on the total site. 34 No details of the internal layout of the building are available that might otherwise have permitted an application of the floor space formula provided in 4.16 of the contributions plan. 35 Although aerial photographs are available of the industrial building erected on the site, there is a complete lack of detail about its internal configuration or about what workforce occupied it in 1964. This causes the company to propose that, in lieu of applying the provisions of 4.16 of the contributions plan, the appropriate approach is to take the ratio of the area of the site to the area occupied by the whole site to derive the appropriate mathematical factor to be applied to the peak workforce in 1964 to calculate a notional workforce for the site. 36 Adopting this approach leads to the result that a notional workforce of 229 persons would have been employed, in 1964, within the company's landholding subject of these proceedings. 37 Mr Russell submitted that this is the correct approach because alternative mathematical models, applying either of the formulae put in the alternative in 4.16 would lead, on the evidence given by Mr Smith, the company's town planner, or that given by Mr Hewetson, the council's town planner, to a range of employee numbers between 78 and 91. If this were to be extrapolated, to derive a notional overall total number of employees on the larger site, the result would be of the order of 2771. This latter number, Mr Russell submitted, is so far at variance with what was the actual number of employees on the larger site that to adopt it would be entirely unreasonable. A calculation based on the actual number of employees is the appropriate course to adopt, he said. 38 I will return to consideration of these propositions later.

39 On this point, as I understand it, the council's position is that, consistent with the evidence of Mr Hewetson, because there is no evidentiary basis upon which to ascertain the precise distribution of British Motor Corporation employees on the larger site and there is no evidentiary foundation upon which to assume that they were evenly distributed as the formula proposed for the company assumes, the adoption of the formula provided for in 4.16 of the contributions plan, if there is to be any allowance (the council not conceding that this should be the case), is the appropriate mathematical path to follow. Meriton v South Sydney considerations - elapsed time 40 The second matter arising from Brown C's decision that the council says distinguishes it from the circumstances in this case is that the time for which adjustment was credited, in the 2001 decision, was a period of 15 years. In the present instance, the company is seeking credit for a peak workforce that was present on the site 34 years ago. Meriton v South Sydney considerations - site vacancy 41 Finally, as I understood it, the council relies on the fact that this site has been vacant for a considerable period of time. In that regard, the council relies, further, on the provisions of 2.15 of the contributions plan where the plan sets a time for measuring a population on the site by reference to the 2001 Commonwealth Census.

Rateability 42 It also seems to me, as I indicated to the parties during the course of the hearing, that the fact that the case before Brown C in Meriton v South Sydney involved a site that had been in private ownership and, hence, rateable throughout the whole of the period between the peak workforce occupying the site of and the commencement of the redevelopment process was a factor potentially warranting consideration in any exercise of discretion. A regression analysis basis for credit calculation? 43 During the course of the hearing, I raised, with the parties, the fact that the contributions plan included a formula for forward adjustment from the date the original rates in the plan were formulated. This adjustment formula is based on movements in the consumer price index according to a formula contained in this plan.

44 I raised, with the parties, the question of whether or not it might be appropriate to use what I termed a regression analysis applying that formula backwards to calculate what might have been the relevant contribution rate at the time of the peak workforce. Neither of the expert planners, in their oral evidence, was asked to consider such a proposition. Between the first and second days of the hearing, an analysis was undertaken on this basis and was received in evidence. However neither party pressed that I would have regard to such calculations and, as a consequence, as it is inconsistent with the decisions of Brown C and I have no evidentiary basis upon which I could adopt it, I have not had further regard to this material.

Consideration of the cut-off in 2.15 45 As earlier noted, the contributions plan provides that, if there is no population on the site as at the date of the 2001 census, for the purposes of the contributions plan, the population is assumed to be zero and no credit is to be provided against any contributions otherwise due under the plan. This is expressly apparent from that portion of 2.15 of the contributions plan set out earlier.

46 It is clear from the decision in Meriton v South Sydney, at (9) to (11), that a similar proposition, with respect to an earlier census year, 1996, was advanced to Brown C: 9 Evidence for the Council was provided by Ms Catherine Paterson, the Council's specialist s 94 Contribution Planner. She outlined the procedures for justifying a credit for an existing workforce population. Firstly, the confirmation of occupancy since the last census is required. This can be achieved by formal notification by the previous owner/occupier of the site and the number of employees present up to the date of vacation. The details should include as many dates as may be relevant. If a vacated site fails the test of occupation at the date of the last census, no further assessment is undertaken and no credit for that site is justified.

10 In this case, the appropriate census date was 6 August 1996 and as the site was purchased in July 1996, by the applicant, no employees of the former ACI site could have been present on the site. Additionally, details supplied by ACI to Council showed 1800 employees, at an unspecified date, but prior to final closure in April 1985. At this time there were only 120 employees, and all but two of these were ultimately retrenched.

11 Ms Paterson concluded that the Council was reasonably entitled, on the basis of the ACI information, to decide that the site was completely vacated prior to the 1996 census and prior to the benchmarking of the 1998 Contribution Plan. Accordingly, the subject site failed the test of occupancy on 6 August 1996 and no further information was required and no further assessment was undertaken by the Court.

