Mirvac Homes (NSW) Pty Ltd v Baulkham Hills Shire Council

Regulation 26 of the Environmental Planning and Assessment Regulation 1994 ("the Regulation") prescribes what particulars must be contained in a contributions plan including:- (d) the formulas to be used for determining the section 94 contributions required for different categories of public amenities and services.

There is no dispute between the applicant and the respondent that cl 9.5 contains one such formula.

However, the respondent contends, and the applicant denies, that cl 10 contains a mechanism which allows for an increase in the land component of s 94 contributions. According to the respondent, the means by which the land component of a contribution is to be adjusted is not the quarterly review contemplated by application of the formula in Table 16 of cl 9.5 for the capital works component, but rather the formal review and amendment of a contributions plan carried out each year was contemplated by cl 10 of the 1993 plan.

Mr Preston relies upon the following passage in the judgment of the Chief Judge in Stockland (Constructors) Pty Ltd v Baulkham Hills Shire Council (Pearlman J, NSWLEC, 10 July 1996, unreported) at 11:- I think that cl 9.5 and pt 10 of the Rouse Hill contributions plan operate to require that adjustment of the land component of a contribution can only be effected by amendment to the plan, as distinct from adjustment of the capital works component by means of the prescribed formula. Both cl 9.5 and pt 10 are directed to adjusting contributions to reflect current values. In the case of the capital works component of a contribution, that adjustment is achieved by the application, on a quarterly basis, of a specific formula, and this method of adjustment is expressly excluded from the process provided for in pt 10. No method is stipulated by cl 9.5 for adjustment of land cost - no formula is provided and it is merely stated that latest land values will be used. Part 10, however, does provide a process for adjustment to meet current values, one of the express purposes of review of the Rouse Hill contributions plan under that part being to meet changes in construction costs and land values . It follows that the method of adjusting the land component of a contribution is by process of review, public exhibition and amendment of the Rouse Hill contributions plan.

At the time Stockland was decided the land component of the contribution had not been amended and was therefore still set at the original rate.

The council submits, however, the 1993 plan has now been reviewed. New plans have been made pursuant to s 94B of the EP&A Act and cl 31 of the Regulation, thereby changing the land component of contributions. The council relies upon the latest review reflected in the 2000 plan.

According to the respondent, the review of the land component has been carried out in accordance with the 1993 plan by the making of the 2000 plan.

Clause 10 of the 1993 plan distinguishes between the quarterly adjustment of the capital works component referred to in cl 9.5 on the one hand and a formal review of the plan itself on the other.

The applicant submits that the only review of contribution rates contemplated by the conditions is a review in accordance with the 1993 plan, namely, a review under cl 9.5 of that plan.

The respondent criticises this claim by saying that a construction of the words "reviewed regularly" in the second subparagraph of each of conditions 44(a) and 45(a) is inconsistent with the provision in cl 9.5 of the 1993 plan for the capital works component to be adjusted "quarterly" . The council contends that whilst the quarterly adjustment of the capital works component of the contribution is a form of regular review, so too is the formal review each year that the council contemplates carrying out pursuant to cl 10 of the 1993 plan. Thus, by using the wider expression "reviewed regularly" , the council was able to refer to both the quarterly adjustment of the capital works component pursuant to cl 9.5 as well as the formal review each year under cl 10.

Conversely, Mr Tobias QC argues, on behalf of the applicant, that cl 10 is simply a warning to land holders that the 1993 plan may cease to apply and a new plan could come into existence as the result of reviewing the old plan for the purposes identified in the body of cl 10. Clause 10 does not in terms contain a formula for the increase in contribution rates for the land component. It does, however, specifically distinguish the quarterly review of contribution rates as contemplated in cl 9.5 (the reference in the text to cl 8.5 is acknowledged by both parties as an error). Accordingly, Mr Tobias says the capital works component is adjusted using the formula in Table 16 of cl 9.5 while the means by which the land component is to be adjusted is the formal review and amendment of the contributions plan carried out each year as contemplated in cl 10.

If the council is right the contribution applicable at the time of payment pursuant to the second paragraph of conditions 44(a) and 45(a) will be that which results from a regular review process which, in the case of the capital works component, will be achieved by the quarterly application of the formula in Table 16 of cl 9.5 and, in the case of the land component, an annual review under cl 10 which may result in the making of a new contributions plan, as the council has done here.

