There Was No Failure to Give Reasons by the Commissioner
46The asserted deficiency in the Commissioner's reasons is said to arise from the Commissioner's failure to articulate why the council's case was preferred over that of Norm Fletcher's. And in particular, why the evidence of Mr Logan (the council's expert heritage consultant) was preferred over that of Mr Staas (Norm Fletcher's expert heritage consultant).
47On the question of the reasonableness of the costs of restoring Camden Lodge, there was plainly conflict between the two heritage experts. Their divergent positions were summarised in their joint experts' report dated 20 June 2013, as follows:
The reasonableness of the estimated costs of restoration in relation to the heritage significance of the item
Mr Logan considers that the damage suffered by Camden Lodge both during, and in the period following, the fire has had some impact on its integrity. Nevertheless, as discussed in paragraphs 3.4 to 3.21 of his Evidence, this impact is not at a level that has removed its heritage significance.
Heritage significance is assessed under the seven criteria in the NSW Heritage Assessment guidelines, only one of which needs to be satisfied to establish heritage significance. In Mr Logan's assessment, the property satisfies at least four of the seven criteria.
It retains most aspects of its previously identified heritage significance, including its historic significance to the local government area, its historic associations, its key aesthetic attributes and social value to the local community. Other values, including its representative significance, could be recovered through reconstruction.
It would not be reasonable to allow the demolition of Camden Lodge in the current circumstances. The dwelling is readily able to be reconstructed and there are options available to the owner to defray the costs of reconstruction and bringing the dwelling back to a habitable condition.
Mr Staas considers that the assessment of heritage value is subjective in nature though it can be assisted by the Guidelines of the NSW Heritage Office Publication, assessing heritage significance. In his experience it is rare for heritage experts to agree fully on the level of significance or the relevance of certain criteria based on the inclusion / exclusion guidelines of that publication.
Based on his experience of the repair and maintenance of Federation era structures and in the reconstruction involved in severely fire damaged buildings, there are substantial costs involved because of the specialised tradesmen required which when combined with the remediation of poor foundation conditions and the need to provide for acceptable levels of finish commensurate with the economic value of the building would be unreasonable in the present circumstances.
In his opinion the more esoteric values associated with historical evolution and associations are not readily represented by the remaining damage fabric of the bungalow or that, because they are well documented, these would necessarily be lost through the demolition process.
Much of the local value of the building relied strongly on the aesthetic values of the place and its integrity as a substantially intact building of the early 20th century in a substantially intact garden setting. Reconstruction to the extent required in these circumstances does not in his opinion provide any degree of authenticity or integrity, as a large amount of the publicly perceived fabric would be a recreation of the original design and the interiors would be substantially modified.
This situation coupled with the probable cost to recreate the former appearance and setting of the house and provide for an acceptable degree of amenity and finish are not reasonable in the circumstances and do not result in any substantial social benefit to the wider community.
48In his expert statement of evidence dated June 2013, Mr Logan had noted that Norm Fletcher's quantity surveyor had estimated the cost of restoration to be in excess of $2 million, while the council's quantity surveyor considered that the cost would be less than $1 million. It was Mr Logan's opinion that the actual cost would, consistent with the council's quantity surveyor's evidence, be substantially less than $1 million in the "current economic climate". Furthermore, while even the latter amount would appear "prohibitive in most situations", it was his view that there were opportunities to recover all or most of the costs. Finally, he noted that had the property been insured, some or all of the cost of repairing the damage caused by the fire might have been recovered. Equally, he opined that the decision not to secure the roof with a tarpaulin, contrary to the requests of the council, was likely to have resulted in further deterioration of the fabric of the dwelling, and therefore, further contributed to an augmentation of the repair costs.
