North Sydney Council v Harris Farm Markets Pty Limited

E: Expert Evidence

1. Mossemenear opined (affidavit 24 October 2016, EB, tab F, fol 222, pars 9 and 12) that; 1. for development involving internal building alterations to be complying development for the purposes of the Code, it must satisfy all of the development standards in cl 5.2 of the Code; and 2. a reasonable certifying authority could not have been satisfied that the development covered by CDC1 and CDC2 satisfied all of the cl 5.2 standards, nor that the change of use purportedly authorised by the CDC either (a) was a change specified in cl 5.3, or (b) satisfied all the development standards in cl 5.4.
2. He also opined (fol 223, pars 16, and 17, as amended) in respect of an increase in GFA: 16 The alterations purportedly authorised by CDC 1 and CDC 2 increase the gross floor area of tenancy CG-02 by removing cool rooms located within that tenancy and replacing them with retail display areas. These alterations are shown in approved drawing CDC 03 in CDC 1 and drawing CDC 02 in CDC 2. 17 Cools rooms are a type of plant room and as such are excluded from the matters required to be included when calculating gross floor area of a building. By contrast, retail display areas are included in the calculation of gross floor area. At the time that CDC 1 was issued, the words "except if the increase is required for the alteration to comply with the Premises Standards" did not appear in cl 5.2(1)(c). The absence of those words at the time CDC 1 was issued does not affect my opinions regarding CDC 1.
3. He further opined (fols 223 - 227), in respect of the Council's FAPOC, especially par 13 (CB fols 10 - 12): Conversion of areas excluded from Gross Floor Area ... 20 In my opinion, the alterations to the building authorised by CDC 1 and CDC 2 convert areas referred to in clause 5.2(1)(d). 21 As stated above, CDC 1 and CDC 2 purport to authorise alterations that convert an area that is excluded from the measurement of gross floor area by removing cool rooms located within tenancy CG-02 and replacing them with retail display areas. Loading dock ... 23 [Paragraph 13(c) of the FAPOC] refers to clause 5.2(1)(h) of the Commercial and Industrial Alterations Code which provides: (h) if the alteration involves a loading dock, the alteration must not: (i) reduce the number or capacity of the trucks accommodated, or (ii) reduce the area for goods handling, or (iii) reduce the area for waste handing (including any recycling area), or (iv) reduce the manoeuvring area of the loading dock or access driveway 24 In my opinion CDC 2 purports to authorise alterations that reduce the area for goods handling in the loading dock by relocating the retail garbage area (so as to make room for dry storage) to an area that would otherwise be for goods handling, as shown in the Proposed Basement Plan (Drawing CDC 04). Not a specified change of use ... 26 The change of use purportedly authorised by CDC 2 is: A change of use of tenancy CG01 from a fruit and vegetable market and a change of use of tenancy CG02 from a fresh produce outlet to a supermarket within CG01 & CG02. 27 I note that clause 5.3 of the Commercial and Industrial Alterations Code only specifies a "change of use from an existing use specified in a category in Column 1 of the Table ... to a use specified in the corresponding category in Column 2 of that Table." 28 In my opinion, nothing in the Table referred to in clause 5.3 authorises a change of use of two premises to enable them to be operated as a single business or operation, or a change of use from a "fruit and vegetable market" to a "supermarket" or a "fresh produce outlet" to a "supermarket". In my opinion, the change of use described in CDC 2, if it is to be understood as authorising the operation of CG-01 and CG-02 as a single business or operation, is not a change of use specified in clause 5.3. Contravention of existing condition of consent related to traffic generation and parking ... 30 [Paragraph 13(d) of the FAPOC] refers to clause 5.4(1)(g) of the Commercial and Industrial Alterations Code which provides: the new use must not cause the contravention of any existing condition of the most recent development consent (other than a complying development certificate) that applies to the premises relating to hours of operation, noise, car parking, loading, vehicular movement, traffic generation, waste management or landscaping, 31 In my opinion, the new amalgamated use approved under CDC 2 will cause a contravention of Condition I5 of the Consent applying to the Site. Condition I5 provides: Amalgamation of Tenancies The approved tenancies number CG-01, CG-02 and CG-03 as identified on Ground Floor Plan number A2.04 dated May 2006 ... shall not be amalgamated (Reason: To ensure the size of the tenancies remains consistent with the objectives of the Residential D Zone). 32 The objectives of the Residential D Zone under LEP 2001 when Condition I5 were imposed were: (a) encourage a wide range of services and shops which serve the surrounding residential neighbourhoods, and (b) permit a range of small scale business which serve local needs, and (c) encourage active street life while maintaining high residential amenity, and (d) encourage shop top housing. 33 In my opinion, a planning consequence of "small scale neighbourhood shops" and "small scale businesses which serve local needs" is that traffic generation and parking demand is lower than for larger scale developments. 34 In the decision granting consent subject to Condition I5 (amongst other conditions), Commissioner Hoffman of this Court made various observations relating to the need to prevent tenancies CG-01 and CG-02 being operated together as a single supermarket and referred to "numerous assurances" given by the applicant for consent that they would not be operated together: ... 35 Having regard to the nature of the zone objectives, and the decision of Commissioner Hoffman, in my opinion Condition I5 is a condition "relating to" traffic generation and parking because one of its effects is to limit traffic generation and parking and restrict any supermarket type use to tenancy GC-01 (sic - CG-01) that has adequate parking provision at the higher rate. Condition I5 was imposed as a result of, amongst other things, concerns about the traffic impacts of GC-01 (sic - CG-01) and GC-02 (sic - CG-02) being amalgamated. 36 In my opinion, if the change of use authorised by CDC 2 is understood to permit the operation of the two tenancies as a single business or operation then it will contravene Condition I5. Car parking ... 38 [Paragraph 13(e) of the FAPOC] refers to clause 5.4(1)(h) of the Commercial and Industrial Alterations Code, which provides: (h) car parking must be provided: (i) in accordance with any existing condition relating to car parking that applies to the use of the land, or (ii) if there is no existing condition relating to car parking either: (A) in accordance with any relevant requirements contained in an environmental planning instrument or development control plan applying to the land, ... 39 At the time the Consent was granted overall parking within the Centre was assessed as adequate under the NSDCP 2002 on the basis of tenancy CG-01 at 4 spaces per 100m² (on the basis that it was classified as a supermarket) and tenancy CG-02 at 1 space per 100m² (on the basis that it was a retail shop). Parking was also considered specifically for the child care centres on the site in Building C. Additional parking was allowed by the Court in response to a Section 96AA application when it was envisaged that tenancy GC-01 (sic - CG-01) was likely to be a Fruit and Vegetable shop. ... 40 As is apparent from those documents, the Court had considered parking at the rate of 10 spaces for the child care centre; 22 spaces for level 1 and 2 at 1 space per 100m²; 36 spaces for the ground floor tenancies assuming half of the area is used as cafe/restaurant (1 space per 50m²) making a total of 68 spaces. With the largest ground floor tenancy (CG-01 at 480m²) used as a fruit market then 48 spaces would be required for the ground floor (12 more than the 36 originally provided for) and a total of 80 spaces for non-residential uses. 41 The new amalgamated use will involve tenancy CG-02 being assessed at the higher rate of 4 spaces per 100m² which is the applicable rate for a supermarket under Section 10 - Car parking & Transport of NSDCP 2013, requiring 7 additional parking spaces that are not available. The current parking provisions require a general rate of 1 space per 100m² for non specified uses in the B1 Neighbourhood zone, with a different rate for a specified use. Supermarkets are specified at 4 spaces per 100m²; Food & Drink premises are specified at 1 space per 50m². 42 In my opinion, the change of use purportedly authorised by CDC 2 will have the effect that car parking will not be provided in accordance with any existing condition relating to car parking or in accordance with any relevant requirements contained in an environmental planning instrument or development control plan applying to the land.
