Port Stephens Council v Chan Industrial Pty Limited & Anor

Court of Appeal (NSW)|2005-07-04|Before: Giles JA, Tobias JA, Cowdroy J, Allan J, Mr J

CITATION: Port Stephens Council v Chan Industrial Pty Limited & Anor [2005] NSWCA 232

JUDGMENT OF: Giles JA at 1; Tobias JA at 2; Brownie AJA at 44

DECISION: (1) Appeal allowed; (2) Set aside the declaration and orders made by Cowdroy J on 19 November 2004; (3) Remit the proceedings to the Land and Environment Court for further consideration and determination in accordance with the decision of this Court; (4) The first respondent to pay the costs of the appellant and the second respondent in the Court below with respect to the separate question and to pay the appellant's costs of the appeal but to have with respect to the latter a certificate under the Suitors' Fund Act 1951, if otherwise qualified

CATCHWORDS: ENVIRONMENT AND PLANNING - Development consent - Whether grant of consent lawful - Whether building exceeded height limit mandated in Council's Local Environmental Plan (LEP) - Proper construction of definition of "height" in LEP - Proper approach to construction of delegated legislation - Object or purpose of the height control

Supreme Court Rules 1970 LEGISLATION CITED: Port Stephens Local Environment Plan 2000

Kingston v Keprose Pty Limited (No 3) (1987) 11 NSWLR 404 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 CASES CITED: Repatriation Commission v Vietnam Veterans' Association of Australia NSW Branch Inc (2000) 48 NSWLR 548 Hecar Investments No 6 Pty Limited v Lake Macquarie Municipal Council (1984) 53 LGRA 322

Port Stephens Council PARTIES: Chan Industrial Pty Limited Allan J Bealing

A: Mr M Craig QC / M Seymour COUNSEL: 1R: Mr J A Ayling SC / J Jagot 2R: Submitting

A: Sparke Helmore, Newcastle SOLICITORS: 1R: Cleaves, Mallik Gibbs Lawyers, Cessnock 2R: Submitting

LOWER COURT JURISDICTION: Land & Environment Court

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41065/04 L&E 40066/04

GILES JA TOBIAS JA BROWNIE A-JA

Tuesday 19 July 2005 PORT STEPHENS COUNCIL v CHAN INDUSTRIAL PTY LIMITED & ANOR Judgment 1 GILES JA: I agree with Tobias JA. 2 TOBIAS JA: This appeal concerns a single issue which is simple to articulate but tricky to resolve: namely, the proper construction of the definition of "height" (the definition) in the Dictionary (the Dictionary) to the Port Stephens Local Environmental Plan 2000 (the LEP). Its resolution is relevant to whether a development consent granted by the appellant (the Council) to the second respondent (Mr Bealing) to the erection of a building containing four residential units (the building) was lawful or unlawful. The primary judge, Cowdroy J, construed the definition in a manner which resulted in the building exceeding the height limit mandated by the LEP. Consequently, his Honour declared the consent to be invalid and of no effect: [2004] NSWLEC 650. It is against that decision that the Council appeals to this Court.

Relevant background facts 3 On or about 29 November 2002, Mr Bealing lodged a development application with the Council to erect a building upon the parcel of land known as No.78 Magnus Street, Nelson Bay (the site). The building comprised five floors, of which the lowest floor constituted basement parking and each of the remaining four floors contained a residential unit. The site was within Zone No. 2(c) - Residential "C" Zone under the LEP in which urban housing (which was defined in the Dictionary to mean housing consisting of three or more dwellings) was permissible with the consent of the Council. 4 Between 19 November 2002 and 14 October 2003, the application was amended in a number of respects not presently relevant. On 28 October 2003 the Council resolved to grant consent to the amended application (the consent). 5 On or about 21 January 2004, the first respondent (Chan) instituted a Class 4 application in the Land and Environment Court alleging that the consent was invalid on a number of discrete grounds. One such ground was that the building was in breach of clause 19(c) of the LEP which, relevantly, was in the following terms: "A person shall not erect … urban housing on land within a zone specified in the Table to this clause, unless: … (c) the height of the building does not exceed the maximum height identified for the relevant zone."

