Newcastle City Council v Northern Residential Pty Limited &

Background facts 10 The council's cause of action is based upon a challenge to the validity of four subdivision certificates issued by the second defendant, Mr Gibson (or by the third defendant, T G Gibson Pty Limited) for the subdivision of land owned by Northern Residential. Mr Gibson is and was the principal certifying authority for the project. 11 The relevant facts which give rise to the allegation of invalidity of the subdivision certificates are not in dispute and may be briefly described. 12 Northern Residential owns a large area of land at Minmi, on which it proposed to carry out a residential subdivision. On or about 29 September 2006, the Minister for Planning granted a concept plan approval and a project approval for the subdivision of the land under Pt 3A of the Environmental Planning and Assessment Act 1979 ("the EP&A Act"). Mr Gibson is an accredited certifier and principal of T G Gibson Pty Limited, who was appointed as principal certifying authority for the project. I note that only an individual and not a body corporate can be an accredited certifier: s 5(1) of the Building Professionals Act 2005. On or about 21 July 2008, Mr Gibson purported to issue four subdivision certificates for the completed project.

Legislative scheme 13 There are a number of statutory provisions regarding the role of a principal certifying authority. A "principal certifying authority" is defined in s 4 of the EP&A Act as a principal certifying authority appointed under s 109E. Section 109E(1) states that the person having the benefit of a development consent or complying development certificate for development involving building work or subdivision work may appoint only the consent authority, the council or an accredited certifier as the principal certifying authority for the development. 14 The reference in s 109E(1) to a "development consent" or "complying development certificate" includes a reference to an approved project granted under Pt 3A of the EP&A Act: see s 75S, which states that ss 81A and 109M or "any other provisions of the Act in relation to the issue of subdivision certificates" apply to an approved project in the same way as they apply to development subject to a development consent, subject to any necessary modifications and any modifications prescribed by the regulations. 15 Section 81A(4) describes the role of the accredited certifier and principal certifying authority - Mr Gibson, in the present case. That section states: (4) Subdivision work in accordance with a development consent must not be commenced until: (a) a construction certificate for the subdivision work has been issued by the consent authority, the council (if the council is not the consent authority) or an accredited certifier, and (b) the person having the benefit of the development consent has appointed a principal certifying authority for the subdivision work, and (b1) the principal certifying authority has, no later than 2 days before the subdivision work commences: (i) notified the consent authority and the council (if the council is not the consent authority) of his or her appointment, and (ii) notified the person having the benefit of the development consent of any critical stage inspections and other inspections that are to be carried out in respect of the subdivision work, … 16 On 19 August 2007, Mr Gibson gave notice in accordance with s 81A(b1)(ii) in the following terms: In accordance with Section 81A(4)(b1)(ii) of the EP&A Act and in my capacity as the PCA [Principal Certifying Authority] for the subdivisional works you are advised that you shall nominate a full-time representative, on site, who has authority to request inspections and to deal with site instructions from the Principal Certifying Authority's representative as and when required. Notice should be given to the Principal Certifying Authority's representative (Lynn Gray) on telephone […] or […] ….

The notice then lists the stages at which notice of inspections are to be given as follows: a) Sediment Control -Upon initial erection of sediment control devices and prior to all other works; -Upon erection of subsequent stage sediment; -Controls nominated in the Land Management Plan; -Upon completion of stormwater drainage; and -Final inspection. b) Earthworks -Subgrade prior to laying of fill; and -Final inspection.

c) Road Construction -Subgrade prior to laying of sub-base; -Sub-base prior to laying kerb and or gutter; and -Final inspection.

d) Footpath/ -Subgrade prior to laying of base course; Cycleways -Base course prior to laying of formworks; -Formwork enforcement before placing concrete; -After installation of curing methods; and -Final inspection.

e) Stormwater - Trench and Bedding prior to laying of pipes; Drainage -Pipes prior to backfill; -Pits prior to backfill; -Backfill prior to capping; and -Final inspection.

g) Retaining Walls -Foundation material prior to laying of rocks; -Subsoil drainage pipes prior to backfill; and -Final inspection.

h) Asset Protection -Prior to the removal of vegetation; and Zone -Final inspection.