4. Mossemenear adhered strongly to his expert opinions, and to all his other evidence, in the face of searching cross-examination by Mr Rigg (T06.03.17, pp44 - 57). In fact, I found his responses totally unhelpful to HFM's case.

F: Competing Positions and Submissions on the "Real" Issues

Council' submissions

1. Council's position in the case is (T06.03.17, p14, L50 - p15, L3) that HFM failed in its "amalgamation" endeavours when it pursued the "planning merits route", so it sought to pursue the same result through the CDC process, HFM's objective being (Tp20, LL5 - 10) to have the SEPP construed, and applied, such that two shops could be converted to one large shop (i.e. a supermarket - see T06.03.17, p17, L47).
2. As noted in Mr Hutton's written submissions (par 2), HFM sought to effect the amalgamation under the CDCs which: ... purportedly permitted the refurbishment of the two tenancies in a manner that will see them operate as a single retail business or operation and, in the case of the Second CDC, purports to permit "[a] change in use of tenancy CG-01 from a fruit and vegetable market and change in use of tenancy CG-02 from a fresh produce outlet to a supermarket within CG-01 & CG-02".
3. After dealing with the CDCs in his opening submissions, Mr Hutton said (T06.03.17, p20, LL3 - 16) that what HFM attempted was not only "very unusual", but "way beyond power": ... So a change of use of tenancy 01 from a fruit and vegetable market, and a change of use of 02 from a fresh produce outlet- and these are the critical words - "to a supermarket within both tenancies". "A supermarket within", so by those words, it seems to be attempted to say, "We're going to amalgamate them both." Now, we say that's what you can't do because that's not changing one shop to a medical centre, or business premises, or something else - it's changing two shops into one shop. And there's nothing in the Codes SEPP that says you can do that and I'll come to the reasons why we say one would not construe the Codes SEPP so that you can do that.
4. In respect of Real Issue 1 - the correct construction of condition I 5 - Council contends (subs pars 21 - 22) that, properly construed, it prohibits amalgamation of "any two or more" of the three relevant tenancies (CG01 - 03), c.f. only all three of them, into a "single amalgamated use".
5. Mr Hutton relied (par 23) upon the general principles of construction for conditions of consent, as summarised by Pepper J in Agricultural Equity Investments Pty Ltd v Westlime Pty Ltd (No 3) ("Westlime") [2015] NSWLEC 75, at [93] (citations omitted): (a) consents are to be construed, "not as documents drafted with legal expertise, but to achieve practical results" ... ; (b) consents are to be construed fairly and liberally, with the meaning of their text to be determined objectively, having regard to the context in which the consent was issued, and taking into account the fact that, unlike a contract, a consent operates in rem and is for the benefit of subsequent owners and occupiers, as well as for the applicant ... ; (c) as a general rule, a development consent should be construed without reference to extrinsic evidence other than to identify a thing or place referred to in it ... ; (d) plans and other documents may be incorporated in a development consent expressly or by necessary implication ... ; (e) a mere reference in a development consent to another document, such as a development application, will not usually be sufficient to incorporate that document into the consent ... However, if a development consent expressly incorporates another document, or part of it, or if a document is attached to a development consents or referred to in it for the purpose of identifying or describing something dealt with in the consent, this will generally be sufficient for the purposes of incorporation ... ; and (f) the words of a development consent have the meaning that the consent authority is objectively taken to have intended them to have. Ordinarily that meaning will correspond to the grammatical meaning, but not always. The context of the words, the consequences of a literal or grammatical construction (such as absurdity or inconsistency), the purpose of the development consent, and orthodox cannons of construction may require an alternative interpretation ...
6. The Court of Appeal also held in Ross v Lane Cove Council (2014) 86 NSWLR 34, at [30], that one could "have regard to extrinsic evidence" if language is "ambiguous or susceptible of more than one meaning", and that "the primary source of extrinsic material, in a case like this where the findings and orders reflect the findings and reasoning at trial are (sic) reasons for judgment". See also subs par 25, Siminton v Australian Prudential Regulation Authority [2008] FCAFC 90, at [24], and Brown Brothers v Pittwater Council [2015] NSWCA 215, at [167].
7. As Mr Rigg argues that there is no ambiguity in condition I 5, Mr Hutton explored (T06.03.17, pp24 - 25, and 33 - 34) what the Court of Appeal has recently said about assessing whether or not there is ambiguity.