The Table to clause 19 provided that, in respect of urban housing in Zone 2(c), the maximum height was 15 metres. 6 After the hearing of the proceedings commenced before the primary judge, the parties agreed that his Honour should determine the following question separately pursuant to Pt 31 r 2 of the Supreme Court Rules 1970: Would the completed building depicted in the plans at Tab 55 in Exhibit A have exceeded 15 metres in height within the meaning of Port Stephens LEP 2000 cl 19(c) and the table thereto? 7 The primary judge answered this question in the affirmative. As a consequence it was conceded by both the Council and Mr Bealing that the consent was unlawful and ought to be declared invalid. His Honour made a declaration to that effect accordingly.

The findings of the primary judge 8 The critical issue for determination in the separate question was the proper construction of the definition of "height" in the Dictionary which was in the following terms: " Height in relation to a building, means the maximum height of the building measured vertically from the natural ground level or the finished ground level of the completed building, whichever is the lower." 9 The site had a frontage to Magnus Street on its southern boundary and to a public reserve on its northern boundary. It was approximately rectangular in shape and had an even fall of four metres from its southern to its northern boundary. That part of the building containing the four residential floors was erected upon a podium comprising carparking which extended from the eastern to the western boundary of the site and occupied approximately 80% thereof. The residential floors also stepped down the site on their northern elevations. As the natural ground level fell away relatively evenly from the southern to the northern boundary of the site, the stepping of the building was no doubt intended to ensure that the height limit of 15 metres was not exceeded. However, whether it was or not depended upon the point at ground level from which the vertical height measurement was taken. 10 Chan maintained that the "finished ground level of the completed building" was the surface of the ground immediately beneath the basement slab which was, along its whole north/south length, lower than the natural ground level. On this basis, a vertical measurement taken from the basement slab to the top of the parapet to the fourth residential level of the building resulted in a height of 15.3 metres, thus exceeding the permitted maximum. 11 On the other hand, the Council submitted that the measurement should have been taken from points along the perimeter of the building where the ground abutted its vertical external walls of the building. As the parking podium was constructed across the full width of the site, it followed that the point at which the ground met or abutted the vertical walls of the podium coincided with the natural ground level on both the eastern and western boundaries of the site. A vertical measurement taken at a point below the parapet to the fourth residential level of the building to the top of that parapet measured 14.42 metres and thus complied with the height restriction. 12 In resolving the construction issue posed by the separate question, the primary judge relied upon the following passage from the dissenting judgment of McHugh JA in Kingston v Keprose Pty Limited (No 3) (1987) 11 NSWLR 404 at 421: "Where the text of the legislative provision which embodies the proposition is grammatically capable of only one meaning and neither the context, the purpose of the provision nor the general purpose of the Act throws any real doubt on that meaning, the grammatical meaning must be taken as representing Parliament's intention as to the meaning of the law." 13 Because the primary judge considered that the definition was "clear and unambiguous", his Honour did not need to consider the following further observations of McHugh JA in Kingston, which immediately followed the above passage (omitting citations): "A court cannot depart from the grammatical meaning of a provision because that meaning produces anomalies or injustices where no real doubt as to the intention of the Parliament arises. If the grammatical meaning does give rise to an injustice or anomaly, however, a real doubt will usually arise as to whether Parliament intended the grammatical meaning to prevail … A resulting anomaly or injustice is not itself, however, a ground for departing from the grammatical meaning. Equally the natural and ordinary grammatical meaning of the provision is not decisive. … Ascertaining the ordinary grammatical meaning of a legislative provision is only the first step in the process of statutory construction. If the consequences of the literal or grammatical construction raise a real doubt as to Parliament's intent, the court is justified in refusing to give the words their literal or grammatical construction." 14 At 423, McHugh JA continued (omitting citations): "A purposive and not a literal approach is the method of statutory construction which now prevails. In most cases the grammatical meaning of the provision will give effect to the purpose of the legislation. A search for the grammatical meaning still constitutes the starting point. But if the grammatical meaning of a provision does not give effect to the purpose of the legislation, the grammatical meaning cannot prevail. It must give way to the construction which will promote the purpose or object of the Act." 15 As I have observed, the primary judge considered that the meaning of the definition of "height" was both clear and unambiguous. He therefore said (at [13]): "The measurement of height is to be taken vertically, between either the natural ground level or the finished ground level of the building (whichever is the lower) and its maximum height. In this instance the calculation of height must be measured from the ' finished ground level of the completed building ', being the floor of the basement carpark since it is the lower of the levels depicted in the plans. Accordingly, the correct level for the purpose of measurement required by the definition is the ' finished ground level of the completed building ', not the natural ground level as it existed prior to the construction of the building. The word ' ground ' means no more than ' the earth's solid surface: firm or dry land ': see Macquarie Dictionary revised 3rd ed." 16 His Honour then concluded in these terms (at [14]): "Whether such measurement is taken from inside or outside the building is immaterial, since the focus of the definition relates to the levels. The authorities relied upon by the council referred to above are not relevant because they relate to the interpretation of definitions which are fundamentally different to the definition contained in the LEP. The definition does not produce absurd results as submitted by the council. It can readily be applied to produce the intended consequence that the height of urban housing is to be restricted within the 2(c) zone to no greater than 15 metres from their lowest level to their uppermost level. It is immaterial that the finished ground level may be a basement or carpark. The definition is only directed to the completed building." 17 Although his Honour accepted a measurement between the finished ground level of the basement at RL12.12 and the highest level of the parapet wall at RL27.42, he recognised that the measurement should be taken from the surface of the ground immediately beneath the basement slab. However, it was unnecessary to determine that precise RL as the measurement from the top of the basement slab exceeded 15 metres as a consequence whereof a measurement from the surface of the ground beneath the slab would also exceed that limit.