47 It is equally clear from Brown C's decision in Meriton v South Sydney that he rejected such an arbitrary cut-off date. He said, at (20) and (21): 21 In my view, this apportionment for existing uses cannot simply be benchmarked at a particular time because this disregards the contribution made to public amenities and public services prior to the benchmarked date. The fact that no employees were located on the site at the benchmark date should not negate the fact that contributions, in some form, were provided towards public amenities and public services prior to this date. To accept the Council's approach would be to undermine one of the fundamental principles of s 94.

22 In saying this, I do not disagree with Ms Paterson that s 94 Contribution Plans must be based on some benchmarking. Clearly, benchmarking is appropriate when dealing with matters such as land values, or construction costs, however it is unreasonable to use this method for assessing a credit for past populations. I would accept that the Council's approach provides for a relatively clinical way of dealing with credit however ease of operation cannot be preferred over the fundamental requirements of s 94.

48 In addition, in these proceedings, although it is clear from the Census (2006) Regulation 2005 (Cwth) that some information might have been obtained concerning where persons in employment worked during the week prior to the census - assuming a similar position applied for the 2001 census (see Schedule I.2(c) of the Regulation), it is not clear (and I have no evidence about) how precise such employment data might be and whether or not, in any instance, in any census, sensible computational data might be available.

49 I leave, for the present, the question of the appropriate statistical methodology to be used in ascertaining the notional workforce numbers for this site until later in this decision. I do, however, consider that the combination of the uncertainty concerning the possible utility of census data for workforce calculation coupled with the provisions of 4.16 of the contributions plan provide sufficient support for and consistency within the approach taken by Brown C not to warrant me departing from the general proposition that an arbitrary "nil return" date determined by the date of a census should not be used as an absolute prohibition in considering whether or not a credit should be granted for some prior workforce on the site.

The length of time since the peak workforce and 50 In the 2008 case determined by Brown C, the workforce had been absent from the site for a period of three years but he did not consider that this acted as a barrier to some credit being given for that workforces' demand for public services or facilities. In the 2001 case, a Brown C considered that the elapsing of a period of 15 years since the peak workforce did not act as a barrier to the exercise of his discretion to take account of that workforces' demand for public facilities and services.

51 Mr McEwen SC, counsel for the council, effectively, put the proposition that there must, necessarily, be some realistic past cut-off point as it would otherwise be potentially possible that the maximum population on the site would have occurred at some radically remote period in the past. 52 As I understood his submissions, if I were to adopt the proposition that no limit should be applied to retrospectivity, it might be necessary to return to the 19th or early 20th centuries to determine what the peak population might be for this case. 53 Indeed, I am aware, from the historical information that was provided to the council from Godden Logan Mackay, the company's heritage consultants, as part of the company's application, that the Victoria Park racetrack was used for temporary accommodation under canvas by groups of the Australian armed forces at the time of the First World War. It is possible, although I have no evidence on this point, that there may well have been a significant population peak on the land that encompasses the site as part of that process.

54 Consideration of the appropriate extent of any retrospectivity, in my view, is obviously only a question of fact and degree. Brown C considered that 15 years was a reasonable period of retrospectivity as earlier noted. I also note, parenthetically, that he did not express any view as to whether or not that would act as a limit as he was neither asked to do so or compelled to do so by the facts in those proceedings. I certainly do not consider that 15 years is some arbitrary limit that I need observe. 55 However, the broad concept of retrospective consideration has been adopted by Brown C, I consider that I should, consistent with Segal v Waverley and the way this matter has been argued, consider what would be an appropriate cut-off date in light of the history of occupation of this site. It is possible that, in some future proceedings, it may be necessary to consider whether some absolute cut-off should be imposed. How far back, if at all, will need to be determined on the facts and circumstances of any particular site. 56 I do not propose to consider any potential absolute time limit in these proceedings as I am satisfied that the period of time involved here, in the history of modern industrialised Australia, should not be disregarded. In this instance, I am satisfied that the ramping-up of Australia's secondary industry - the major industrialisation which took place on the site - in the context of the post-Second World War emphasis on the continuing transformation of the Australian economy from an economy significantly dependent on primary produce to having an independent manufacturing base (a context where the establishment industries such as that of the British Motor Corporation was encouraged by national government secondary industry policy) is a significant matter that is relevant to be considered. In this context, with respect to this site, I do not consider it unreasonable to go back further than Brown C was asked to go for the sites he considered. I have determined that it is appropriate to have regard to what might have been the workforce demands for public services and facilities in 1964 at the peak of the manufacturing workforce on the site.

57 I have earlier set out, in some detail, the difficulties that arise in establishing what might have been the number of persons employed in the building erected on this part of the British Motor Corporation's site. To me, the critical element in rejecting the formulaic approach, in the table in 4.16 of the contributions plan - and thus relying on either the gross floor area of the building or the gross site area of the total site, is that of application of these allowances would lead to a calculation of the peak 1964 workforce on the site between approximately 1/3 and approximately 3/7 of the workforce actually known to have been on the totality of the British Motor Corporation's site at that time. Having accepted the proposition that it is appropriate to use this peak manufacturing workforce in 1964 as the appropriate time point for considering such a calculation, I see no valid reason contained in the council's formula options for adopting either of those options rather than a simple arithmetic approach based on the area of the portion of the larger site subject of this application as a proportion to the area of that total larger site. To do otherwise, having accepted 1964 as a valid and relevant date for such a calculation, would lead to an unacceptable and illogical result in my view.

