Findings
80The key question before the Court is whether condition 48 of the development consent should be amended pursuant to s 94B(3) of the Act because it is unreasonable in the circumstances of the case. To determine whether the condition is unreasonable the Court must be satisfied that the condition reflects the extent to which the development will or is likely to require the provision of or increase the demand for public amenities and public services within the area .
81The decision of the Court of Appeal in Meriton No 3 outlines the proper approach to determining the reasonableness of the condition within the statutory framework established by s 94 and s 94B. At [59] Tobias JA states:
59 The simple point is that the relevant provisions of the statute are concerned with the nett demand for public amenities and services generated by the development in question. Although the relevant exercise requires a determination of the existing demand for such services in order to reach the nett demand, the former is based purely on the actual or deemed resident or workforce population of the relevant land at the time of the development application for it is only the future population that generates the demand in respect of which a monetary contribution can be required. That determination cannot be dependant upon whether the demand of the historical population was ever met by the council or, if it was, out of what source of revenue.
82To determine the existing demand in this case, the parties agree that there was no 'actual' resident or workforce population on the site at the time of the development application. However, they disagree as to whether there is a 'deemed' population and therefore disagree on the nett demand for public services and amenities generated by the development.
83The disagreement centres on whether the 2001 Census date in cl 2.15 of the Plan or the peak historical population that existed on the site around 1974 should be deemed to be the population for the purpose of determining existing demand. Mr Tomasetti submits that this historical population did not generate a demand for the 'specific' public amenities and services to be provided by the Plan and that the development requires the provision of these amenities and services. Whereas, Mr Russell submits that the historical worker population had demands, whether or not these had been met, and that it is unreasonable not to permit a credit for this historical population only because it existed on the site prior to an 'arbitrary' cut off date.
84In order to understand these competing submissions it is necessary to firstly examine the previous decisions of the Court.
Previous decisions of the Court
85Mr Russell relies on the previous decisions of the Court and submits that they have already addressed the question before the Court of whether an 'arbitrary' census date can be used to determine existing population.
86In Maygood, Brown C upheld an appeal against council's refusal of a development application to use an existing building and construct an additional floor for a mixed retail, commercial and residential building at 320 Liverpool Street, Sydney. At [75-82] he considers whether the s 94 contribution in the condition should provide for a credit for the previous population of the existing building. At [82] he finds:
...In accordance with cl 2.15 (2) of the Contributions Plan, I accept that the population has vacated the site for the purposes of redevelopment since the 2001 Census based on the contents of Exhibit G and as such a credit is justified. In any event, the reference to the 2001 Census is an arbitrary point for the consideration of whether a credit applies. It is clearly helpful in the council's consideration of such requests but it does not however mean that it is the ultimate determinant of whether a credit is granted. The test imposed by s 94(1) is not necessarily time sensitive but whether a development "will or is likely to require the provision of or any increase the demand for public amenities and public services within the area".
87The decision of Brown C in Maygood was in accordance with the Plan and, other than his comments about the arbitrary nature of the census date, it provides no guidance for my determination of the issues before me.
88Meriton No 1 was an appeal against council's refusal of an application under s 96 of the Act to amend a development consent for the former Australian Consolidated Industries (ACI) site at Waterloo. Brown C upheld the appeal and amended a condition of consent requiring a s 94 contribution to recognise the previous workforce population of the site. His decision is based on the acceptance of 'the approach of allowing a credit for the previous provision of public amenities and public services was an appropriate consideration in determining the level of contribution'. He rejected the use of a 'benchmark ' date on the basis that:
A fundamental principle of a s 94 contribution is that only the additional need for public amenities and public services, brought about by a development, can be claimed through s 94. The parties did not dispute this principle. As a consequence of this principle some apportionment has to be made between existing uses and the anticipated new uses.
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.
89Brown C found that even though the ACI site was vacant at the census date, a credit was justified as 'during the ACI occupation of the site, contributions were made to the council through at least land rates'.