17 The approval granted by the Minister was subject to a condition that the development shall be in accordance with a statement of commitments prepared by Planning Workshop Australia. Paragraph A.5.7 of the statement of commitment is of particular relevance: A.5.7. The subdivision works will be inspected during construction by the Principal Certifying Authority, or other suitably qualified person(s) at the discretion of the Principal Certifying Authority, and documentary evidence of compliance with the terms of this consent and relevant Construction Certificate(s) will be obtained prior to proceeding to the subsequent stages of construction, such inspections and documentation will be arranged at not less than the following key stages....

a) Sediment Control -Upon initial erection of sediment control devices and prior to all other works; - Upon erection of subsequent stage sediment controls nominated in the Land Management Plan; -Upon completion of stormwater drainage; and -Final inspection.

b) Earthworks -Subgrade prior to laying of fill; and -Final inspection. c) Road Construction -Subgrade prior to laying of sub-base; -Sub-base prior to laying kerb and/or gutter; -Kerb and/or gutter prior to laying base course; -Base course prior to Benkleman Beam testing; -Base course immediately before prime sealing; -Prime seal prior to laying AC wearing surface; -Footpaths prior to turfing; and -Final inspection. d) Footpaths/ -Subgrade prior to laying of base course; cycleways -Base course prior to laying of formwork; -Formwork/reinforcement before placing concrete; -After installation of curing methods; and -Final inspection.

e) Stormwater -Trench and bedding prior to laying of pipes; drainage -Pipes prior to backfill; -Pits prior to backfill; -Backfill prior to capping; and -Final inspection. f) Access handles -Subgrade prior to laying of base course; -Base course prior to laying of formwork; -Formwork/reinforcement before placing concrete; -After installation of curing methods; and -Final inspection. g) Landscaping -Prior to initial site works for each stage; -Prior to any works within Public Reserves; -Prior to removal of any trees outside the construction zone; -Prior to commencement of landscape works; -Final inspection; -6 months post final inspection; and -At the completion of the maintenance period. h) Asset Protection -Prior to the removal of any vegetation; and Zones -Final inspection.

18 A comparison of the notice given by Mr Gibson on 19 August 2007 and of par A.5.7 of the statement of commitments discloses two things. Firstly, the notice given by Mr Gibson of the inspections required by him as principal certifying authority does not include all the inspections required by par A.5.7 of the statement of commitments. Secondly, par A.5.7 states that the subdivision works will be inspected during construction "by the Principal Certifying Authority, or other suitably qualified person(s) at the discretion of the Principal Certifying Authority". 19 Mr Gibson appointed Mr Lynn Gray of Lynn Gray & Associates to carry out most of the required inspections. Mr Gray is not and was not an accredited certifier and was not, therefore, a person authorised under s 109D(1)(d) to issue subdivision certificates. That section relevantly states: (1) Subject to subsections (2) and (3), the following kinds of Part 4A certificate may be issued by the following kinds of persons: ... (d) a subdivision certificate may be issued: ... (iv) in the case of subdivision of a kind identified by an environmental planning instrument as one in respect of which an accredited certifier may be a certifying authority, by an accredited certifier. 20 The role of a principal certifying authority is also described in s 109E(3), which relevantly states: (3) A principal certifying authority for building work or subdivision work to be carried out on a site is required to be satisfied: ... (d) that building work or subdivision work on the site has been inspected by the principal certifying authority or another certifying authority on such occasions (if any) as are prescribed by the regulations and on such other occasions as may be required by the principal certifying authority, before the principal certifying authority issues an occupation certificate or subdivision certificate for the building or work, and (e) that any preconditions required by a development consent or complying development certificate to be met for the work before the issue of an occupation certificate or subdivision certificate have been met, before the principal certifying authority issues the occupation certificate or subdivision certificate. 21 The person who carried out the bulk of the required inspections, Mr Gray, reported to Mr Gibson in writing on 14 July 2008 on the results of these inspections. On 21 July 2008, Mr Gibson purported to issue the subdivision certificates. In doing so Mr Gibson relied on Mr Gray's inspections. Discussion 22 It is clear, in my opinion, that the subdivision certificates issued by Mr Gibson are invalid. I am of this opinion for the following reasons:

(a) There is no power of delegation by an accredited certifier under the Act.

(b) A limited power of delegation is contained in cl 162A of the Environmental Planning and Assessment Regulation 2000 , but it only enables delegation to another certifying authority. That regulation relevantly states: (2) Except as provided by subclause (3), the critical stage inspections may be carried out by the principal certifying authority or, if the principal certifying authority agrees, by another certifying authority.

(3) The last critical stage inspection required to be carried out for the class of building concerned must be carried out by the principal certifying authority. (c) Similarly, cl 162B states: (1) A principal certifying authority and each other certifying authority must make a record of each critical stage inspection and any other inspection carried out because it was required by the principal certifying authority under section 109E (3)(d) of the Act carried out by the principal certifying authority or other certifying authority. (2) Any certifying authority who is required to make such a record but is not the principal certifying authority for the work concerned must forthwith provide a copy of the record to the principal certifying authority for the work.

(d) Similarly, s 109E(3) of the EP&A Act , noted in par [20] above, draws a distinction in sub-ss (3)(d) and (e) between the role of a "principal certifying authority" and "another certifying authority", but nevertheless requires inspections to be carried out by a certifying authority.

(e) Although Mr Gray's report of 14 July 2008 contains a record of each critical stage inspection and all other inspections which he carried out, this does not satisfy cl 162B(1) of the Regulation because Mr Gray was not either "a principal certifying authority" or "another certifying authority", but it nevertheless requires inspections to be carried out by a certifying authority.

(f) A "certifying authority" is defined in s 4(1) of the EP&A Act as meaning a person who: (a) is authorised by or under s 85A to issue complying development certificates, or (b) is authorised by or under s 109D to issue Pt 4A certificates. Mr Gray was not so authorised.

(g) To the extent that par A.5.7 of the statement of commitments authorises inspections by " other suitably qualified person(s) at the discretion of the principal certifying authority ", the reference to " other suitably qualified person(s) " could only be a reference to another certifying authority. A person granting an approval or consent to carry out development under the Act does not have power to avoid the requirements of the Act by imposing conditions which have the effect of doing so.

(h) The Building Professionals Act 2005 which provides for the accreditation of certifiers for the purposes of the EP&A Act not only sets out the requirements for accreditation, but provides that accredited certifiers are subject to investigation and may have their accreditation suspended, removed or made subject to conditions (Pt 3). Importantly, they are obliged to carry out professional indemnity insurance: s 63. Once accredited, certifiers must comply with a code of conduct, avoid conflicts of interest and undertake continuing professional development each year. Under s 21 of the Building Professionals Act , a person may make a complaint to the Building Professionals Board against an accredited certifier in respect of his or her professional conduct. I agree with the council's submission that to adopt a reading of the provisions which permits an accredited certifier to delegate his obligations to an unaccredited person would permit certifiers and developers to sidestep all of the machinery of professional qualification, suspension and insurance.