8. In a commercial contract case, Mainteck Services Pty Ltd v Stein Heurtey SA ("Mainteck") (2014) 89 NSWLR 633; [2014] NSWCA 184, Leeming JA examined Electricity Generation Corporation v Woodside Energy Ltd ("Woodside") (2014) 88 ALJR 447; [2014] HCA 7, and Western Export Services Inc v Jireh International Pty Ltd ("Jireh") (2011) 86 ALJR 1; [2011] HCA 45, and found some inconsistencies in reasoning (see [71]), preferring Woodside.
9. His Honour observed (at [74], [75], [77], [78], and [80]): 74 Secondly, very often, language when considered in its context will have a single, clear meaning. Very often, there is no dispute as to the ordinary grammatical or literal meaning of a sentence, and no dispute that that is the legal meaning. Very often, nothing in the context will come close to displacing the ordinary grammatical meaning of the legal text. "But not always": Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [78]; ... 75 The legal meaning may diverge from its literal or grammatical meaning, especially in the (self-selectingly contestable) cases that reach courts. Words do not have a "natural" meaning that can be determined in isolation. ... ... 77 For those reasons, to say that a legal text is "clear" reflects the outcome of that process of interpretation. It means that there is nothing in the context which detracts from the ordinary literal meaning. It cannot mean that context can be put to one side; otherwise the three legal texts mentioned in the previous paragraph would be "clear". 78 Thirdly, I would not regard anything in the foregoing as inconsistent with the passage in Mason J's reasons in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 352 (which was the focus of Jireh): "The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning." ... 80 Mason J was indicating that there are very real limits to the extent to which grammatical meaning can be displaced by contextual considerations. However, in order to determine whether more than one meaning is available, it may be necessary first to turn to the context.
10. A differently constructed Court of Appeal in Newey v Westpac Banking Corporation [2014] NSWCA 319 embraced Leeming JA's Mainteck analysis. Gleeson JA said (at [89]): As subsequently observed by Leeming JA (Ward and Emmett JJA agreeing) in [Mainteck] at [71], Woodside endorses and requires a contextual approach to the construction of commercial contracts and "ambiguity" is to be evaluated having regard to surrounding circumstances and commercial purposes or objects. To the extent that what was said in the reasons of three members of the High Court when refusing special leave in [Jireh] supports the contrary proposition, Jireh should be regarded as inconsistent with what was said in Woodside at [35], for the reasons explained in Mainteck at [72]-[86]. See also Stratton Finance Pty Ltd v Webb (Stratton Finance) [2014] FCAFC 110 at [41] where the Full Court of the Federal Court of Australia (Allsop CJ, Siopis and Flick JJ) agreed with the conclusion in Mainteck and with the reasons given there in elaboration at [72]-[86].
11. Mr Hutton draws from these cases (T07.03.17, p25, LL3 - 7): "If the certifier sees a development consent, he thinks it's ambiguous," well, the Court of Appeal's told him that he does need to go search out the reasons and try and understand what it says. So the sweeping submission that the certifier need not look at old consents or reasons for decision, has to be rejected.
12. If regard is had to the reasons of Hoffman C, it is clear that he was alert to Council's concern about HFM creating a single retail operation (See pars [28] - [34] of his judgment, and par 13 of Council's subs), and that condition I 5 was intended to address that concern (subs par 26) by forbidding any amalgamation among the three tenancies.
13. Conditions should be construed, if possible, to give effect to their intention: Westfield Management Limited v Perpetual Trustee Company Limited & Anor [2006] NSWCA 245, at [40].
14. If having regard to the reasons were not permissible, Council argues that the correct/proper construction of the condition, and its use of the word "and", would be to prohibit amalgamation of any two of the three tenancies, "the evident planning purpose of the condition being to prevent the creation of a shop with a floor area that is out of character with the other shops" in the project (subs 27). The word "and" can be both conjunctive and distributive (T06.03.17, p23, L7, and see DC Pearce and RS Geddes, "Statutory Interpretation in Australia", 7th ed, p52).
15. As the subject consent related to CG01 only, Mr Hutton submits that condition I 5 means that none of the three tenancies can be amalgamated with either or both of the others, the reason for the condition being to keep tenancy sizes consistent with the zone objectives (T06.03.17, p23, LL22 - 41).
16. Amalgamation of CG01 and CG02 would breach condition I 5 and hence s 76A of the EPA Act (subs 28). CG01 is already the largest, and more than double the area of CG02. Put together, they would create a tenancy vastly out of proportion to all others (T06.03.17, p24, LL6 - 14).
17. Real Issue 2 raised the question whether, despite condition I 5, the CDCs permit the contentious amalgamation of tenancies CG01 and 02.
18. Council contends that CDCs cannot relieve the beneficiary of a consent from its obligation to comply with a (key) condition of that consent, by employing the "device" of changing the use of each of the two tenancies to the "same use (i.e., in each case, Supermarket)" (subs 32).
19. Mr Hutton relies on ss 85(1)(a) ([39] above) and 76A ([36] above), of the EPA Act, plus cls 1.5, 1.15 - 1.19, and 5.1 - 5.4 ([53] - [69] above) of the Codes SEPP, to argue (subs 33 to 40) that "there is no development 'specified in a complying development code' that involves the amalgamation of two existing tenancies or commercial premises (that is, their operation as a single operation or business" (subs 36).