90I note that in Meriton No 1, the experts did not seek to use the peak historical demand of 4000 workers that occurred on the ACI site in 1970 as the basis for determining the credit for historical population. The applicant's experts recognised that the worker population had declined and lower figures were suggested to reflect the demand. Brown C accepted a figure of 1,465 based on the occupation rates in the Contribution Plan.
91Meriton No 2 was an appeal against council's refusal of an application under s 96 of the Act to amend a development consent for 5 Hutchison Walk, Zetland. The land is also within Victoria Park and previously was part of the BMC operations. Moore SC, amended the condition of consent requiring a s 94 contribution to recognise the previous workforce population of the site. However, he also reduced the credit sought for the period where the site was in government ownership (about 27 of the last 45 years) where it was exempt from paying rates.
92At [62] the Senior Commissioner acknowledged that 'Brown C's analysis of the fairness of having regard to ratability is...appropriate to be considered and adopted...but account needs to be had of the period when such rates were not paid'. He states at [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.
93The Senior Commissioner also accepted Brown C's rejection of an 'arbitrary' cut off date for determining existing population. At [49] he states:
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.
94Further, in determining existing population, Moore SC considered the length of time since the peak workforce existed on the site to be a question of 'fact and degree' and found 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.
95The Court of Appeal in Meriton No 3 considered an appeal against the decision of Pain J ( Meriton Apartments Pty Ltd v Council of the City of Sydney [2010] NSWLEC 64) where Her Honour upheld an appeal under s56A of the Land and Environment Court Act 1979 against the Senior Commissioner's decision in Meriton No 2. Tobias JA, with whom Campbell JA and Macfarlan JA agreed, examined the decision and reasons of the Senior Commissioner. At [25] and [26], Tobias JA outlines the issues identified by Moore SC as being firstly, whether a credit should be granted for past industrial commercial occupation of the site and secondly, the extent to which a credit should be granted as a matter of discretion if he was otherwise satisfied that there was some appropriate basis to grant at least some credit. 'It is the second issue determined by the Senior Commissioner that gives rise to the present appeal' [29]. In dealing with the consideration of this issue by Pain J, Tobias JA found:
55 In my view Meriton's submissions should be accepted and those of the Council rejected. The underlying basis of the Senior Commissioner's reasoning particularly at [64], was that notwithstanding his determination of the appropriate workforce to be taken into account for the purposes of calculating the relevant credit, there should be a discount of that credit because there were periods of non-rateability when there was no revenue from the Site to subsidise or contribute towards the cost of community facilities presumably utilised by that workforce from time to time.
56 In my view, a consideration of the subject matter, scope and purpose of the relevant provisions of Subdivision 3 of Part 4 of the EP&A Act (which contains ss 94 and 94B), does not provide any basis, whether express or implied, which is capable of linking the rateability of the relevant land to the net demand for public amenities and public services generated by the development under consideration.
57 As Meriton submitted, so much was recognised by the Contributions Plan itself. In the table to paragraph 4.16, assumed employee density was acknowledged and provided for community and recreational uses such as schools, TAFE colleges and hospitals, all of which would be exempt from rates. In other words, it was not suggested in the Contributions Plan that rateability of the land at any relevant time was a matter that could or should be taken into account in determining workforce occupancy rates, let alone contribution rates. Nor is there any reference in the Practice Notes issued by the Department and which were required by cl 26(1) of the Regulation to be taken into account by the Council in preparing the Contributions Plan to rateability being relevant to the determination of the credit or allowance which a council was required to make for existing development when determining the net demand generated by new development for public services and amenities.