49During the hearing, however (as is recorded in the Commissioner's decision at [64]), Mr Logan's evidence with respect to the reasonableness of the restoration costs increased to $2 million based on his assessment of a higher heritage significance for Camden Lodge after reconstruction (elaborated upon by the Commissioner at [65]). He said (T116.28-116.41):
WITNESS LOGAN: No. Yeah. It's hard to know how to balance this and hard to know how to do the financial equation but I would have thought that if it's possible to get more than $1 million for the tennis court site and I don't know what one could get for that but is what was in mind, it might be $1 million and that could be sold, and it would also be possible to construct an addition at the rear that might add another, I don't know, three, four, $500,000 to the value of the reconstructed house. I think in those circumstances that a cost in the order - if the reconstruction cost was say $2 million, I think that would be reasonable because there are opportunities to recover a substantial amount of that. I would also say that if this house was reconstructed and the garden reconstructed it would attract a premium in terms of its resale value. There are people who would queue up to buy a place like this once reconstructed to its former appearance and that might actually realise more value than a new house of the same size. So in other words it might attract a premium.
50Understandably, Mr Logan's change of position from $800,000-$900,000 to $1 million, and subsequently to $2 million, as an estimate of what would constitute reasonable restoration costs, attracted strident criticism by Norm Fletcher during the course of the hearing before the Commissioner (T141.25-155.32) and during the course of this appeal.
51As a consequence, Norm Fletcher submitted that, "there was [a] need for the Court to consider the change of position [of Mr Logan] and then to determine the difference between the experts (T13.17-13.19)." Likewise the contention that, "it was an important part of the decision making required of the Commissioner to resolve the dispute therefore that arose... between Mr Staas' $500,000 and Mr Logan's either $2 million or if the criticism of that was accepted, substantially less than $1 million (T14.28-14.33)."
52The submission must be rejected for a number of reasons. First, it is clear from the Commissioner's reasons that she in fact accepted the complaints made by Norm Fletcher of Mr Logan's evidence (at [66]). However, she proceeded to opine that the deficiencies in his evidence were, in her view, immaterial because it was "not necessary... to quantify the amount potentially available to defray the cost of repair and reconstruction" (at [66]). The Commissioner gave reasons for this conclusion, namely, first, her acceptance of the evidence of both Mr Staas and Mr Logan that a sympathetic infill development of the site was legally possible, and that therefore, some of the costs of repair and reconstruction could be defrayed (at [66]); second, that the balancing exercise necessary to determine the reasonableness of the repair costs was not a purely arithmetic exercise (at [67]); third, that the social value or public interest in the retention of the heritage item was relevant (at [68]); fourth, that (relevant to the balancing exercise) the present owner acquired the dwelling with all its physical limitations and heritage constraints. That is to say, with knowledge that the building required "significant work"; and fifth, that the owner's failure to maintain and insure the property had increased the cost of restoration (at [69] and [70]). None of these matters were the subject of challenge by Norm Fletcher.
53Second, the Commissioner took into account the quantum of the cost of the repairs and reconstruction and found that although they would be "considerable", they would not, for the reasons enumerated above, impose an unreasonable burden on the owner in all the circumstances (at [70]). The Commissioner was, in my opinion, neither required to quantify what those costs were likely to be, nor was it necessary for her to resolve in monetary terms the contest between the two heritage experts, and therefore, to explain further why, or even if, she preferred the evidence of one expert over the other. It was sufficient, given the principal contested issue (namely, whether or not the repair and restoration costs were reasonable), for her to acknowledge that the restoration costs were likely to be significant and to then turn her mind to the question of whether or not they were reasonable. This is precisely what she did. There was no paucity in her articulation of her reasons in doing so.
54Third, contrary to the submissions of Norm Fletcher, the principal contested issue between the parties was not to accurately determine how much the restoration costs were likely to be, thereby requiring adjudication of the evidentiary dispute between the heritage experts. This posited the ultimate question too narrowly. Rather, as Norm Fletcher initially stated, the central issue for determination by the Commissioner was whether the repair and reconstruction costs would pose an unreasonable burden on the present owner of Camden Lodge. The Commissioner found, having regard to all of the factors to be weighed in the balancing exercise that she was required to undertake, including the "considerable" restoration costs, that it would not. As the consent authority in a Class 1 merits appeal she was entitled to make this finding. It was reasonably open on the evidence before her.
