Mineral Wealth Pty Limited v Gosford City Council

On the property (176 Williams Road, Kulnura) the Applicant extracts water and bottles it for commercial sale. Erected on the property is a small dwelling house together with a metal clad shed which contains water collection and bottling facilities. The Applicant had constructed, without approval, on the property and adjacent to the existing shed used for the bottling of water for commercial sale another shed (the unauthorised shed).

The Applicant applied to the Council for a building certificate for the unauthorised shed. The Applicant also lodged a development application for the use of the unauthorised shed. Council refused both applications and the Applicant appealed to this Court, where its appeals were upheld by the Commissioner.

I note that there was no issue raised in the appeal by the Council as to the structural integrity of the shed.

In matter no. 10159 of 2002 the Council's grounds of appeal are as follows: 1. The Commissioner erred at law by failing to deal with the issue of whether the building certificate should be issued before determining whether a development consent should be granted for the prospective use of the shed. 2. The Commissioner erred at law in his determination of the application for the building certificate by failing to address the question of the issue of a building certificate by a merits assessment under s 149D of the Environmental Planning and Assessment Act, 1979.

In matter no. 10160 of 2002 the Council's grounds of appeal are as follows: 1. The Commissioner erred at law in determining the Development application for future use of the subject structure without having first determined whether, on a proper merit assessment, a building certificate ought be directed to be issued for the structure in which the use was proposed to be carried on. 2. The Commissioner erred at law in finding that the proposed use was permissible pursuant to Interim Development Order 122. 3. The Commissioner erred at law in his determination of the issue of the extent of the existing use with respect to the subject land, in that: (a) As a matter of law the existing use did not extend to the whole of the subject land. (b) There was no, or there was not sufficient, evidence to establish the extent of the existing use. (c) The Commissioner granted consent for the enlargement, expansion or intensification of the existing use over land which was not the land the subject of the existing use.

The Council's main grounds of appeal are grounds 2 and 3 in matter no. 10160 of 2002. I will deal with those grounds first. If the Council fails on ground 2 then ground 3 will not need to be considered. Ground 1 in matter no. 10160 of 2002 overlaps with the grounds in matter no. 10159 of 2002 and these will be dealt with together. Ground 2 (matter no. 10160 of 2002) - the Commissioner erred at law in finding that the proposed use was permissible pursuant to Interim Development Order 122

The subject land is zoned 1(a) Rural Agriculture under the Gosford City Council Interim Development Order No. 122 (IDO 122). The Applicant asserted that the development was permissible as it came within the definition of "rural industry". A "rural industry" is defined in cl 3(1) of IDO 122 as follows: The handling, treating, processing or packaging of primary products … but does not include the extraction of groundwater for commercial purposes. 9. The exclusion "but does not include the extraction of groundwater for commercial purposes" was added to the definition of rural industries after the amendment of IDO 122 on 28 June 2000. This was added after the existing shed had been built and its use for the bottling of extracted groundwater commenced.

10. The parties accept that groundwater is classified as a primary product. The Commissioner's finding at [31] was that: With respect to the definition of rural industry, I am inclined to take a broader view of the operation, which involves the use of the new shed to allow the more efficient conveyance and handling of the primary product rather than its use as a separate storage area. On this basis then, I consider it generally satisfies the requirement involving "the handling, treatment, processing of the product". The handling involves the shifting of the product around within the shed, which I consider is covered by the definition. 11. Further at [32] the Commissioner stated: With regard then to restrictions on extraction of groundwater, I accept Mr Preston's submissions that in this case the character, extent and other features of the activities of handling, treating and packaging the water in the sheds, are such as to make those activities an independent use of the land, from the activity of extraction of the groundwater. The fact that the activities are interrelated and mutually beneficial does not cause one to be subordinated to the other. This is in line with the authority in Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404 at 409. 12. Accordingly, the Commissioner considered that the proposed use of the unauthorised shed could be characterised as a rural industry under IDO 122 and was therefore a permissible use.

Council's submissions 13. The future use of the unauthorised shed, as argued by the Council, was that it was predominantly for the storage of bottles of water after the bottling process had been undertaken, with some limited storage of empty bottles and materials to be used in the bottling process.