20. In the interests of fairness, and completeness, I now set out the Council's key specific arguments (subs 37 to 40): 37. Clause 5.3(1) of the Commercial and Industrial Alterations Code refers to "[a] change of use from an existing use specified in a category in Column 1 of the Table ... to a use specified in the corresponding category in Column 2 of the Table" but that would only enable a change of use within each of the tenancies. Put another way, a Complying Development Certificate can be used to effect a "change in use" for a commercial premises but it cannot be used to increase the area of a commercial premises or a particular use (ie, as a single business or operation) by allowing two or more commercial premises to be operated together simply by the device of changing them to the same use. 38. Similarly, clause 5.1 of the Commercial and Industrial Alterations Code states that "[a]n internal alteration of a building that is used, or is the subject of a development consent for use, for any purpose ... is development specified for this code". That clause thus permits "internal alterations" of a "building" but does not permit two separate commercial premises (in this case, tenancies CG-01 and CG-02) from being operated together. 39. The limitation on using "internal alterations" and "change of use" to effectively enlarge a commercial premises by enabling two adjacent premises to be operated together is supported by cll 5.2 and 5.4 of the Commercial and Industrial Alterations Code. Those clauses preclude a Complying Development Certificate from being issued where it will result in an increase in GFA (cl 5.2(1)(c)), or the conversion of areas excluded from the calculation of GFA ((cl 5.2(1)(d)), or reduction in the capacity of a loading dock ((cl 5.2(1)(h)), or contravention of a condition of consent relating to hours of operation, noise, parking, loading, vehicular movement, traffic generation, waste management or landscaping (cl 5.4(1)(g)) or where additional car parking is not provided (cl 5.4(1)(h)). They are all directed toward development that will result in an intensification of use. A change of use that increases the area of a commercial premises or particular use will result in an intensification of use. 40. In conclusion, then, the Council's first submission on Agreed Issue 2 is that the Commercial and Industrial Alterations Code, while authorising Complying Development Certificates for the change of use of a "premises" (see cl 5.3 of the Code) does not permit two adjacent tenancies or properties (which may be understood as "premises" for the purposes of the use) to be the subject of internal alterations and change of use so that they can be operated together as a single business (ie, amalgamated). Unless the Code is read to preclude amalgamations very substantial developments with significant planning implications could be approved by way of Complying Development Certificates amalgamating several adjacent commercial premises (if Harris Farm's position be correct, there is no need to stop at two) instead of Development Applications.
21. That argument brings Council to the conclusion that the CDCs (sub 41): ... must either be regarded as ineffective to the extent that they purport to permit such an amalgamation or be read down so as not to permit an amalgamation, consistent with the principle that an instrument is to be read down to give it legal operation where possible.
22. Council argues for the second option, given that (subs 41): ... the First CDC permits alterations to be carried out but is completely silent on use, and the Second CDC purports to authorise a change in use for each of tenancy CG-01 and tenancy CG-02 but does not, in terms, authorise an amalgamation of use (that is, it does not in terms authorise the two tenancies to be used together).
23. In the alternative, Council submits (subs 42 - 47) that a CDC cannot "wipe away" conditions of consent imposed on a development - for example, cl 5.4(g) envisages continued application of conditions.
24. Condition I 5 is a negative "stipulation or prohibition" (subs 43 and 45), which cannot be avoided by a CDC applying to the same development. The Council insists that the DC route and the CDC route are alternatives available to proponents of projects, but Council acknowledges that CDCs can be used to vary plans etc. As Mr Hutton says (pars 45 and 46): 45. ... However, there is nothing in the [EPA Act] or the Codes SEPP that suggests that Complying Development Certificates were intended to be able to be used to evade negative stipulations or prohibitions included in development consents as opposed to being able to be used to vary plans to permit internal alterations, change uses and the like. 46. As a practical matter, it is not uncommon for a consent authority to grant development consent subject to negative stipulations prohibiting certain things from being done. The regime would be subverted if a developer could accept those limitations, carry out development under the development consent, and then evade them by obtaining a Complying Development Certificate the effect of which was to permit the very thing that was prohibited in respect of the same site. The Council submits that where there is such a negative stipulation the developer must have it removed by a modification application, as was attempted in the present case although, it may be noted, Harris Farm did not appeal to this Court from the decision of the Independent Planning Panel.
25. In his oral submissions, Mr Hutton articulated six arguments in support of this conclusion. In summary, these are: 1. The certifier did not act reasonably in failing to treat the "cool room" as a "plant room". Had he done so, he would have recorded an increase in GFA and the CDC would not have been issued on the basis that the proposed alteration did not comply with cl 5.2(1)(c); 2. The change of use of the cool room space in CG02 to retail space in addition to the basement area change of use to a relocated garbage room and change of use of a garbage room to a dry storage room are all non-compliances with cl 5.2(1)(d) which prohibits the conversion of any area that is excluded from the measurement of gross floor area of the building; 3. The loading dock area is being used by a variety of Cammeray Village tenants. The alterations proposed involve the loading dock, reduce the area for waste handling and for goods handling which constitutes a non-compliance with cl 5.2(1)(h); 4. Clause 5.3 of the Codes SEPP ([64] above) does not authorise an amalgamation of two tenancies with a use in "Column 1" to one larger tenancy with a use in "Column 2"; 5. The proposed alterations do not comply with cl 5.4(g) as the new use will increase the need for car parking as well as impact on traffic generation. Condition I 5 was drafted to prevent these impacts and is therefore contravened by the proposed alterations; 6. The Certifier ought to have been satisfied that car parking would be provided in accordance with cl 5.4(h). A change of use from the fresh food outlet in CG02 to a supermarket requires car parking to be assessed at the higher rate of 4 spaces per 100m, rather than 1 space per 100m. The proposed alterations result in a deficiency of seven car spaces, therefore resulting in a non-compliance with cl 5.4(h).
26. Real Issue 3 raised the question of whether the CDCs are valid.
27. I have already noted ([27]) Council's reliance on Trives CA, and its acceptance that CDCs can, therefore, be challenged only on the basis of unreasonable opinions formed by the certifier.