55Fourth, the Commissioner did not resile from her conclusion even accepting Norm Fletcher's case at its highest, that is to say, even accepting the evidence that the total cost of the repairs would be approximately $1.7 million and that the sale of part of Camden Lodge would defray "at best little of that cost". It was her opinion that given the heritage significance of the building, this cost was, in any event, not an unreasonable burden on the owner (at [70]).
56Thus while it is true that the Commissioner does not specifically say that she rejects the evidence of Mr Staas of $500,000 as a maximum of reasonable cost and thereafter expressly articulate why, she has done so implicitly, by an explicit reasoning process.
57In my opinion, the Commissioner's thought processes in dismissing the appeal were more than adequately exposed and it cannot reasonably be said that Norm Fletcher was left with any real doubt as to why it was unsuccessful. Having found no breach by the Commissioner of her duty to give reasons for her finding that "in circumstances where the building can be repaired and reconstructed so as to retain its heritage significance, and the costs of doing that work do not impose an unacceptable burden on the owner", and therefore, "demolition should not be permitted" (at [71]), this ground of appeal must be dismissed.
The Commissioner's Decision Was Not Illogical or Manifestly Unreasonable
58The council conceded, correctly, in my opinion, that this ground of appeal was, for the purpose of s 56A of the LEC Act, a question of law.
59The gravamen of this ground of appeal was summarised by Norm Fletcher as follows (T3.34-3.43):
HEMMINGS: I'm just giving some background to then go back. To suggest that the expenditure of $1.7 million to bring up to a standard that is then liveable in of [sic] the existing house on the property for which he had originally paid $2.5 million is in our submission of itself a conclusion which is irrational and illogical.
HER HONOUR: Is that the high water mark of your submission on that ground?
HEMMINGS: Yes.
60The ground was argued uniquely on the basis of unreasonableness in the sense articulated in Associated Provincial Picture House Ltd v Wednesbury Corporation [1948] 1 KB 223; (1947) 45 LGR 635 (which requires the almost intolerably high threshold of the exercise of discretionary power in making a decision to be so unreasonable that no reasonable decision-maker could make it) and was not rooted in any broader abstraction of the concept as espoused in the judgment of Dixon J in Avon Downs Pty Ltd v Federal Commissioner of Taxation [1949] HCA 26; (1949) 78 CLR 353 (at 360).
61In Minister for Immigration and Citizenship v Li [2013] HCA 18; (2013) 249 CLR 332, the High Court directed attention to the need for reasonableness in exercising a statutory discretion in order to render the exercise lawful. French CJ stated the principles in the following terms (at [26]):
26 The rationality required by "the rules of reason" is an essential element of lawfulness in decision-making. A decision made for a purpose not authorised by statute, or by reference to considerations irrelevant to the statutory purpose or beyond its scope, or in disregard of mandatory relevant considerations, is beyond power. It falls outside the framework of rationality provided by the statute. To that framework, defined by the subject matter, scope and purpose of the statute conferring the discretion, there may be added specific requirements of a procedural or substantive character. They may be express statutory conditions or, in the case of the requirements of procedural fairness, implied conditions. Vitiating unreasonableness may be characterised in more than one way susceptible of judicial review. A decision affected by actual bias may lead to a discretion being exercised for an improper purpose or by reference to irrelevant considerations. A failure to accord, to a person to be affected by a decision, a reasonable opportunity to be heard may contravene a statutory requirement to accord such a hearing. It may also have the consequence that relevant material which the decision-maker is bound to take into account is not taken into account.
62But the Chief Justice sounded this note of caution (at [30]):
30 The requirement of reasonableness is not a vehicle for challenging a decision on the basis that the decision-maker has given insufficient or excessive consideration to some matters or has made an evaluative judgment with which a court disagrees even though that judgment is rationally open to the decision-maker. Gleeson CJ and McHugh J made the point in Eshetu that the characterisation of somebody's reasoning as illogical or unreasonable, as an emphatic way of expressing disagreement with it, "may have no particular legal consequence." As Professor Galligan wrote:
"The general point is that the canons of rational action constitute constraints on discretionary decisions, but they are in the nature of threshold constraints above which there remains room for official judgment and choice both as to substantive and procedural matters. In other words, within the bounds of such constraints, different modes of decision-making may be employed."