The Council submitted the Commissioner's finding about the use of the unauthorised shed at [31] did not correlate with the evidence of the use of the unauthorised shed for storage and that such a finding was so divorced from a proper characterisation of the use that it constitutes an error of law.

Alternatively, the Council submitted that even if the Commissioner's characterisation was accepted, the Commissioner fell into legal error by finding the proposed use was permissible. In a proper consideration of the definition of rural industry it is clear that the activity prohibited by the definition is not simply the extraction of groundwater, but rather an activity prohibited by "the extraction of groundwater for commercial purposes" . This phrase should not be limited to the simple act of extraction. Firstly, because no notion of "extraction" is contained within the inclusory part of the overall definition of rural industry being the "handling, treating, processing or packaging" . Secondly, because, but for the exclusion, the process in question would have been included in the definition. Thirdly, because the exclusion relates to a process or overall activity which on a proper construction of the definition covers all aspects of extraction of groundwater for commercial purposes, the use was therefore not permissible.

Alternatively, if "handling, treating, processing or packaging" is to be excised from the process of "extraction" then each of the individual activities described in "rural industry" should be viewed separately. The proposed use of the unauthorised shed was for "storage" only, and the storage of bottles is not included in the "handling, treating, processing or packaging of primary products ". All aspects of the handling, treating, processing or packaging of the water as the primary product is completed by the time that the bottle of water enters the unauthorised shed.

Furthermore, if this alternative approach is correct the subject use is within the definition of "warehouse" under IDO 122. A warehouse use is prohibited within this zone.

In such circumstances, the proper conclusion of characterisation is that the development is prohibited: see Hawkesbury City Council v Sammut (2002) 119 LGERA 171.

Applicant's submissions 19. The Applicant submitted the use for which consent is sought is permissible. The activity of bottling the groundwater into bottles involves handling, treating (filtering and ozone treatment) and packaging the water: see Australian Native Landscapes Pty Ltd v Warringah Shire Council (Bignold J, NSWLEC, 8 February 1989, unreported). The extraction of groundwater obviously precedes the conveyance of the water through pipes to the shed for that handling and treatment. The exclusion from the definition of "rural industry" of the extraction of groundwater for commercial purposes prevents that part of the process from being a rural industry. Nevertheless, the handling, treating and packaging in the sheds of the water conveyed to the sheds after it has been extracted is a distinct process from that of extraction of ground water, and does not fall within the exclusion. The handling, treating and packaging of the extracted natural mineral water, and matters ancillary or incidental thereto, being the operation carried on in the unauthorised shed, remains a rural industry, notwithstanding the exclusion.

The Applicant submitted there is no lack of correlation between that use and the use described in the Statement of Environmental Effects (this is in response to the Council's submission at par 15 above). Accordingly, there was no error of law in the way the use was characterised by the Commissioner.

Further, the handling, treating and packaging of water cannot be characterised as being subordinate to a dominant use of the land for the extraction of groundwater. The character, extent and other features of the activities of handling, treating and packaging the water in the sheds means that those activities are an independent use of the land from the activity of the extraction of groundwater. One is not subordinate to the other, applying Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404 at 409.

Activities reasonably ancillary to, or otherwise associated with, the handling, treating and packaging of water (for example, storage) are permissible also, and are not to be categorised as some other prohibited use (such as warehouse).

The principle in Egan v Hawkesbury City Council (1993) 79 LGERA 321, which was also applied in Sammut , that if a particular use can be categorised as an "industry" (a prohibited use) it must be so categorised, notwithstanding that the use could also be categorised as a "rural industry" (a permissible use) is not relevant in this case.

The proposed use of the unauthorised shed is a permissible use under IDO 122 and the Commissioner did not err.

Finding 25. I accept the Applicant's submissions that the characterisation of the use of the unauthorised shed by the Commissioner at [31] was open to him on the evidence and is not an error of law.