(i) The fact that an accredited certifier under the Building Professionals Act must be an individual and not a corporation, suggests that the duties of accredited certifiers must be carried out personally by the person so accredited. 23 I note, however, that Mr A M Pickles, appearing for Northern Residential, relies upon the following submissions, as I understand them. 24 Firstly, Mr Pickles relies upon s 75S of the EP&A Act, noted in par [14] above, which defines a relevant provision for the purposes of that section is ss 81A, 109M, "or any other provision of this Act relating to the issue of subdivision certificates": sub-s (1A). That section goes on to state that a relevant provision applies to an approved project, other than a critical infrastructure project, in the same way as it applies to development subject to a development consent, "subject to any necessary modifications and any modifications prescribed by the regulations": sub-s (1). There are no relevant modifications prescribed by the regulations. Mr Pickles accepts, and I agree, that the reference in sub-s (1A) to "any other provision of this Act relating to the issue of subdivision certificates" necessarily includes a reference to s 109E(3). 25 Mr Pickles next submits that the approved project in the present case - the Minister's approval of the subdivision - has the effect of modifying s 109E(3) so that it has no work to do in relation to this approval. The submission proceeds that this must be so because the approval itself specifies the inspections to be carried out and it also specifies who is to undertake them - see par [17] above. That is, s 109E(3) must be read down consistently with the necessary modification brought about by the terms of the approval. 26 I do not accept the submission. The modification of s 109E(3) is not "necessary" within the meaning of s 75S(1). The terms of the approval can be given effect without the need to modify s 109E(3). A statutory requirement cannot be avoided or overridden by a condition of approval. However, if there was power to do so and an express statutory requirement was not intended to apply, then it would require clear and express words to that effect, and there is nothing in s 75S(1), or elsewhere, which says that s 109E(3) can be overridden. 27 Secondly, Mr Pickles submits that the inspections required by the approval are not those which are covered by s 109E(3), which is concerned only with inspections prescribed by the regulations - there are none - and inspections required by the principal certifying authority. In the present case it is submitted that there are no such inspections because Mr Gibson didn't require any independently of those in the approval - that is, the only inspections that were carried out were those required by the approval. 28 Again, I do not accept the submission. The evidence is to the contrary. Mr Gibson's letter to the contractor of 19 August 2007, noted in par [16] above, clearly states that it is given in accordance with s 81A(4)(b1)(ii) of the Act - and that is the sub-section which states that the principal certifying authority must notify the person having the benefit of the consent of "any initial stage inspections and other inspections that are to be carried out in respect of the subdivision work". The express reference to s 81A (4)(b1)(ii) and the listing of the inspections of which notice has to be given clearly means that those are the inspections required by the principal certifying authority to which s 109E(3) applies. The fact that the inspections required by Mr Gibson duplicate some (but not all) of the inspections required by the approval does not mean that s 109E(3) does not apply. 29 The next question is whether a declaration of invalidity should be made. In Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, the majority of the High Court accepted, at [93], the criticism by the New South Wales Court of Appeal in Tasker v Fullwood (1978) 1 NSWLR 20 at 24, of the continued use of "the elusive distinction between directory and mandatory requirements". The High Court went on to say: "A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid". The majority of the High Court (McHugh, Gummow, Kirby and Hayne JJ) said at [91]: An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends on whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition. 30 In Sharples v Minister for Local Government [2008] NSWLEC 328, Biscoe J reviewed a number of cases in which a breach of a statutory provision has been held to result in the invalidity of the act done in breach of the provision, or not to result in the invalidity, as the case may be. In these cases it has been necessary, consistently with the approach of the High Court in Project Blue Sky, to have regard to the language or intention of the particular legislation. I respectfully adopt Biscoe J's reliance, at [85], on what McHugh JA said in Woods v Bale (1987) 7 NSWLR 560 at 577 (in reliance on the line of authority approved in Project Blue Sky): Speaking generally, I think that, at the present time, the proper approach is to regard a statutory requirement, expressed in positive language, as directory unless the purpose of the provision can only be achieved by invalidating the result of any departure from it, irrespective of the circumstances or resulting injustice … (Emphasis added.) 31 In my opinion, the legislative purpose of the statutory scheme for the certification of development in Pt 4A of the EP&A Act can only be achieved by invalidating the subdivision certificates. I have come to this view for the following reasons:

(a) The provisions of s 109E(3)(d) and (e) are prescriptive and have a rule like quality which leaves no room for any flexibility. A principal certifying authority is " required to be satisfied " that the building work or subdivision work has been " inspected by the principal certifying authority or another certifying authority… " before the principal certifying authority issues a subdivision certificate.