The submissions on the appeal 18 Both parties relied upon various statements in the authorities relating to the proper approach to the construction of delegated legislation. Chan referred to the statement in the joint judgment of McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 382 [71] that "[a] court construing a statutory provision must strive to give meaning to every word of the provision." 19 It was submitted that in this context, the primary judge had failed to give any significance to the word "vertically" in the definition. It was further submitted that the requirement to measure the height of the building in a vertical plane required the measurement to be taken within the footprint of the completed building. 20 The Council relied upon the following passage from the judgment of Spigelman CJ, with whom Handley JA agreed, in Repatriation Commission v Vietnam Veterans' Association of Australia NSW Branch Inc (2000) 48 NSWLR 548 where at 575-576 his Honour said (omitting citations): "107. The Australian law of statutory interpretation requires a court to consider context in the first instance, not merely after 'ambiguity' is identified. 108. As Sir Anthony Mason put it in K & S Lake City Freighters Pty Ltd (at 315) (in dissent, but not with respect to the law of statutory interpretation): '… Problems of legal interpretation are not solved satisfactorily by ritual incantations which emphasise the clarity of meaning which words have when viewed in isolation, divorced from their context. The modern approach to interpretation insists that the context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise.' 109. In the case of words in a definition section, the context entitled to particular weight is constituted by the section or sections in which the defined words appear. …" 21 The Council also referred to the following passage from the judgment of Cripps J (when Chief Judge of the Land and Environment Court) in Hecar Investments No 6 Pty Limited v Lake Macquarie Municipal Council (1984) 53 LGRA 322 at 323: "I adopt, with respect, the observation of Lord Reid in Gill v Donald Humberstone & Co Ltd [1963] 1 WLR 929 at 933, 934 that when interpreting delegated legislation, the court ought be concerned with practical considerations rather than construing it by meticulous comparison of the language of the various provisions such as might be appropriate in construing sections of an Act of Parliament and that if that language is capable of more than one interpretation, a court ought discard the more natural meaning if it leads to an unreasonable result, and adopt that interpretation which leads to a reasonably practicable result." 22 The Council submitted that, in its context, the expression "finished ground level of the completed building" could be construed as either:

(a) the level at which the soil of the earth's surface was finished in relation to the proposed building as seen around the perimeter of the completed building where the exposed surface of the earth abutted the building and disregarding subterranean elements of the building such as a basement carpark below that level; or

(b) the unobservable level of the soil beneath the lowest foundation or pier supporting the building; or

(d) the level of the lowest floor of the building which lay above the soil of the earth's surface regardless of whether that floor was below the level of the soil of the earth's surface around the external perimeter of the completed building or not. 23 Each of these meanings, the Council submitted, was available on a literal reading of the definition. His Honour accepted the last. The fact that there were four possibilities emphasised that the meaning of the definition was neither clear nor unambiguous. In my opinion, this cannot be gainsaid. 24 The Council then submitted that in order to apply a purposive approach to the construction of the definition, it was necessary to determine the purpose or object of the height control. It was to be noted, in particular, that in the LEP that control was confined to the residential zones (clause 19) and to residential development in the environment protection zones (clause 35(1)(d)). The objectives of the residential zones (of which there were only two - Zone Nos. 2(a) and 2(c)) referred to adequate levels of privacy, visual amenity and overshading. In particular, the objectives of Zone No. 2(c) within which the site was located, included objective (c) which was "to ensure that the new development in the zone has regard to the character of the area in which it is proposed and does not have an unacceptable effect on adjoining land by way of shading, invasion of privacy, noise and the like". 25 The Council also referred to clause 44(1) of the LEP which concerned the appearance of buildings within view of any waterway or adjacent to any main or arterial road, public reserve or land zoned as open space, and clause 44(2) which related to developments on or near any ridgeline visible from a public road. In determining whether to grant consent to any such development, the Council was required by clause 44(3)(a) to consider, inter alia, the height of any building that would result from carrying out the development. 26 In light of the foregoing, the Council therefore submitted that: (a) there was no provision of the LEP which evinced an intention to prohibit or discourage underground levels of urban housing development. Although the Dictionary excluded from the definition of " gross floor area " carparking needed to meet any requirements of the Council, that exclusion did not require the carparking to be constructed beneath natural ground level;

(b) the evident object and purpose of the height control was to address the perceptible height of a building and the environmental impacts of its height and bulk such as overshadowing, overlooking or privacy and visual impact; each of those impacts could only relate to that part of the building which was above the surface of the surrounding ground: I interpolate at this point that this proposition, at least on one view of it, may beg the question;