It was not necessary for the Chief Judge in Stockland to address the issue which arises in this case. Nevertheless, Her Honour did identify the purpose of providing particulars in a contributions plan pursuant to reg 26, in my respectful opinion quite correctly, as follows at 8:- The purpose of providing particulars about specific public amenities in a contributions plan is to provide information to the public generally, both during the public exhibition period and in respect of the implementation of the contributions plan by the imposition of conditions. The relevant information is the description of the proposed public amenities and their cost. That information permits a member of the public to make submissions during the public exhibition period, and to consider the reasonableness of a condition imposing monetary contribution.

Ultimately Her Honour concluded at 12 that a condition providing for contributions based on land cost as at a different level than is provided in the contributions plan is not of a kind allowed by and determined in accordance with the 1993 plan. She reiterated that if a condition is not authorised by a contributions plan the council may not impose that condition (see Trehy & Ingold v Gosford City Council (1995) 87 LGERA 262 at 272).

Her Honour did not have to determine the question as to whether a condition providing for contributions based on land costs at a different level than those provided in the 1993 plan, but subsequently identified in the 2000 plan, is of a kind allowed by and determined in accordance with the 1993 plan. I have already mentioned that at the time Her Honour decided Stocklands in 1996 there had been no changes to the 1993 plan and the council was seeking to impose a land contribution based on higher costs for acquisition of the land without prior amendment of the 1993 plan.

The introduction to the 2000 plan expressly states that it repeals any previous s 94 contributions plan that applied to the area to which the plan applies.

Section 94(11) authorises a council to "impose" a condition for monetary contribution only if it is of a kind and is determined in accordance with a contributions plan approved under s 94B. Section 94B(1) speaks of a council approving a contributions plan "for the purpose of imposing conditions". In order to construe conditions 44 and 45 as being a legal exercise of council's power to increase the applicable rate between the date of consent and the time of payment the final payment must be recognised as having been determined in accordance with a contributions plan in force at the date the condition was imposed by the grant of development consent, namely the 1993 plan.

In this context there is no difficulty with applying the formula set out in Table 16 to cl 9.5 because the condition operates by reference to the plan at the date of consent. The capital works component of the contribution can be identified at any time by reference to the plan itself and by the application of the formula for adjusting contributions contained in Table 16 either up to that date or in the future.

Clause 10 does not have the same effect as cl 9.5.

Clause 10 contemplates that most, if not all, of the particulars to be included in the contributions plan pursuant to reg 26 may be reviewed either by reference to a whole new set of criteria to identify the demand for public amenities and public services or merely by carrying out a re-evaluation of the cost of the public amenities and public services already identified in the existing plan.

A contributions plan operates and has effect at the date of the imposition of a condition. Accordingly, if a condition provides for a review of s 94 contribution rates and determination of the applicable rate at the time of payment, then the applicable rate must be capable of being ascertained from the provisions of the plan at the date of the imposition of the condition. Although an applicant for development consent may not have the benefit of absolute certainty at the time the consent is granted, nevertheless there will be that extent of certainty which follows from compliance with Pt 4 of the Regulation which deals with the preparation of contributions plans including reg 26. The application of Table 16 in cl 9.5 of the 1993 plan provides the necessary extent of certainty.

Following the decision of the Chief Judge in Stockland it is clear that any adjustment of the land component of the contribution contemplated by cl 9.5 may only be made by the process identified in cl 10. Her Honour referred to "amendment to the plan as distinct from adjustment of the capital works component by means of the prescribed formula" . I accept that Her Honour intended to convey the prospect of achieving an adjustment of the land component (as contemplated by the last paragraph in cl 9.5) by an amendment of the plan after the completion of a yearly review. Nevertheless, the council has not followed that course. The 1993 plan has been repealed. Thus, it no longer operates, even in an amended form, except to the extent required to facilitate the recovery of contributions imposed pursuant to its terms.

Regulation 31 makes a clear distinction between a subsequent plan which amends a contributions plan and a subsequent plan which repeals a contributions plan. Clause 10 only refers to amendment of the plan.

The council is entitled by virtue of cl 9.5 to take into account any adjustments to the land component already made in accordance with cl 10 as at the date of operation of the condition.

If the council's argument is taken to its widest extreme then the review provisions in conditions 44 and 45 might be applied through cl 10 to impose a totally different scheme based on components of an entirely new plan in respect of which no cost had been determined at the date of consent. In such a case it would be impossible for a developer to consider whether the contribution ultimately payable is reasonable and properly relates to public amenities and public services, the demand for which will or is likely to be increased by the grant of development consent.

The legislative framework is that councils may require a contribution where development will or is likely to require the provision or increase the demand for public amenities and public services, provided that the contributions are determined in accordance with a contributions plan approved pursuant to s 94B in accordance with the Regulation.