28. Craig J summarized the relevant principles, in Bankstown City Council v Ramahi (No 2) ("Ramahi No 2") [2016] NSWLEC 34, at [138]: As the Court of Appeal determined in [Trives CA], on judicial review this Court cannot decide whether the proposed development was complying development as an objective "jurisdictional fact". However, it can determine whether a certifier could reasonably have held the opinion that the development proposed was complying development, correctly construing the provisions of the relevant planning instruments that specified what constituted complying development (at [14], [26], [27]-[31] and [34]). If the opinion of the certifier could not reasonably be so held, the decision or decisions made to issue the certificate or certificates are amendable to orders setting aside those decisions and, as appropriate, making remedial orders. (emphasis added in subs par 48)
29. His Honour also accepted and applied the approach taken by Biscoe J to the issue of reasonableness, in the remitter hearing following Trives CA, i.e. Hornsby Shire Council v Trives (No 3) ("Trives No 3") [2015] NSWLEC 190, at [16] - [23]: 16. A prerequisite to the exercise of the Certifier's power to issue the CDCs was that he be satisfied that the proposed structures were complying development: s 85A(3) EPA Act. 17. Where the existence of a particular state of satisfaction or opinion is made a prerequisite to the exercise of power, the legislation conferring the power is treated as impliedly referring to a state of satisfaction or opinion that can be formed by a reasonable person who correctly understands the meaning of the law under which he operates. The question for a court of judicial review is not whether the court would have formed the opinion but whether the repository of the power could have formed the opinion reasonably: R v Connell; Ex parte Hetton Bellbird Collieries Ltd (No 2) [1944] HCA 42, 69 CLR 407 at 430-432 (Latham CJ); Foley v Padley [1984] HCA 50, 154 CLR 349 at 370 (Brennan J). 18. The implication of reasonableness as a condition of a state of satisfaction or opinion required by statute as a prerequisite to the exercise of a statutory power is no different to the implication of reasonableness as a condition of the exercise of a discretionary power conferred by statute. Each is a manifestation of the common law principle of construction that such decision-making authority conferred by statute must be exercised according to law and to reason within limits set by the subject matter, scope and purpose of the statute: Minister for Immigration and Citizenship v Li [2013] HCA 18, 249 CLR 332 at [90]-[91] (Gageler J). 19. The legal standard of unreasonableness is not limited to an irrational if not bizarre decision - that is to say one that is so unreasonable that no reasonable person could have arrived at it. Unreasonableness encompasses, for example, a decision-maker misunderstanding his or her statutory obligation. What must be evident is that some error has been made in forming the opinion or state of satisfaction. A court of judicial review may infer that in some way there has been a failure to properly arrive at the state of satisfaction or opinion if upon the facts the result is unreasonable. Unreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification: Minister for Immigration and Citizenship v Li at [68]-[72], [75], [76] (Hayne, Kiefel and Bell JJ). 20. "Unreasonable" encompasses, among other things, failure by a decision-maker to obey rules requiring proper application of the law: Minister for Immigration and Citizenship v Li at [27] (French CJ). 21. The fact that the repository of the power has not made known his reasons why he was satisfied will not prevent judicial review of his decision. His decision may, on consideration of the material that was before him, be found to be capable of explanation only on the ground of misconception such as some mistake of law: Avon Downs Pty Ltd v Federal Commissioner of Taxation [1949] HCA 26, 78 CLR 353 at 360 (Dixon J). In Minister for Immigration and Border Protection v Singh [2014] FCAFC 1, 231 FCR 437 at [45], the Full Federal Court (Allsop CJ, Robertson and Mortimer JJ) said: In circumstances where no reasons for the exercise of power, or for a decision, are produced, all a supervising court can do is focus on the outcome of the exercise of power in the factual context presented, and assess, for itself, its justification or intelligibility bearing in mind that it is for the repository of the power, and not for the court, to exercise the power but to do so according to law. This was the position in, for example, Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353: see at 359-360. Where there are reasons, and especially where a discretion is being reviewed, the court is able to follow the reasoning process of the decision-maker through and identify the divergence, or the factors, in the reasons said to make the decision legally unreasonable. 22. In the present case, if upon the application of the SEPP and the LEP, correctly construed, to the clear facts the decision is plainly unreasonable, the Court should infer that the decision-maker misinterpreted, failed to address or overlooked the requirements of those instruments or that in some other way there has been a failure to properly form the prerequisite state of satisfaction. 23. Such environmental planning instruments may be construed in the light of practical considerations rather than by a meticulous process such as might be appropriate in construing an Act of Parliament: Tovir Investments Pty Ltd v Waverley Council [2014] NSWCA 379 at [54].
30. Mr Hutton noted (subs 49) that the Biscoe/Craig approach involves the following four principles: a. The legal standard of unreasonableness is not limited to an irrational if not bizarre decision - that is to say one that is so unreasonable that no reasonable person could have arrived at it. Unreasonableness encompasses, for example, a decision­maker misunderstanding his or her statutory obligation. What must be evident is that some error has been made in forming the opinion or state of satisfaction. b. A court of judicial review may infer that in some way there has been a failure to properly arrive at the state of satisfaction or opinion if upon the facts the result is unreasonable. Unreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification. c. "Unreasonable" encompasses, among other things, failure by a decision-maker to obey rules requiring proper application of the law. d. The fact that the repository of the power has not made known his reasons why he was satisfied will not prevent judicial review of his decision. His decision may, on consideration of the material that was before him, be found to be capable of explanation only on the ground of misconception such as some mistake of law.