58 As a consequence, I am satisfied that company's figure of a workforce calculation of 229 should be adopted.

59 The necessary consequence is, prima facie, that the amount proposed by the company as a necessary adjustment to the levy contribution is that which is contained in the company's modification application to the company.

The discretion to discount 60 However, such mathematical calculation is not the complete answer in these circumstances. The discretion, as earlier adverted to as having been confirmed in Rose Consulting v Baulkham Hills enables me to take account of any other relevant matters in considering whether this amount should be discounted.

61 There is, to my mind, one significant matter dealt with (and adopted by) Brown C that causes me to conclude that a degree of discounting (and indeed, a significant degree of discounting) should be applied to this calculation. In his decision, Brown C made the observation set out below concerning the rateability status of the property in those proceedings. He said, in Meriton v South Sydney: 24 ………………... It must be accepted that during the ACI occupation of the site, contributions were made to the Council through at least land rates. These rates would have been distributed through the Council budgetary process to the areas thought by the Council, at the time, to require the provision of additional expenditure in areas likely to include land acquisition, new public amenities and public services or embellishment of existing facilities. The decisions on the allocation of the resources would have been based on the perceived needs, at that particular time, by the elected Council.

25 I see no need to delve into the particular distribution of expenditure during the ACI ownership to determine whether a credit should be granted. In my view, it is sufficient for ACI to have provided funds to the Council for a credit to be granted. It is the function of the Council to distribute these funds in the manner it thought appropriate.

62 However, it is not the position that applies here - as there has been a significant period when the property has been owned by government authorities, resulting in a long, continuous period when no rates have been levied on the property. Brown C's analysis of the fairness of having regard to rateability is, in my view, appropriate to be considered and adopted in these proceedings but account needs to be had of the period when such rates were not paid. Although the planning experts did not agree that such apportionment was appropriate - if it were to be, they agreed that, as I understood it, such apportionment of might properly be calculated by having regard to the number of years that the property was rateable compared to the total number of years since the peak workforce. 63 Just as Brown C considered that it was appropriate to have regard to the fact that rate income had been provided to the council for the whole of the period while the site was being used for industrial purposes, I consider it equally appropriate to take into account the fact that, for a considerable period of time during the period since the peak British Motor Corporation workforce I have adopted as the appropriate year for the contributions offset calculation, the site was in commonwealth or state public ownership and thus not rateable.

64 Just as Brown C took into account the fact that, within the discretionary budget of the council, payment of rates could be used to subsidise or contribute towards the costs of community facilities utilised by industrial workers as an entitling factor for a credit, accepting the logic of his approach, as I do, it is then appropriate to accept that periods of non- rateability constitutes a period where there was no revenue from the site to subsidise or contribute towards the costs of community facilities utilised by industrial workers. As a consequence, in my opinion, to take account of this, a discounting factor is required.

65 I do not consider that taking account of this requires any form of precise calculation of the nature used by the council to adjust the contributions policy. I consider it is sufficient simply to take the amount that has been agreed between the parties as being the relevant amount on an unadjusted calculation base and multiply it the fraction that is the number of rateable years over the total number of years. There is no readily justifiable alternative basis available, in my view.

Conclusion 66 I have concluded that: o it is appropriate to allow a contributions offset; and o that contributions offset should be calculated, as a first step, on the notional workforce basis put that by the company - that is on a notional peak workforce for this portion of the site of 229 workers in 1965; however o as the site has been in public ownership for a significant period of time, being 27 out of 45 years, it is appropriate to discount the offset amount by having regard to this significant non-rateable period by adopting a discount rate that reflects the total number of rateable years as a proportion of the total number of years since the peak workforce on the site; as a consequence o applying this ratio leads to a calculation of an offset amount in favour of the company of $186,984.91 (rounded to the nearest cent). Orders 67 As a consequence of what I have concluded, the orders of the Court will be: 1. The appeal is upheld 2. Development Consent D/2007/2330/D for residential units at 5 Hutchinson Walk, Zetland is modified by inserting, at the end of condition 5, a credit of $186,984.91 for past workforce contributions so that the development is subject to the consolidated, modified conditions of development consent in Annexure A; and 3. The exhibits are returned.

Directions 68 In order to permit the orders to be made, I give the following directions: 1. the respondent is directed to file and served settled, consolidated conditions of development consent reflecting this decision by the close of business on Friday 23 October; 2. the revised consolidated conditions of development consent are to be filed in hard copy and electronically by e-mail to the Court marked for my attention; 3. the matter is set down for mention before me at 9.05 AM on Wednesday 4 November; and 4. if direction (1) is satisfied, I will vacate the mention and make orders in chambers.

18/02/2010 - Correction to hearing dates - Paragraph(s) Cover sheet

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