Progress & Securities Building Pty Limited v Burwood Council & Anor

KEY ISSUES: Construction and Interpretation :- appeal - separate questions - planning agreement - whether Court can require consent authority to enter into a planning agreement - whether power to impose a condition requiring a planning agreement is available on a modification application - whether power to impose a condition under s 94 is available on a modification application

Environmental Planning and Assessment Act 1979 LEGISLATION CITED: Environmental Planning and Assessment (Development Contributions) Act 2005 Land and Environment Court Act 1979

1643 Pittwater Road Pty Ltd v Pittwater Council [2004] NSWLEC 685 Arkibuilt Pty Ltd v Ku-ring-gai Council (2006) 67 NSWLR 529 Fairfield City Council v N & S Olivieri Pty Ltd [2003] NSWCA 41 Fitch v Shoalhaven City Council (1977) 67 LGRA 165 Goldberg v Waverley Council (2007) 156 LGERA 157 CASES CITED: Hillpalm Pty Ltd v Heaven's Door Pty Ltd (2004) 220 CLR 472 Minister for Urban Affairs & Planning v Rosemount Estates Pty Ltd (1996) 91 LGERA 31 Peter Duffield and Associates Pty Ltd v Canada Bay City Council (2002) 124 LGERA 349 Progress and Securities v Burwood Council [2006] NSWLEC 706 Sanctuary Investments Pty Ltd v Baulkham Hills Shire Council (2006) 153 LGERA 355 Sydney City Council v Ipoh Pty Ltd (2006) 149 LGERA 329

APPLICANT Mr J J Webster SC with Ms A Pearman SOLICITORS Emerys Law Firm

FIRST RESPONDENT LEGAL REPRESENTATIVES: Mr C J Leggat SC SOLICITORS Maddocks

SECOND RESPONDENT Ms R Daniel SOLICITORS Clayton Utz

THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

PROGRESS & SECURITIES BUILDING PTY LTD Applicant

RAIL CORPORATION NEW SOUTH WALES Second Respondent

JUDGMENT Jagot J: 1 The applicant has appealed against the deemed refusal by Burwood Council of its application to modify a development consent under s 96AA(3) of the Environmental Planning and Assessment Act 1979. Section 96AA authorises consent authorities to modify development consents granted by the Court and permits applicants to appeal against any deemed or actual refusal of such an application by a consent authority.

2 The appeal is listed for hearing on 12 to 14 May 2008. The parties identified certain issues about the powers of the Court that they agreed should be heard and determined in advance of all other issues in the proceedings. All of these issues relate to the fact that when the Court granted the development consent on 13 November 2006 it imposed a condition (condition 4B) requiring the applicant to enter into a planning agreement in accordance with s 93I(3) of the EPA Act. The Court's reasons for decision (Progress and Securities v Burwood Council [2006] NSWLEC 706) do not identify any issue between the parties with respect to this condition. It is common ground that the condition reflected the fact that the Council agreed to enter into the planning agreement proposed by the applicant if the Court were minded to grant development consent. Consistent with this common position, the applicant and the Council entered into a planning agreement on 23 April 2007. The applicant now wishes to vary the planning agreement. In contrast to its position with respect to the planning agreement entered into on 23 April 2007, the Council does not agree to any variation of the planning agreement. In these circumstances the applicant and the Council posed four questions for determination as follows: 1A. Is the power under s 93I(3) of the EPA Act available with respect to the determination of a modification application under s 96 of that Act? 1. Whether, during the hearing of an application to modify a development consent pursuant to s 96(1A) of the EPA Act, the Court has power under s 39(2) of the Land and Environment Court Act to exercise the functions and discretions of Council to enter into a planning agreement under Part 4 Division 6 of the EPA Act. 2. Deleted. 3. Whether, during the hearing of an application to modify a development consent pursuant to s 96(1A)[sic; s 96AA] of the EPA Act, the Court has power to impose a condition requiring a contribution towards provision or improvement of amenities or services pursuant to s.94 EPA Act in circumstances where the development consent the subject of the application for modification does not include a condition requiring a contribution pursuant to s 94 EPA Act but does include a condition requiring the developer to enter into a planning agreement under Part 4 Division 6 of the EPA Act. 4. If the Court answers question 3 "yes", then can or must the contributions made and/or to be made under the existing planning agreement be taken into account in determining whether any further contributions should be levied pursuant to s.94 of the Act, or otherwise?

3 The second respondent did not wish to be heard with respect to the separate questions.

4 The questions must be answered within the scheme established by the relevant legislation (the EPA Act and the Land and Environment Court Act 1979). The operative provisions of the EPA Act of relevance are contained within Pt 4. Part 4 deals with development assessment of development not regulated by Pt 3A (major infrastructure and other projects) or Pt 5 (environmental assessment of activities not regulated by Pt 4). The key definition in s 4(1) of relevance is that of "consent authority". A consent authority: …in relation to a development application or an application for a complying development certificate, means: (a) the council having the function to determine the application, or (b) if a provision of this Act, the regulations or an environmental planning instrument specifies a Minister or public authority (other than a council) as having the function to determine the application - that Minister or public authority, as the case may be.

5 Other relevant definitions in s 4(1) include the following: development application means an application for consent under Part 4 to carry out development but does not include an application for a complying development certificate.

development consent means consent under Part 4 to carry out development and includes, unless expressly excluded, a complying development certificate.