31. In its FAPOC (pars 13 to (e)), Council gave five reasons for contending that the opinions in the CDCs in the present case were "not reasonable": 13. Further or in the alternative to paragraph 12 above if, contrary to the Council's contentions, the Court finds that CDC 1 and CDC 2 do operate to relieve any person carrying out development in tenancy CG-01 from compliance with Condition I 5 in accordance with the proper construction of that Condition as pleaded in paragraph 7, then the Council contends that either or both of CDC 1 and CDC 2 were not validly issued because: (a) in the case of CDC 1 and CDC 2, the Third Respondent could not reasonably have been satisfied that the alterations would not result in an increase in the gross floor area (GFA) of the building contrary to cl 5.2(1)(c) of the Commercial and Industrial Alterations Code; Particulars The GFA of the building is calculated by excluding, amongst other things, basement, plant room and loading space. The effect of the alterations purportedly authorised by CDC 1 and CDC 2 is to increase the gross floor area of the building by removal of the cool rooms located on tenancy CG-02 (which would have been excluded from any calculation of GFA) and replacing them with "front of house" or display areas (which would be included in a calculation of GFA); (b) in the case of CDC 1 and CDC 2, the Third Respondent could not reasonably have been satisfied that the alteration would not involve the conversion of an area excluded from the measurement of the GFA of the building including basement, plant room and loading space contrary to cl 5.2(1)(d) of the Commercial and Industrial Alterations Code; Particulars The alterations purportedly authorised by CDC 1 and CDC 2 convert areas referred to in cl 5.2(1)(d) of the building by: (i) converting the cool rooms located on tenancy CG-02, which are "plant room" as described in cl 5.2(1)(d) into "front of house" or display areas, as shown in the Proposed Floor Plan (Drawing CDC 03 in CDC 1 and Drawing CDC 02 in CDC 2); (ii) in the case of CDC 2, converting the basement, which is a "basement" as described in cl 5.2(1)(d), as shown in the Proposed Basement Plan (Drawing CDC 04); and (iii) in the case of CDC 2, converting part of the loading space in the loading dock, which is a "loading space" as described in cl 5.2(1)(d), as shown in the Proposed Basement Plan (Drawing CDC 04). (c) in the case of CDC 2, the Third Respondent could not reasonably have been satisfied that the alteration would not involve a loading dock, and reduce the area for goods handling contrary to cl 5.2(1)(h) of the Commercial and Industrial Alterations Code; Particulars CDC 2 purports to reduce the area for goods handling in the loading dock by relocating the retail garbage area (so as to make room for dry storage) to an area that would otherwise be for goods handling, as shown in the Proposed Basement Plan (Drawing CDC 04). (d) in the case of CDC 2, the Third Respondent could not reasonably have been satisfied that the new amalgamated use would not cause the contravention of an existing condition of the most recent development consent that applies to the premises relating to traffic generation, as required by cl 5.4(b) of the Commercial and Industrial Alterations Code; Particulars The new amalgamated use will cause a contravention of Condition 15 (sic). Condition I 5 is a condition "relating to" traffic generation and parking because one of its effects is to limit traffic generation and parking. (e) in the case of CDC 2, the Third Respondent could not reasonably have been satisfied that car parking would be provided in accordance with any existing condition relating to car parking or in accordance with any relevant requirements contained in an environmental planning instrument or development control plan applying to the land as required by cl 5.4(h) of the Commercial and Industrial Alterations Code; Particulars Non-residential parking within the Centre was assessed as adequate at 80 spaces under Section 9 - Car Parking - NSDCP 2002 on the basis of tenancy CG-01 at 4 spaces per 100 sq/m (on the basis that it was a supermarket) and tenancy CG-02 at 1 space per 100 sq/m (on the basis that it was non-specified non-residential floor space): see Report of Geoff Mossemenear, Executive Assessment Planner dated 10 September 2007 at pp 18-19 and Hampton Development Group Pty Ltd v North Sydney Council [2007] NSWLEC 814 (13 December 2007). The new amalgamated use will involve tenancy CG-02 being assessed at the higher rate of 4 spaces per 100 sq/m which is the applicable rate for a supermarket under both the previous NSDCP 2002 and the current NSDCP 2013, requiring at least 7 additional parking spaces that are not available.
32. These FAPOC are supported by the expert evidence of Mossemenear (including his opinion, in the context of cl 5.2(1)(c) ([124] above), that cool rooms, such as those in CG02, are plant rooms, and their area should be included in GFA (T06.03.17, 30, LL9 - 36).
33. Mr Hutton says, therefore, that the certifier could not reasonably have been satisfied that that alteration would not result in an increase in GFA (T06.03.17, p30, L46 - p31, L3). Characterisation of cool rooms as plant rooms was not accepted by Mr Rigg, but he reached agreement with Mr Hutton that if a cool room area became retail space, it would count towards GFA (T06.03.17, p34, LL21 - 24).
34. Mr Hutton also relies on Mossemenear's analysis of impacts on goods storage and goods handling areas, garbage rooms, and the loading dock (T06.03.17, pp 31 and 32).
35. In terms of cl 5.4(1)(g), the "most recent" DC which applies to the whole area affected by the CDCs is Senior Commissioner Roseth's Bluestone consent, which contains the relevant conditions on parking, traffic etc., and Mr Hutton submitted (T06.03.17, p35, L46) that there is no evidence that the certifier "even had regard to it" and (p36, LL24 - 25) "could not reasonably have formed an opinion" that car parking would be provided for a supermarket in accordance with the NSDCP.
36. Mossemenear's written and oral evidence were unshaken; the certifier respondents put on no evidence, and HFM offered no opposing expert evidence.
37. Mr Hutton's submissions relied upon Mossemenear's evidence, and he reiterated many of them when he replied to Mr Rigg's oral submissions (at T07.03.17, pp18 to 43).

HFM's submissions

1. Mr Rigg's written submissions of 3 March 2017 responded to the FAPOC, and to Mr Hutton's submissions, summarized above.
2. He commenced his oral submissions with the following remark (T07.03.17, p4, LL44 - 47): ... in this case, quite an unusual proposition is being put to the Court, that the CDC regime does not cater for or embrace the notion of an amalgamation of tenancies of the kind that's considered by the CDC, which are now in the issue before the Court.
3. He explored the notions of "development" and "subdivision" (T07.03.17, p5), and then noted (LL30 - 33) that: ... there is no relevant difference in the status of a development consent, either it being one which has been carried out pursuant to a development application, or one which has been carried pursuant to a complying development application.
4. He conceded (LL35 - 41) that the CDC regime does not embrace all the merits considerations required when a DA is lodged, but went on to submit that the Council's NSDCP would apply only where there was no pre-existing DC attaching conditions on, e.g., parking (T07.03.17, p8, LL24 - 29).
5. He rejected (T07.03.17, p11, LL9 - 12) any notion that condition I 5 of the pre-existing consent "essentially sterilises" the CG01 to CG03 arrangements.
6. On Real Issue 1 - the proper construction of condition I 5 - he submits that the condition is neither ambiguous, "nor susceptible of more than one meaning" (see [135] par 78 above). His primary submission is that the condition is irrelevant because it is not called up by any of the CDC development standards (T07.03.17, p17, LL34 - 38)..
7. He notes (par 1) that Council's expert (Mr Cullen) contended before the Commissioner that CG03 could "ultimately operate" with CG01, but that the Court should not permit all three to operate together. Paragraphs [90] and [91] of Hoffman C's judgment ([95] above) make clear that the inclusion of CG03 in condition I 5 was intentional, even though the consent related to CG01 only, and CG01 could not be amalgamated only with CG03. Condition I 5 could not preclude amalgamation of CG02 and CG03, subject to necessary consent. CG02 "must always be part of any amalgamation" (pars 2 and 3).