58 As Meriton submitted, the relevant provisions of the statute are concerned with that demand. The developer was entitled to a credit for the demand created by the existing population, however determined. That demand could be in no way dependant upon whether the landowner in question who created the demand did or did not pay rates at any material time. True it is that before the EP&A Act came into force in 1980 a council may have depended upon rates (whether general or special) to provide public amenities and services to meet the needs of the existing population. But how it met those needs and out of what funds was not the subject of evidence before the Senior Commissioner and, therefore, could not be the subject of any justifiable factual findings.
59 The simple point is that the relevant provisions of the statute are concerned with the net demand for public amenities and services generated by the development in question. Although the relevant exercise requires a determination of the existing demand for such services in order to reach the net demand, the former is based purely on the actual or deemed resident or workforce population of the relevant land at the time of the development application for it is only the future population that generates the demand in respect of which a monetary contribution can be required. That determination cannot be dependant upon whether the demand of the historical population was ever met by the council or, if it was, out of what source of revenue.
60 If the Senior Commissioner's approach was to be adopted, then enquiries might need to be made to identify the public amenities and services, if any, which the council provided to meet the existing demand and the source of the funds used for that purpose which would not necessarily be from the proceeds of the general rate. It might be sourced from government grants. Such historical enquiries, often lost in the mists of time, would be not only difficult but also unhelpful. Critically, they would tell the inquirer nothing that would assist in determining the issue posed by s 94(1).
61 Thus the present provisions of the statute neither expressly nor impliedly relate to the manner in which a council provides public amenities and services to meet the needs of past populations: rather, they are only concerned with ensuring that the present developer not be required to meet the needs that are not generated by the development in respect of which consent is being sought.
62 It follows from the foregoing that in my opinion the Senior Commissioner took into account an irrelevant consideration and in so doing erred in law. Once the Court was satisfied that the non-rateability approach involved an irrelevant consideration as a matter of construction of the statute, it was not in contest that that involved an error of law. It follows that the Senior Commissioner's decision should be set aside.
96Tobias JA then dealt with the question of whether the Court of Appeal should remit the matter for further consideration by the Land and Environment Court. At [65], His Honour states:
I have already referred at [25] and [26] to the issues that the Senior Commissioner considered required his decision. The first issue involved the determination of the appropriate workforce population to be factored into the credit calculation. That population was determined at 229 and there is no contest with respect to that finding....
97At [69], Tobias JA found that:
Finally, it was neither suggested to the Senior Commissioner nor on the appeal that there should be a discount of the historical workforce population of 229 or to the rates of contribution applicable to that workforce other than as was advanced to the Senior Commissioner and rejected by him. In these circumstances it seems to me that no purpose would be served by remitting the matter for further consideration in the light of this Court's decision with respect to the sole basis upon which the Senior Commissioner determined to discount the credit to which Meriton was otherwise found to be prima facie entitled.
98Mr Russell submits that my discretion is limited by the decision of the Court of Appeal in Meriton No 3 which accepted a credit for the historical workforce of a site that was also formerly part of the BMC land and is now under the same contributions plan. The Court of Appeal clearly states that the question on appeal is the extent of a credit in circumstances where Moore SC had found that there was a basis for a credit. The consideration is confined to questions of law, in particular, whether the Commissioner considered an irrelevant matter, in exercising his discretion under s 94B (3), by determining that the credit should be reduced to reflect the period when rates were not paid.
99Having determined that rates are not a relevant consideration, it cannot be concluded that the fact that the Court of Appeal did not remit the matter means that I am bound to consider the historic population in the same manner as Moore SC or that the 'benchmark' date in the Plan has been found to be unreasonable by the Court of Appeal. The matter was not remitted as Moore SC had found that the appropriate historic workforce population to be factored into the credit calculation was 229 and 'there was no contest with respect to that finding'. Once 't he sole basis upon which Moore SC determined to discount the credit to which Meriton was otherwise found to be prima facie entitled' was found to be flawed then the credit remained unaltered.