26. In relation to whether the proposed use was permissible, I accept and adopt the primary arguments and reasoning of the Applicant's counsel at par 21 - 24, that is, that the handling, treating and packaging in the sheds of the water conveyed there is a permissible rural industry under IDO 122 which is separate from the extraction of the groundwater for commercial purposes. Those activities are not to be characterised as subordinate to a dominant use of extraction of groundwater, but are an independent use. Further, activities to be conducted in the unauthorised shed that are ancillary to the handling, treating and packaging of water are permissible and should not be separately categorised as warehousing. The Commissioner has not erred in the findings at [31] - [32] of his judgment. The Council fails on this ground.

Ground 3 (matter no. 10160 of 2002) 27. Ground 3 does not need to be answered given my finding on ground 2. Alleged errors in dealing with the building certificate (ground 1 and 2 in matter no. 10159 of 2002, ground 1 in matter no. 10160 of 2002) Council's submissions 28. The Council's submissions addressed the two issues raised by these grounds together (ground 1 and 2 in matter no. 10159 of 2002, ground 1 in 10160 of 2002). Ground 1 in matter no. 10160 of 2002 overlays both the grounds in matter no. 10159 of 2002. I will therefore, where relevant, refer to the two separate grounds in 10159 of 2002 as these grounds separate the two issues raised.

29. The essence of the Council's complaint is that the Commissioner failed to determine the merit based matters required by s 149D of the Environmental Planning and Assessment Act 1979 (the EP&A Act) in relation to the building certificate application (ground 2 matter no. 10159 of 2002). The approach taken by the Commissioner was to determine the Applicant's development application and, having been satisfied about the grant of development consent, then simply to direct the issuing of the building certificate.

30. After identifying the relevant background facts and planning instruments, the Commissioner addressed the issues concerning the grant of development consent, namely the future use of the unauthorised shed (at [24] - [68] of the Commissioner's judgment). Apart from addressing the matter of the structural integrity of the shed (at [24]), the Commissioner only addressed the issue of the permissibility of the use of the unauthorised shed.

31. The Commissioner noted that the proper approach to the determination of a building certificate application is to leave aside the matter of the unauthorised construction of the shed: see [28] and [69] of the Commissioner's decision and Ireland v Cessnock City Council (1999) 110 LGERA 311 at [28] ( Ireland No 2 ). Notwithstanding that, the Commissioner indicated (at [28]) that the " decision should be made on the basis of whether the subject Development Application would have initially been approved, based on its compliance with the relevant planning controls ". The Council submitted that on a proper reading of the Commissioner's judgment he was only concerned with the permissibility of the proposed use. Further, the acceptability of the structure was assumed.

32. The Commissioner failed to properly approach the matter by considering the notional development application, assuming that the structure had not been built: see Taipan Holdings v Sutherland Shire Council [1999] NSWLEC 276 at [58]ff and [110]ff and Ireland No 2 at [37] where Bignold J set out the two issues as being firstly, the structural adequacy of the building and secondly, the probability of development consent being granted had such approval been sought. The Council argued the Commissioner did not address the second issue, the consideration of these two issues being necessary before the actual development application before the Court was considered. Consequently, the Commissioner failed fundamentally as a matter of law, pursuant to s 149D of the EP&A Act, to properly consider the issue of the building certificate. Applicant's submissions Ground 1, matter no. 10159 of 2002 33. It is questionable whether Bignold J in Ireland v Cessnock City Council (1999) 103 LGERA 285 ( Ireland No 1 ) and also in Ireland No 2 was expounding a general and universal principle of law in the manner the Council asserts. Even if such a general principle exists it cannot be concluded that the Commissioner breached that principle simply by expressing his conclusions in relation to granting development consent before expressing his conclusions in relation to the building certificate. The Commissioner clearly addressed his mind to both questions. To accept the Council's arguments would be to let form triumph over substance.

Ground 2, matter no. 10159 of 2002 34. It is clear from the Commissioner's judgment that he recognised and accepted that there was an entitlement to take action of the kind set out in s 149D(1)(a) of the EP&A Act in relation to the unauthorised shed, but he concluded that " despite the unsatisfactory manner in which the shed was constructed "(at [69]) a building certificate should be issued subject to appropriate conditions (at [70]). It cannot be asserted that the Commissioner did not direct his mind to the right questions.