8. He characterised the Council's argument on the construction of I 5 as "absurd", and, submitted (par 2(4)) that: ... To avoid such absurdity the use of the word "and" and the non inclusion of words such as "each of' (sic) in condition I5 must be regarded as intentional and the condition given its normal grammatical meaning.
9. He urged the Court to find that the certifier acted reasonably "and was unconstrained by condition I 5" (par 4), and was "bound and compelled by s 85A(7) ... to issue the subject CDCs" (par 5). Condition I 5 was not a development standard within that provision.
10. Section 84A entitled HFM to carry out development in accordance with the CDCs. Condition I 5, "being a non specified type of condition under cls 5.2 or 5.4 ceased to operate from the date of the issuance of the CDCs" (par 6).
11. Mr Rigg went on to submit (par 7): The Codes SEPP is a beneficial and facultative planning instrument. The accredited certifier was not required to consider section 79C matters other than to comply with the evaluation matters specified in section 85A (3) and additionally pursuant to Section 85A (7) to also have regard to any other relevant requirements prescribed by the Environmental planning (sic) and Assessment Regulation 2000, none of which are relevant to this amalgamation issue.
12. It would have been "both unnecessary and unreasonable" for the certifier to examine Hoffman C's reasons, because condition I 5 did not relate to a matter specified as a relevant development standard under either cl 5.2 or cl 5.4(g) of the SEPP. The certifier could not reasonably be expected "to search out for answers about conditions and their true meaning in the manner suggested by Council" (par 8).
13. Moving on to Real Issue 2 - Do the CDCs authorize amalgamation of CG01 and 02, despite condition I 5? - Mr Rigg submitted that, to get orders under s 124, the Council has to satisfy the Court that a breach of the Act has occurred or will be committed (par 9), and/or that the CDCs were not authorized by the SEPP and s 85A (par 10).
14. Mr Rigg noted (par 11) that a CDC has status as a consent, and he submits that it overtakes amalgamation conditions like I 5. In any event, condition I 5 was not part of the original consent for the centre's development (par 12). It was imposed in 2008 when "shops" were a prohibited use, and compliance with the then zone objectives was mandatory (par 13). The 2013 LEP intervened, "repealing" the need for I 5, and rendering it "no longer relevant to" any assurances upon which Council relies (par 13). The only extant pre-CDC conditions of consent, which continue to apply (par 14) relate to "hours of operation, noise, car parking, loading, vehicular movement, traffic generation, waste management or landscaping".
15. Mr Rigg says (par 14) that, in view of cl 5.4(g) ([65] above), it "may reasonably be submitted that all other existing conditions cease to apply unless preserved by the Regulations (if any)".
16. Mr Rigg concludes (par 14) that condition I 5 ceased to apply to CG01 upon issuance of the relevant CDC, but it never applied to CG02, let alone to the whole centre (as he says is submitted by the Council in subs par 43).
17. Real Issue 3 concerns the validity of the CDCs.
18. Mr Rigg asserts (par 16) that "it ill behoves" Council to argue that some five opinions of the certifier were not reasonable.
19. Council's approach to the case changed over time, and its focus moved to the joinder of Bennett and City Plan, and the challenging of the CDCs.
20. Mr Rigg wants the Court to conclude that, for that period of twelve months, the Council considered, reasonably or unreasonably, that the certifier had met the requirements of the SEPP and s 85A. Council had twelve months to form its opinion, but insists that a certifier is to take only ten days.
21. On the question of whether there are errors or deficiencies in the certifier's opinions about the impact of proposed building alterations on GFA (cl 5.2(1)(c)), Mr Rigg concentrated (par 18) on (1) the removal of cool rooms from within CG02 and their replacement by "front of shop" or display areas, and (2) Council's argument that "cool rooms" should be excluded from GFA because they are "plant rooms", which are excluded from "GFA" by the Standard Instrument. (Neither category of room is defined in the dictionary to the SEPP, nor in the Standard Instrument.)
22. He argues that the certifier was reasonably entitled to form the opinion that, for the purposes of cl 5.2(1)(c), they were not "plant rooms". A cool room is used for the storage of food or drinks at a controlled temperature, and is not a room or area used exclusively for mechanical services or ducting: see Spigelman CJ in Lend Lease Real Estate Investments Ltd & Anor v GPT RE Ltd [2006] NSWCA 207, at [30].
23. He acknowledges (par 18) that, if the cool room had been located in the basement, it would probably have been regarded as "basement storage", and Council may have been correct to exclude it from GFA in those circumstances.
24. He says (par 19) that Council's arguments on other alleged "errors" or "deficiencies" would be found to be "likewise wrong". He indicated that he would demonstrate that in his cross-examination of Mossemenear, but Mossemenear was unshaken in his views.

G: Consideration

1. As Mr Hutton observed (T07.03.17, p22, L22), there is a "useful description" of the DA and CDC regimes in the Court of Appeal's decision in Trives CA (at [19] - [22]): 19 Part 4 of the [EPA Act] contains a structured scheme for the regulation of development, including the use of land and the carrying out of work on land. As the heading to Div 1 indicates, that structure depends upon a three-fold classification. First, some activities, described as "exempt development" may be undertaken without the need for consent. This case was not concerned with exempt development. Secondly, there is development that needs consent. Thirdly, there is prohibited development. Prohibited development is development which is not to be carried out on land, with or without consent. However, it is an important part of the Council's argument that development which can be carried out with consent is prohibited if carried out without consent. 20 The kinds of development which fall within each category are identified by environmental planning instruments. The relevant instruments in the present case were the Hornsby Local Environmental Plan 2013 ("the Hornsby LEP") and the [Codes SEPP]. The Hornsby LEP, like most such instruments, regulates permissible forms of development by reference to the zoning of land within the local government area and categories of development. 21 Relevantly for present purposes, there are two sets of procedures for obtaining consent where that is required. The primary procedure is that identified in Div 2, covering ss 77-83 of the [EPA Act]. This requires a development application to be made to the relevant consent authority, which is usually the local council. Different forms of development may require different steps to be taken. Thus "designated development" requires that the application be placed on public exhibition, followed by a process of public consultation. There are also special procedures with respect to "staged development". 22 Importantly for present purposes, there is a separate set of procedures with respect to "complying development", described in the heading to Div 3, as "Special procedure for complying development", to be found in ss 84-87 of the [EPA Act]. A person may carry out complying development if he or she has been issued with a "complying development certificate". This is intended to be a streamlined process available for development "that can be addressed by specified predetermined development standards". Further details as to the nature of such development are set out in the [Codes SEPP] for complying development, but the straightforward principle is that development which can be determined by reference to predetermined standards does not need to go through a discretionary process of assessment by a consent authority and the formulation of detailed conditions appropriate to the specific development.