100While, the Court of Appeal outlined the reasoning behind Moore SC determination of whether there was a basis for a credit it did not review the merits of that decision and it is open to me, on the facts and evidence before me, to apply a different reasoning and reach a different conclusion as to whether Condition 48 is unreasonable in the particular circumstances of this case.
101As discussed by the Court of Appeal, I am however, required to exercise my statutory discretion by reference to the subject matter, the scope and the purpose of the legislation that creates it (see Goldie v Commonwealth of Australia [2002] FCA 261at [45]). The Court of Appeal decision clearly articulates that the relevant provisions in ss 94 and 94B(3) of the Act are concerned with demand and that 'the developer is entitled to a credit for the demand created by the existing population, however determined.'
102As previously stated, Tobias JA at [59] outlines that to determine the nett demand for public amenities and services generated by a development requires a determination of existing demand for such services. Existing demand is based on the actual or deemed resident or workforce population on the site at the time of the development application. It is the reasonableness of the method for determining the 'deemed' workforce population on the site at the time of the development application that is in dispute between the parties. In particular, whether a condition requiring a monetary contribution that is based on the deemed population calculated in accordance with the 'benchmark' date in cl 2.15 of the Plan is reasonable.
The structure of the Plan and its statutory framework
103To determine whether cl 2.15 is a reasonable method to establish the existing population and therefore the nett demand of a site it is necessary to understand the structure of the plan in the context of the planning framework within which it is made.
104Both Mr Russell and Mr Tomasetti provided an overview of the statutory framework and the structure of the plan. There is no dispute that the Plan was prepared in accordance with the requirements of the EPA Act, its Regulations and the Practice Notes. Significantly, Mr Russell did not raise issue with aspects of the plan such as contribution rates, nexus or apportionment other than the Policy for existing development in cl 2.15.
105The Regulation specifies the particulars which must be addressed in a contributions plan and the Practice Notes provides further, more detailed, information. It explains that the principles that underlie s 94 contributions are:
- reasonableness in terms of nexus (the connection between development and demand) and apportionment (the share borne by future development); and
- accountability both public and financially
106There is no dispute that the Plan has demonstrated a relationship between the expected types of development in the area and the demand created by that development for the public amenities and services to be provided in the works schedule (nexus).
107There is also no dispute that the Plan provides that new development only contributes its share to the cost of the facility or service for which it has created a demand (apportionment).
108The relationship between the expected development and demand is required to be identified in a contributions plan by the Regulations (cl 27(1)(c)). The Practice Notes explain that this requires an assessment of:
The makeup, spatial distribution, and timing of growth that will be encountered in the catchment area(s) in the planning horizon (growth and development);
The current levels of provision of public amenities and services in the catchment and the needs of future residents in this catchment. (nexus/demand identification)
109The Practice Notes also explain that the main aim in assessing growth and development is to determine the demand that is to be generated by an incoming population, which requires a focus on factors such as population growth and the implications of demographic change. It includes census data as being relevant information to assist in the analysis of existing and future population.
110The works programme in a contributions plan is a reflection of the likely population growth and demand. The Regulation requires identification of the specific works to be provided, supported by a works schedule, including costs and staging (cl 27(1)(h)).
111The s 94 contribution rate is then a function of the total cost of the works divided by the demand and multiplied by the apportionment factor.
112A s 94 contribution can only be levied on the nett demand created by a development, however, the Act and the Regulations are silent on how this should be determined. The Practice Notes deal with Exemptions, Discounts, Credits and Refunds but provide little guidance on how to determine credits for existing commercial and industrial developments. It states:
In the case of existing development on a site, it is
accepted practice that a credit equal to that existing
development on a site is taken into consideration.
.........
For commercial and industrial development, credits
are more complicated, as the same development
may have differing implications such as higher (or
lower) levels of traffic generation. Councils will
need to assess these on a case by case basis. In
all cases, council should have a specific policy on
credits in their s94 development contributions plan.
These will need to be documented and the
implication for the s94 development contributions
plan assessed particularly if the credit is large.