(c) in its context and given the objectives of the control referred to, the better view was that " the finished ground level of the completed building " was a reference to the level of the surface of the ground upon which the completed building stood when constructed. This was because the phrase in question in its context directed attention to the building as it would appear to an observer when completed. Such an observer could only perceive the maximum height of that part of the building which stood above the ground level surrounding the building, as completed. 27 Taken literally, the Council's proposition did not differ from the finding of the primary judge who determined that the finished ground level of the building was the level of the ground upon which it stood, namely, the level of the ground beneath the basement slab. However, it was apparent that the reference in the Council's submission to the level of the ground upon which the completed building stood was intended to refer to the level of the surface of the ground which abutted the completed building: it being only that part of the building that was constructed above the surface of the land which would be observable to the public or adjoining owners and which would be capable of creating impacts in terms of overlooking, overshadowing and perception of building bulk. 28 In response and by reference to the majority judgment in Project Blue Sky at 381-382 [69]-[71], Chan emphasised that the primary object of statutory construction was to construe the relevant provision so it was consistent with the language and purpose of all the provisions of the statute. Accordingly, the process of construction must always commence by examining the context of the provision that was being construed. In this regard, it submitted that the objective and purpose of the height control went further than that submitted by the Council, namely, to regulate the visible height of the structure above the surface of the ground which abutted the completed building. 29 Chan accordingly submitted that a further objective of the relevant zone was that of land stability and that, in the context of the appearance of buildings located on ridges or visible from public places, particularly in an area such as Port Stephens which was said to be characterised by ridgelines and land sloping to waterways, the height control was clearly intended to discourage excavation and encourage built forms which stepped up or down the land contours. Attention was drawn to the objective in both residential zones of ensuring that the design took into account environmental constraints including soil erosion and the requirement of clause 44(3)(c) of the LEP for the Council, when determining whether to consent to the development of land within view of any waterway or adjacent to any main or arterial road, public reserve or land zoned as open space or which was on or near any ridgeline visible from a public road, to consider the likely effect of carrying out the development on the stability of the land. 30 Chan further submitted that the distinction drawn in the definition between natural ground level and the finished ground level of the completed building was illuminating in that the former looked to the land itself, whereas the latter looked to the building as completed. Accordingly, so it was submitted, the finished ground level of the completed building needed to be determined within its footprint being the lowest level of any floor. As the object or purpose of the height control included minimising ground disturbance, a control which operated by reference to the lower of the natural ground level or the finished ground level of the completed building was intended to encourage buildings which stepped up or down the contours so minimising excavation and emphasising a requirement for the height of the building to follow the slope of the land. 31 It was also submitted that the phrase "finished ground level of the completed building" could not be a reference to the finished level of the ground surrounding the building as distinct from that part of the site within the footprint of the building and that this was supported by the fact that the height was to be measured vertically which, of necessity, required it to be measured from a point within that footprint. 32 Finally, Chan sought assistance in the interpretation of the definition from the provisions of Development Control Plan PS1 (the DCP), which took effect on 1 May 2003, some three years after the LEP was made. In clause 3.3 of the DCP under the heading "Building Height", the objectives of the height control were stated to include not only that the amenity of the surrounding properties be properly considered but also that site disturbance and cut and fill be minimised. These objectives were illustrated by three examples, each of which, so the Council submitted, supported its construction of the definition rather than that adumbrated by Chan. However, the Council submitted that it was not open to the Court to call in aid the provisions of the DCP, made three years after the LEP, for the purpose of interpreting the provisions of the latter - a submission with which I agree.

33 Absent some provision of the LEP that expressly incorporated the terms of a particular development control plan, it would be quite inappropriate in the circumstances of the present case to call in aid the DCP for the purpose of interpreting the definition. This is so notwithstanding Chan's submission that one of the principles stated in clause 3(d) of the LEP was the making of provisions in development control plans to further its aims and objectives.