A distinction may arguably be drawn between rationality and reasonableness on the basis that not every rational decision is reasonable. It is not necessary for present purposes to undertake a general consideration of that distinction which might be thought to invite a kind of proportionality analysis to bridge a propounded gap between the two concepts. Be that as it may, a disproportionate exercise of an administrative discretion, taking a sledgehammer to crack a nut, may be characterised as irrational and also as unreasonable simply on the basis that it exceeds what, on any view, is necessary for the purpose it serves. That approach is an application of the principles discussed above and within the limitations they would impose on curial review of administrative discretions.
63Similarly, in the joint judgment of Hayne, Kiefel and Bell JJ, their Honours said (at [66]):
66 This approach does not deny that there is an area within which a decision-maker has a genuinely free discretion. That area resides within the bounds of legal reasonableness. The courts are conscious of not exceeding their supervisory role by undertaking a review of the merits of an exercise of discretionary power. Properly applied, a standard of legal reasonableness does not involve substituting a court's view as to how a discretion should be exercised for that of a decision-maker. Accepting that the standard of reasonableness is not applied in this way does not, however, explain how it is to be applied and how it is to be tested.
64Gageler J also discussed the implied obligation on decision-makers to act reasonably (at [90], emphasis in original):
90 Implication of reasonableness as a condition of the exercise of a discretionary power conferred by statute is no different from implication of reasonableness as a condition of an opinion or state of satisfaction required by statute as a prerequisite to an exercise of a statutory power or performance of a statutory duty. Each is a manifestation of the general and deeply rooted common law principle of construction that such decision-making authority as is conferred by statute must be exercised according to law and to reason within limits set by the subject-matter, scope and purposes of the statute.
65Equally, however, his Honour emphasised the very tangible constraints on the application of this ground of review (at [108]):
108 Judicial determination of Wednesbury unreasonableness is constrained by two principal considerations. One is the stringency of the test that a purported exercise of power is so unreasonable that no reasonable repository of the power could have so exercised the power. The other is the practical difficulty of a court being satisfied that the test is met where the repository is an administrator and the exercise of the power is legitimately informed by considerations of policy.
66He therefore reiterated the stringency of its successful application (at [113]):
113 Yet the stringency of the test remains. Judicial determination of Wednesbury unreasonableness in Australia has in practice been rare. Nothing in these reasons should be taken as encouragement to greater frequency. This is a rare case.
67The decision of the Commissioner in the present case was not concerned with any alleged defective procedure, rather, an asserted flaw in the final conclusion reached by her, premised on her finding that to expend up to $1.7 million to repair a heritage item having only local heritage significance was not an unreasonable impost (at [70]). As discussed above, the focus of the Commissioner's decision was not purely quantitative, but was qualitative, concerning, as it did, a balancing exercise that had regard to the public interest of the retention of Camden Lodge as a heritage item, and the neglect of the present owner as a contributing factor in the considerable cost of restoration and repair. The Commissioner's judgment is replete with reasons for her finding that the burden of the cost of the repairs, which, in my opinion, have been articulated rationally, logically and reasonably. There is nothing in the content of either Wednesbury or Li that justifiably impugns the approach taken by the Commissioner. Neither the outcome nor the process of the Commissioner's decision is demonstrative of unreasonableness in the relevant sense. As the council pithily put it, "minds may differ. The Appellant may disagree. That is not enough."
68It follows that this ground of appeal must be rejected.
Costs
69Although the council sought its costs in its written submissions, these are proceedings in Class 1 of the Court's jurisdiction and, pursuant to r 3.7 of the Land and Environment Court Rules 2007, ordinarily there would be no order as to costs. If, however, either party seeks a different costs order, then it must do so within 14 days of the publication of this judgment, by way of notice of motion, together with any accompanying affidavit evidence in support of the application.
Orders
70The orders of the Court are therefore that:
(1)the appeal is dismissed;
(2)each party is to bear their own costs of the proceedings, unless within 14 days either party applies to the Court by way of notice of motion for an alternative costs order; and
(3)the exhibits are to be returned.