113The assumption inherent in the above statement is that a development (population) that exists on a site generates a demand for public amenities and services eg traffic. It does not refer to a historic demand that may have been generated by a development that previously existed on a site but is no longer present. Nor does it propose the concept of 'peak historic demand' as being appropriate. Further, it emphasises the need to assess the implications for a s 94 contribution if the credit is large. This part of the Practice Notes also deal with Discounting Contributions and makes the point that discounting should not be confused with apportionment, exemptions and credits. This does not, as Mr Russell submits, mean that factors such as census data, which are utilised in determining apportionment, are not also relevant to determining an exiting population for the purpose of a credit.
Are the 'benchmark' date and condition 48 reasonable?
114Census data is an important factor in the population data and projections used to determine the relationship between expected development and the demand for amenities and services in an area as well as the apportionment of the costs between the existing and future development and the contribution rate of providing such facilities. The same data on which the Plan is based can therefore also be relevant to determine the exiting population and thus the nett demand of a particular development.
115The Plan utilises two dates (1996 and 2006) to determine the 'contributing population' for the works programme in the Plan. The agreed position of the experts is that there was no or negligible population on the BMC land at the earliest demand assessment date in 1996. It is therefore reasonable to assume that there was no demonstrable demand that would have been assessed to determine the demand for the specific public amenities and services in the works schedule of the Plan.
116The former BMC site has an area of about 244,680sqm. It is unlikely that such a large site would not have been considered in the population and demographic assessment undertaken to determine the likely demand for amenities and services. A worker population of over 5000 shift workers, if present on the site at the time of the demand assessment, would have represented a substantial existing demand for facilities. Given that the site was substantially vacant by 1996 and all the buildings were demolished by 1999, it is unlikely that a demand for facilities from an 'existing population' would have been included in the assessment that was undertaken upon which factors such as nexus, apportionment and contribution rates in the Plan are based.
117If a site is vacant at the time of the development application, cl 2.15 of the Plan provides that the 2001 census is used as the 'benchmark' date to determine if a former population can be construed as 'present' or 'deemed to exist'. I accept Mr New's evidence that it is not unreasonable for a contributions plan to adopt a 'cut off' date for the purpose of determining the existing demand for public services generated by a development. Further, it is not unreasonable that there be a correlation between a date that determines existing population for demand assessment and utilising the same date to determine the deemed population of a particular site for the purpose of establishing nett demand.
118The use of a 'benchmark' date in cl 2.15 of the Plan is therefore not an unreasonable method to determine the deemed population of the site. However, I accept Mr New's opinion that as there are two demand assessment dates, it would be preferable to recognise the peak population of the site during the period 1996 to 2006 rather than at the 2001 Census date referred to in cl 2.15. However, nothing turns on this, as the 2001 census date is within this period and as the site was vacant on both dates and during the period there would be no change to the nil credit in condition 48 of the Consent.
119In accepting that a 'benchmark' date is a reasonable approach to determining the deemed population of a site, I acknowledge that there would need to be a degree of flexibility in applying the date to ensure that a workforce population which had recently departed prior to the 'benchmark' date may be recognised, but only if it could be demonstrated that it would have generated a demand for the specific public amenities and services to be provided by the Plan.
120However, it is not reasonable to consider a 'historic' workforce which occurred at a time where there is no demonstrable demand for the specific public amenities and services to be provided by the Plan. While the workers of the 1970's had demands for facilities it is not those specifically identified in the Plan.
121I accept Mr Tomasetti's submission that the Act, the Regulations and the Practice Notes require 'specific' public amenities and facilities to be identified in a contributions plan to meet the demands of future development. For any 'historic' population to be considered it should demonstrate a demand for the specific services to be provided by the Plan.
122The Plan is based on the assumption that the local government area, including GSURA and Victoria Park, would experience strong population growth between 1996 and 2021, the life of the Plan. The increasing population of both residents and workers would demand public services and amenities which due to changing needs and demographics would be different to those which existed in the area.