(b) Similarly, cl 162A(2) of the Regulation has a prescriptive or rule-like quality which leaves no room for any flexibility: " the critical stage inspections may be carried out by the principal certifying authority or, if the principal certifying authority agrees, by another certifying authority " - and the last critical stage of inspection is " required to be carried out " by the principal certifying authority in accordance with cl 1612A(3) of the Regulation.

(c) Again, cl 162B(1) also has a prescriptive or rule-like quality: " a principal certifying authority must make a record of each critical stage inspection… "; and likewise cl 162B(2), which refers to inspection by any certifying authority who is not the principal certifying authority.

(d) These obligations are created by legislation and not by some administrative determination.

(e) The requirement that a certifying authority, other than the council or the Crown, must be an accredited certifier means that the protection afforded by the Building Professionals Act , noted in par 22 above, would be lost if any other person who was not an accredited certifier could perform the duties of an accredited certifier.

(f) There is no express or implied power of delegation by an accredited certifier to a person who is not an accredited certifier.

(g) The invalidity of the non-complying conduct is both necessary and desirable to ensure compliance with the statutory requirements. That is, to refuse to invalidate the construction certificates would defeat the statutory purpose and statutory protections relating to inspections by accredited certifiers. 32 In Carriage v Stockland Development Pty Ltd (No.7) [2004] NSWLEC 148, Pain J held, on the facts of that case, that it was not reasonably open to a principal certifying authority (an accredited certifier) to issue construction certificates for part of a residential subdivision. Her Honour made declaratory orders that the construction certificates were invalid. 33 In the present case, for the reasons in par [31] above, I consider that it is appropriate to make declaratory orders that the subdivision certificates are invalid.

Discretionary considerations 34 Notwithstanding a finding that the subdivision certificates may be invalid, Mr Pickles submits that in the exercise of the court's discretion, no declaratory order should be made, neither should any consequential relief be granted. 35 Mr Pickles relies upon the council's knowledge that Mr Gray was doing the inspections, and the fact that the council never raised any concern that Mr Gray was not an accredited certifier. Mr Gray's inspection reports show that Mr Gray had a telephone discussion with the council's works manager, Mr Peter Ray on 2 April 2008 regarding footpath crossfalls, and again his inspection report of 4 April 2008 notes an advice received from the council regarding tolerances of footway kerb ramps. The report of 4 April 2008 shows that Mr Gray discussed the issue of turf variety with Ms Deborah Law, the council's landscape architect. A search by the council on 29 July 2008 of the list of accredited certifiers of the Building Professionals Board shows that Mr Gray is not an accredited certifier, so that the council must have known by then of Mr Gray's status but did not raise any concern. 36 Mr Pickles also submits that there would be no utility in granting the relief sought by the council: although not an accredited certifier, Mr Gray is an engineer and, as disclosed by his inspection reports, in carrying out the inspections he issued site instructions to the contractor from time to time requiring compliance with relevant standards of construction. There is no suggestion that any of the roads or drainage have not been constructed in accordance with consent or are otherwise inadequate or substandard. 37 Finally, Mr Pickles submits that if the subdivision certificates are declared void, there is no means by which the inspections can be done again (by an accredited certifier) because they are required to be done during the staging of the works. There is no ability on the part of the proponent to get a further subdivision certificate for the work that has been done. The council's only complaint is the identity of the person who did the inspections. 38 I do not accept Mr Pickles' submissions. As to the extent of the council's knowledge of Mr Gray's status, the search of the Building Professionals Board website in the council's records is dated 29 July 2008. I conclude that the council's knowledge of Mr Gray's status can only be inferred as from that date. I do not, therefore, regard the council's lack of action before then as disentitling conduct. 39 Moreover, as Mr T F Robertson SC, appearing for the council, observed: We were not present on those occasions that my learned friend instanced as occasions when an officer of the council was phoned - they all seemed to be telephone calls - and asked about regulatory requirements. Well of course, the fact that someone phoned us off a development site and asked an officer of council about the regulatory requirement for the construction of pavement, or the slope of footway kerb ramps or the tolerances for footway kerb ramps, seems to us to be completely anodyne. It's the kind of question that one envisages council officers are asked every day of the week and the identity of the person asking the question has no meaning except its someone who's involved in a development project. There's nothing in any of these conversations that suggest it is in the context of Mr Gray asserting to council that he was the principal certifying authority and that the purpose of the call was to give council notice.