How should the construction issue be resolved? 34 In my opinion the clear object or purpose of the height control in the zones to which it applies is, as the Council submitted, to control issues of privacy and overshadowing on the one hand as well as visual amenity, including the visual bulk of the completed building, on the other. I would therefore reject Chan's submission insofar as it asserted that an object or purpose of the height control was to minimise ground disturbance such as excavation. Certainly, I would accept that one of the objectives of the height control or, more accurately, a consequence of it is to require a building to step down a slope so as to ensure that it does not exceed the maximum height permitted at any point measured vertically along its length. On the other hand, if anything, the control seeks to encourage the excavation of the relevant land so as to ensure that the height control is not exceeded. One method of achieving that result, given the maximum floor space ratio which is otherwise permitted, is to provide for subterranean carparking, thus minimising the height of the building visible above the surface of the ground abutting it. 35 Again, the requirement that the height be measured from the lower of the natural ground level or the finished ground level of the completed building emphasises the objective of minimising the impact of the building in terms of overlooking/privacy, overshadowing and visual bulk. Those impacts can only result from that part or the building which stands above the surface or level of the ground abutting it. The combined purpose of encouraging as much of the building that does not comprise residential uses to be below ground level and the objective of minimising the impacts of that part of the building above ground level, in my view requires the "finished ground level of the completed building" to be construed as a reference to the finished ground level which abuts the completed building at any point along its external walls. Such a construction is consistent with an intention to require buildings to step down the slope in order to ensure that the height control is not contravened and so much is illustrated by the subject building which, on its northern elevation, steps down the slope of the site in order to achieve that objective. 36 When one looks at the plans and, in particular, Section Y:Y and the east and west elevations, it becomes obvious that it is only that part of the building which rises above, in this case, the existing ground line at the eastern and western side boundaries of the site (which was accepted as the natural ground level) which is capable of having the environmental impacts to which I have referred and to the minimisation of which the height control is directed. In the present case, that includes part of the basement carpark level and because of that, the residential areas above that part of the carpark on the northern half of the development have been stepped down the slope. 37 Although Chan emphasises the words "the completed building" in the composite phrase "the finished ground level of the completed building", it does not follow that what is being referred to, as the primary judge held, is the lowest level of the building depicted in the plans. The plans reveal the RL of the lowest level of the building as designed. There is no reason why that level should change when the building is completed: on the contrary, consent to the plans depicting those levels requires the building to be constructed precisely to those levels and no others. 38 On the other hand, the expression "finished ground level of the completed building" seems to contemplate that that level may not be known until the building is in fact completed. Such a possibility supports the Council's construction of the relevant phrase. Had the construction adopted by the primary judge and advanced by Chan been intended, one would have expected the draughtsman of the definition to refer to the finished ground level of the building as designed or, more directly, to the lowest level of the building as approved or completed. 39 In other words, the reference to the "finished" ground level of the "completed" building contemplates that that level may not be known until the building is indeed completed and the ground level surrounding the building "finished". This may require the surface or level of the ground abutting the building to be raised, albeit artificially, assuming that level is lower than the natural ground level, so that the height control is not exceeded. I see no necessary inconsistency between such an approach and the necessity, as advanced by the Council, to adopt an interpretation which leads to a reasonably practical result. 40 It is true that if Chan's and the primary judge's conclusion is correct, then the non-compliance with the height control would require, subject to any objection under State Environmental Planning Policy No. 1 being made and upheld, the top level of the building to be removed which, no doubt, would result in it having a lesser impact than that which would result from the interpretation which I consider to be correct. However, the building would not then be required to be stepped on its northern elevation. Further, the maximum permitted floor space ratio of 1.8:1 is high for a residential zone, although I note that in the version of the LEP included in the appeal papers, the Table to clause 19 indicates a maximum floor space ratio of 0.8:1. However, the DCP permits a floor space ratio of 1.8:1 and the report of the Group Manager, Sustainable Planning to the Council dated 7 October 2003, which recommended consent to the amended application, noted that the required floor space ratio was 1.8:1 whereas that proposed was 1.4:1. 41 Furthermore, Chan's third amended points of claim, which raised a large number of issues in support of invalidity, did not allege that the development did not comply with the maximum floor space ratio under the LEP. Accordingly, I assume that there is an error in the Table to clause 19 of the LEP as appears in the appeal papers and that the correct maximum floor space ratio is 1.8:1. On this basis, when combined with a 15 metre height control, it is apparent that the subject zone was intended, as the Group Manager's report noted, to allow for higher residential densities. When one takes the various zone objectives into account, in my opinion the expression "the finished ground level of the completed building" in that definition does not refer to the lowest ground level within the footprint of the building as constructed but to the finished level of the ground abutting the completed building. No doubt it will be a question of fact in each case as to what that level is and whether, in the particular circumstances, as the Council contends, it should include earthworks or mounding for landscaping around the perimeter of the building. Whether it does or not is, as I have said, a question of fact and one upon which there is as yet no finding. 42 Accordingly, in my respectful opinion, the primary judge was in error in construing the expression "the finished ground level of the completed building" as referring to the floor of the basement carpark upon the basis that it was the lowest of the levels depicted in the plans. On the contrary, that expression should be construed as being the finished surface of the ground where it generally abuts the completed building.

Conclusion 43 For the foregoing reasons, I would propose the following orders: (1) Appeal allowed. (2) Set aside the declaration and orders made by Cowdroy J on 19 November 2004. (3) Remit the proceedings to the Land and Environment Court for further consideration and determination in accordance with the decision of this Court. (4) The first respondent to pay the costs of the appellant and the second respondent in the Court below with respect to the separate question and to pay the appellant's costs of the appeal but to have with respect to the latter a certificate under the Suitors' Fund Act 1951, if otherwise qualified. 44 BROWNIE A-JA: I agree with Tobias JA.

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At a glance

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Judgment (27 paragraphs)

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