A scheme which allows the council to undertake a review as contemplated by cl 10 is not in itself inconsistent with the statutory scheme. However, to construe conditions 44 and 45 to include changes made by the introduction of a new scheme which repeals the contributions plan operating at the time the condition was imposed is to introduce an element of retrospectivity which could leave the landowner with no prospect of redress if the time for appeal against imposition of the condition of development consent has already expired at the date of payment.

The calculation upon which council now relies in order to justify the increased contribution rates includes various components. The revised figures are based on components which are in some respects similar to those specified in conditions 44 and 45, but they are not identical. This in itself demonstrates the error of the approach which the council has adopted. It highlights the prospect that a rate of contribution applicable pursuant to a contributions plan in force at the date of development consent may be quite different in character to a contribution determined in accordance with a different contributions plan in force at the date of payment.

The Court's view is reinforced by the reference to the fact that "Section 94 contribution rates are reviewed regularly … " in conditions 44 and 45 and the specific reference to "the quarterly review of contribution rates" in cl 10 when it refers back to the earlier cl 9.5. Clause 10 does not in any other respect make reference in terms to "contribution rates" . Clause 9.5 states only that the two components will be "adjusted" in the manner referred to in the clause. The terms "review" and "adjusted" are clearly interchangeable when applied to the components of the contribution rate and thus the rate itself. Clause 10 appears in the context of the whole plan and stands as a statement of intention to review all aspects of the plan, whereas cl 9.5 is limited to the means of determining any adjustment to the capital component in order to take account of measured changes in the economy by way of the formula set out in Table 16 and a basis for reassessment of land values. The latter can only be effected by amendment to the plan ( Stockland ).

Construed in the above way the second paragraph of conditions 44(a) and 45(a) allows only for an adjustment of the capital works component to the time of payment in accordance with the formula in Table 16. The council quite correctly recognises that the formula in Table 16 has no role to play for the adjustment of the land component of the contributions. Arguably the council could have adjusted the land component of the contributions in a subsequent plan which amended the 1993 plan. However, as the 1993 plan has been repealed that question does not arise in these proceedings and is expressly not decided as the timing and form of any amendment could be critical.

The fact is no part of the 1993 plan effected an adjustment of the land component as at the date of consent or subsequently.

The Court is satisfied that conditions 44 and 45 are a valid exercise of the council's power to recover s 94 contributions pursuant to the EP&A Act and the regulations thereunder.

The capital works component in contribution rates is to be adjusted by application of the formula set out in Table 16 of cl 9.5 in each case. This construction is in conformity with s 94(11).

There can be no adjustment of the land component by virtue of cl 9.5 and cl 10 of the 1993 plan in accordance with the latest assessment of land values in the 2000 plan.

The Court has decided that the contributions required by conditions 44 and 45 have been imposed consistently with s 94(11). The effect of s 101 is that the validity of the development consent cannot be questioned in any legal proceedings while the requisite public notice is given. A notice was published on 2 March 1999 before the proceedings were commenced.

In R v Hickman & Ors; Ex Parte Fox & Clinton (1945) 70 CLR 598 the High Court explained the effect of a privative clause. Decisions are not considered invalid if:- (i) They do not on their face exceed authority. (ii) They amount to a bona fide attempt to exercise the power. (iii) They relate to the subject matter.

60. The Court has addressed the issue of construction as it is entitled to do notwithstanding the Hickman principle. If the council had been successful in persuading the Court that the proper meaning of the conditions is something else which leads to the imposition of a contribution otherwise than in accordance with the EP&A Act, and in particular s 94, then questions of validity could have arisen.

61. The proceedings commenced by the applicant primarily sought relief in the form of a declaration as to the true meaning of the conditions and determination of the amount payable having regard to that meaning.

62. The Hickman principle therefore has no application in the circumstances.

63. Other issues relating to certainty and severability do not now arise for the same reason. To the extent that lack of certainty remained an issue, it is dealt with in para (43).

64. The parties requested that, as the formulation of an appropriate form of declaration depends upon the conclusions reached by the Court, the making of final orders be deferred until the parties have had the opportunity to consider these reasons for judgment.

65. Leave is granted to bring in an agreed form of orders to be made by consent.

66. Otherwise, either party has liberty to apply on 7 days notice.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

64. The parties requested that, as the formulation of an appropriate form of declaration depends upon the conclusions reached by the Court, the making of final orders be deferred until the parties have had the opportunity to consider these reasons for judgment.

65. Leave is granted to bring in an agreed form of orders to be made by consent.

66. Otherwise, either party has liberty to apply on 7 days notice.