The question of weight to be given to various matters (in the absence of Wednesbury unreasonableness, which is denied) is entirely a matter for the Commissioner: see Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 40 - 41 (Mason J) and Randwick Municipal Council v Manousaki (1988) 66 LGRA 330 at 334 (Clarke JA; Hope and McHugh JJA agreeing).

Furthermore, the Commissioner was not under any obligation to set out all matters that he took into account when arriving at his decision that a building certificate should issue: cf Marnal Pty Ltd v Cessnock City Council (1989) 68 LGRA 135.

In addition, or in the alternative, a "merits assessment" of the kind asserted by the Council is not required by s 149D of the EP&A Act. All that section requires is an enquiry as to whether there is an entitlement to take action (of the kind set out in s 149D(1)(a)) and whether there is an actual intention ("proposal") to take any such action. Where there is no such entitlement, or no such proposal, the section otherwise imposes a mandatory duty on the Council to issue a building certificate. That was the intention of the legislation. Furthermore, insofar as the discretionary power under s 149A of the EP&A Act is concerned, Bignold J held in Ireland No 1 at [52]: … s 149A confers a discretion on a council to issue a building certificate even in circumstances where the council is not bound to issue it. In other words, the discretion is wider than the duty, and the duty to issue the certificate, unless certain conditions apply, does not create an implied duty not to issue the certificate where those conditions apply.

By reason of the manner in which the Commissioner did exercise his discretion in relation to ordering the issue of the building certificate, it cannot properly be said that he erred in law.

In relation to the Council's reliance on Taipan , the Applicant submitted that the order in which the Commissioner presented the matters in his judgment (the issue of development consent and the issue of a building certificate) demonstrate that he did deal with the question of " whether development consent should be granted to the notional development application " ( Taipan at [61]).

Alternatively, in the circumstances before the Commissioner there was no legal obligation to consider the question of a notional development application as the Council submitted relying on Taipan and Ireland No 2 . In Taipan there was no actual development application before the Court and Bignold J was addressing his mind to the question of whether or not a building certificate should issue, hence he considered the issue of a notional development application. In Taipan it was important to consider the concept of a notional development application to determine whether the Applicant could rely on existing use provisions. In Ireland No 2 the parties asked Bignold J to deal with the matter in that way. Here there was an actual application which the Commissioner dealt with. This is more than sufficient "discharge of [the] statutory discretion under s 149F(3)" ( Taipan at [60]).

Finally, the Applicant submitted that the Council is taking a "fine tooth comb" approach to the Commissioner's decision, contrary to Brimbella Pty Ltd v Mosman Municipal Council (1985) 79 LGERA 367. Finding on ground 1 and ground 2 in matter no. 10159 of 2002 (ground 1 matter no. 10160 of 2002) 42. I consider the Commissioner appropriately decided whether to grant a building certificate as shown in [69] and [70] of his judgment, given the matters presented to him by the parties. I was not referred to any submission put to the Commissioner by the Council at the hearing about whether or not the building certificate should issue. The Commissioner's decision-making was appropriate in the circumstances.

43. In relation to the alleged failure to conduct a merits assessment for the issue of the building certificate I accept the Applicant's arguments at par 38 that the Commissioner did deal appropriately with the issue of a building certificate on this occasion. I also accept the argument at par 41 concerning Taipan and Ireland No 2 . Those cases do not establish a general principle concerning the approach to be taken to the issue of a building certificate. The approach taken in both cases, namely consideration of a notional development application as part of the assessment in relation to whether a building certificate should be issued, reflects the particular circumstances presented to the Court. In this case there was an actual development application before the Court. The criticism of the Commissioner's judgment on the grounds raised is unduly pedantic, in my view. There is no error of law based on either grounds 1 or 2 in matter no. 10159 of 2002, or ground 1 in matter no. 10160 of 2002.

44. Accordingly, the Council is unsuccessful on these grounds also. The Council's Notices of Motion are dismissed.

45. Order
    1. The Council's Notices of Motion dated 9 December 2002 in matter no. 10159 and 10160 of 2002 are dismissed.
    2. The question of costs is reserved.

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