123The need to account for 'existing population' when apportioning the demand for development between the existing and future population is different to the need to recognise an 'existing population' for the purpose of giving a credit against the contribution payable. However, there is a link between these 'two concepts of existing population'. Mr Smith and Mr New agree that using a historic peak population, as the basis for assessing nett additional demand for amenities and services would result in higher contribution rates if the works programme remains unchanged. Mr Russell submits that a 'minuscule' adjustment to the contribution rates would need to be made for the development on the site. While the adjustment for the particular development on the site may be small, it illustrates that if an existing population is not included when assessing demand but is included for the purpose of a credit it changes the assumptions and methodology upon which the Plan is based.
124The number of workers in manufacturing industries has reduced since last century due to changes in technology and work practices. Mr New provided the example that if every Southern Precinct site's peak population was equated to 'existing demand' this could result in a lower worker population than that on which the demand assessment is based. Mr Smith contends that the history of all sites should be investigated to determine the peak historic population, even those developments that are not vacant. Again this produces distorted results whereby an existing development which is not vacant with an 'actual population' at the time the development application is lodged may have significantly less population than a similar development which is vacant but bases its 'existing population' on a population which occurred at the peak of its manufacturing history.
125It is preferable to base any estimate of a historical workforce on the actual figures that existed at the demand assessment dates. However, if these are not available the occupancy rates in cl 4.16 are preferable and a more transparent method than an estimate of peak population, particularly if this existed at some time prior to the demand assessment dates and where no demonstrable link to the demand for particular services and amenities to be provided by the Plan has been demonstrated.
126In the particular circumstances of the case, there is no justification that the deemed population should be based on the peak historic population that existed for a short period in the 1970's. The uncontested evidence of Dr Fitzgerald is that BMC operated for three shifts only in its final years before its closure in 1974. It operated two shifts from the mid 1960's with the maximum number of people employed at any one time being 2,400 (during the period 1964-1974).
127The problems of using peak historic population are also highlighted by Meriton No 2 , where based on the evidence before him, Moore SC found that the historic population of the BMC peaked at around 7,000 people in 1964. From his judgment it is not clear whether this figure was based on the total population each day or the daily peak. Nonetheless the amount is significantly different to the peak population figures for BMC now before the Court.
128Rose Consulting provides that amending a condition that has been made in accordance with a contributions plan because it is unreasonable does not mean that the Plan itself is amended. However, adopting a different methodology in the particular circumstance of this case would mean that there would be a reasonable assumption that other sites within the former BMC land would expect a similar result on appeal, as would other vacant sites that had populations prior to the census date in cl 2.15 of the Plan.
129Clearly if the Plan produces an unreasonable result in the particular circumstances, a condition made in accordance with the Plan should be disallowed or amended. However, the use of a benchmark date to determine the population for existing development is a reasonable method given the overall structure of the Plan and its planning framework. Clause 2.15 of the Plan, the definition of 'existing population' and the note to Figure 4.5 explain the rationale of using the census date on which the Plan is based as being that if a population was not counted as part of the existing population (to determine demand for specific public amenities and services in the Plan) then it should not be used to determine whether a former population is 'present' or 'deemed to exist' (for the purpose of determining a credit).
130For the above reasons, I accept that condition 48 of the Consent was imposed in accordance with the Plan. It uses a 'benchmark' date to determine the nett additional demand for public amenities and services generated by a development that in the circumstances of this case is not 'arbitrary' or unreasonable. I therefore find that the contribution required by Condition 48 is reasonable and it should not be disallowed or amended. The Appeal is therefore dismissed and the s 96 application refused.
131In reaching this conclusion, it is therefore not necessary for me to adjudicate on the competing submissions in regard to whether the total daily population or the peak daily population should be used to calculate any credit.