These observations are, it seems to me, a complete answer to Mr Pickles' submissions noted in par [35] above. 40 Moreover, the subdivision certificates are dated 21 July 2008, which is before the date of the council's search of the list of accredited certifiers, and the council promptly commenced the proceedings in this court on 12 August 2008, so that it could not be said that the council did nothing upon discovering the fact of Mr Gray's non-accreditation. Importantly, in the absence of such evidence, there is nothing in the evidence which suggests that the council knew that Mr Gray was not an accredited certifier when he was doing the inspections. 41 I do not accept the submission that the granting of the relief sought by the council would be of no utility. There has been a clear breach of s 109E(3)(d) of the EP&A Act. The utility to be served by granting the relief sought would be the enforcement of the Act. To do otherwise would mean that in this and in other cases of a like nature the Act would not be enforced. Mr Gray may well be a duly qualified engineer, but unless he is the holder of a certificate of accreditation issued by the Building Professionals Board under the Building Professionals Act, he is not qualified to perform the tasks that he did. 42 Finally, as Mr Robertson submits, the requirements for inspection and certification by accredited certifiers is an important legal audit, which would be set at nought if the relief sought by the council were to be refused. The requirements are in the interest of the public, in the interest of persons who subsequently take title to the allotments provided by the subdivision, and in the interest of public authorities who take title to the infrastructure and who will have the obligation of maintenance of the system. It does not seem to me that such fundamental requirements can be set aside.

Conclusion 43 Having regard to the considerations outlined above, there will be a declaration that the subdivision certificates issued by Mr Gibson or alternatively by T G Gibson Pty Limited are invalid. In relation to the Supreme Court proceedings which have been transferred to this court, there will be orders restraining the Registrar-General from registering the relevant deposited plans and associated instruments, and an order restraining the Registrar-General from registering any plan of subdivision to which the relevant subdivision certificates have been attached. 44 The orders are as follows:

LEC No. 40792 of 2008

1. The court declares that subdivision certificates 420/08, 421/08, 422/08 and 423/08 purportedly issued by the second defendant, Terry G Gibson, or alternatively the third defendant, T G Gibson Pty Limited, on or about 21 July 2008 for the subdivision of the land known as lot 2 in deposited plan 534168 and lot 11 in deposited plan 1044935 owned by the first defendant, Northern Residential Pty Limited, are invalid and of no effect.
2. The question of costs is reserved.
3. The exhibits may be returned

LEC No. 41128 of 2008 and SC No. 5619 of 2008

1. Note that the Supreme Court proceedings 5619 of 2008 have been transferred to this court for determination.
2. Order that the second defendant, the Registrar-General of New South Wales, be restrained from registering deposited plans 270583, 286153, 286154 and 286155, their associated section 88B instruments, community management statement (deposited plan 270583), neighbourhood management statements (deposited plans 286153, 286154 and 286155) and neighbourhood development contracts and dealing number AE 295841.
3. Order that the second defendant, the Registrar-General of New South Wales, be restrained from registering any plan of subdivision to which any of the subdivision certificates 420/08, 421/08, 422/08 and 423/08 have been attached, or any registrable documents associated with such certificates.
4. The question of costs is reserved.

I hereby certify that the preceding 44 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

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.