2. The Court of Appeal went on (at [28] - [30]) to discuss s 85A ([39] above): 28 Accepting that the Council's reliance upon the use of the term "complying development" is not conclusive, it is necessary to turn to the primary arguments relied on by the applicant. These were three-fold. First, the applicant submitted that the very question (is the proposed development complying development?) was expressly identified as the first question to be determined by the certifier. That followed from the terms of s 85A(1) and (3) ... 29 The second matter relied upon by the applicant was that, in answering that question, the certifier might need to make an evaluative judgment, but it had no discretion. Thus, the certifier "must not refuse to issue a complying development certificate if the proposed development complies with the development standards applicable to it and complies with other requirements prescribed by the regulations relating to the issue of a complying development certificate." ... 30 In short, s 85A(3) required the certifier to consider the application and form an opinion as to each of the three elements identified. The obligation to issue the certificate (under sub-s (7)) must be engaged by the formation of the relevant opinion. No doubt, if the opinion were not validly formed in accordance with relevant legal requirements, the obligation would fall away; however, it makes little sense to suggest that the obligation in sub-s (7) depends upon some objective view of whether the proposed development was complying development or not.
3. Biscoe J applied these principles in his judgment (on the remitter) in Trives No 3, and Craig J also did so, later, in Ramahi (see [154] - [155] above).
4. I accept the correctness and appropriateness of those principles, and am content to adopt and apply them here.
5. Applying the development standards in the SEPP "requires judgment", or "some form of reasonable assessment" (T07.03.17, p25, LL28 - 33), by the certifier, preferably after a site inspection: The Owners Strata Plan 432 v Seddon [2015] NSWLEC 69.
6. Mr Hutton identified six deficiencies on the certifier's part, and he needs to succeed on no more than one (see [151] above).
7. Overall, I accept the arguments he put, and their basis in the evidence and opinions of Mossemenear, which I also accept. I am satisfied that Mr Hutton made good five, if not all six, of his claims, and I find that the CDCs are tainted by unreasonableness, and/or error.
8. The debate regarding the alterations and conversions necessarily came close to descending into an analysis of matters of merit, and I will not set out all of the detail into which the oral submissions delved. It must be borne in mind that the basement areas are not solely for the use or convenience of HFM. While I remain unconvinced that a "cool room" should be counted as a "plant room" when doing GFA calculations, I do not, on the other hand, accept that "goods handling" can be an acceptable use of an area of basement approved as a vehicular manoeuvring area, when there are spaces above the kerb line earmarked for the handling use (T07.03.17, p32, L34 - p33, L31).
9. I reject the suggestions by HFM that the Court must read extra words into SEPP clauses, such as 5.2(1)(d), and that cl 5.3(1) is engaged in this case, and can authorise the amalgamation. Clause 5.4(g) has clearly not been complied with.
10. I accept Mr Hutton's submission (T07.03.17, p35, LL1 - 42) that the very purpose of a clause like 5.2 is to avoid the use of CDCs to bypass the merits assessment required on issues such as those involved here, and that, if the impacts of the alterations had been inspected by the certifier, as expected by the Regulation, it would be unreasonable to conclude that they ought be approved.
11. On the construction of the disputed condition, I 5, I clearly prefer the submissions of Mr Hutton. On the basis of recent Court of Appeal authority, I do not need to find ambiguity in it, in order to construe it in its context. That context is set by Hoffman C's reasoning, and consideration of that is to be preferred to decision-making based on an abstract debate on the use of the word "and". I have no need to resort to any "extrinsic evidence" when the learned Commissioner's reasons are clear. (Compare Westlime principles (b) and (c), and note principle (f) - all in [131] above.)
12. In the final analysis, even Mr Rigg was compelled to rely upon something beyond the wording of the condition - i.e. the physical realities of tenancies CG01 to CG03 - as much as on the use of the word "and", to construe I 5. If I am in error in what I have said, I would accept Mr Hutton's contention that there is some ambiguity in the terms of I 5, as imposed, and I can, therefore, go beyond the actual wording to find its proper meaning and effect from its context.
13. Turning, therefore, lastly, to the question of discretion, it seems that all that Mr Rigg argues in favour of my refusing relief on discretionary grounds is (1) that the LEP changed after 2008, (2) that the Council adopted a late change in its approach, after Trives, and (3) that the dividing wall between the tenancies has already been removed.
14. I find no merit in those submissions.

H: Conclusion

1. I have concluded that the Council should succeed.
2. Prima facie the Court should, therefore, make declarations that: 1. Condition I 5 prohibits amalgamation of tenancies CG01 and CG02; 2. Any amalgamation of those two tenancies, contrary to that condition, would infringe s 76A(1), irrespective of either of the two CDCs; and 3. Those two CDCs are invalid and of no effect; and orders restraining the HFM respondents from effecting any such amalgamation.
3. As the Council has, therefore, been completely successful in obtaining relief generally along the lines of the amended summons on which the case was finally argued, it could ordinarily expect an order in its favour in respect of most, if not all, of its costs, on a party-party basis. However, all parties, including those who submitted, are entitled to be heard on costs, so I formally reserve the question.
4. As the active parties (Council and HFM) sought time to consider the Court's reasons, I will stand the proceedings over to enable all parties to consider these reasons, and seek to reach agreement upon orders which I could make, by consent, in chambers, to give effect to this judgment, and also resolve the question of costs.
5. If no consent orders are submitted to me by 30 June 2017, and there is thought to be a need for further argument, the case will be listed before the Registrar on Friday 7 July 2017 for further directions.
6. The exhibits will be retained until orders are finalised.

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. Decision last updated: 09 June 2017