6 Development that requires consent is regulated separately from development that does not require consent or is prohibited (ss 76A - 76B). Div 2 of Pt 4 sets out the procedures for development that requires development consent. These procedures involve the making of a development application, its evaluation, and determination. The key provisions for these steps are s 78A (the application), s 79C (the evaluation), and s 80 (the determination). Division 6 of Pt 4 concerns development contributions. Before the commencement of the Environmental Planning and Assessment Amendment (Development Contributions) Act 2005 on 18 July 2005 there was a single and exclusive source of power for consent authorities to obtain contributions by developers (be it in the form of money or land) in connection with development (Fairfield City Council v N & S Olivieri Pty Ltd [2003] NSWCA 41 approving Fitch v Shoalhaven City Council (1977) 67 LGRA 165). This source was s 94 of the EPA Act. Section 94 provides: (1) If a consent authority is satisfied that development for which development consent is sought will or is likely to require the provision of or increase the demand for public amenities and public services within the area, the consent authority may grant the development consent subject to a condition requiring: (a) the dedication of land free of cost, or (b) the payment of a monetary contribution, or both. (2) A condition referred to in subsection (1) may be imposed only to require a reasonable dedication or contribution for the provision, extension or augmentation of the public amenities and public services concerned. …

(6) If a consent authority proposes to impose a condition in accordance with subsection (1) or (3) in respect of development, the consent authority must take into consideration any land, money or other material public benefit that the applicant has elsewhere dedicated or provided free of cost within the area (or any adjoining area) or previously paid to the consent authority, other than: (a) a benefit provided as a condition of the grant of development consent under this Act, or (b) a benefit excluded from consideration under section 93F(6).

7 The Environmental Planning and Assessment Amendment (Development Contributions) Act made significant amendments to Div 6 of Pt 4 of the EPA Act. The amendments (amongst other things) introduced other methods by which consent authorities could obtain contributions from developers. One of those other methods involves planning agreements. Under s 93C, a planning agreement means a voluntary agreement referred to in s 93F. A planning authority is defined in the same section in a manner that includes councils. Section 93F(1) provides as follows with respect to a planning agreement: (1) A planning agreement is a voluntary agreement or other arrangement under this Division between a planning authority (or 2 or more planning authorities) and a person (the developer ): (a) who has sought a change to an environmental planning instrument, or (b) who has made, or proposes to make, a development application, or (c) who has entered into an agreement with, or is otherwise associated with, a person to whom paragraph (a) or (b) applies, under which the developer is required to dedicate land free of cost, pay a monetary contribution, or provide any other material public benefit, or any combination of them, to be used for or applied towards a public purpose.

8 "Public purpose" is inclusively defined in s 93F(2) in broad terms. The provisions that a planning agreement must contain are identified in s 93F(3), including in paragraphs (d) and (e) the following matters: (d) in the case of development, whether the agreement excludes (wholly or in part) or does not exclude the application of section 94, 94A or 94EF to the development, (e) if the agreement does not exclude the application of section 94 to the development, whether benefits under the agreement are or are not to be taken into consideration in determining a development contribution under section 94…

9 Under s 93F(3A) a planning agreement cannot exclude the application of ss 94 or 94A in respect of development unless the consent authority for the development or the Minister is a party to the agreement.

10 Section 93F(4) makes planning agreements a far more flexible tool than the imposition of conditions under s 94 of the EPA Act because it ensures that one of the most fundamental limitations that applies to any condition under s 94 does not apply to planning agreements. It does so in the following terms: A provision of a planning agreement in respect of development is not invalid by reason only that there is no connection between the development and the object of expenditure of any money required to be paid by the provision.

11 Sections 93F(5) and (6) are important and reflect the provisions of s 93F(3)(d) and (e). They provide that: (5) If a planning agreement excludes the application of section 94 or 94A to particular development, a consent authority cannot impose a condition of development consent in respect of that development under either of those sections (except in respect of the application of any part of those sections that is not excluded by the agreement). … (6) If a planning agreement excludes benefits under a planning agreement from being taken into consideration under section 94 in its application to development, section 94(6) does not apply to any such benefit.

12 The entering into, amendment, or revocation of a planning agreement is subject to notification and reporting requirements under s 93G.

13 Under s 93H planning agreements may be registered on title and, if registered, bind successors in title.

14 Section 93I contains provisions ensuring that planning agreements remain voluntary. The provisions are as follows: (1) A provision of an environmental planning instrument (being a provision made after the commencement of this section): (a) that expressly requires a planning agreement to be entered into before a development application can be made, considered or determined, or (b) that expressly prevents a development consent from being granted or having effect unless or until a planning agreement is entered into, has no effect. (2) A consent authority cannot refuse to grant development consent on the ground that a planning agreement has not been entered into in relation to the proposed development or that the developer has not offered to enter into such an agreement. (3) However, a consent authority can require a planning agreement to be entered into as a condition of a development consent, but only if it requires a planning agreement that is in the terms of an offer made by the developer in connection with: (a) the development application, or (b) a change to an environmental planning instrument sought by the developer for the purposes of making the development application, or that is in the terms of a commitment made by the proponent in a statement of commitments made under Part 3A. (4) In this section, planning agreement includes any agreement (however described) containing provisions similar to those that are contained in an agreement referred to in section 93F.

15 Section 93J provides that: (1) A person cannot appeal to the Court under this Act against the failure of a planning authority to enter into a planning agreement or against the terms of a planning agreement. (2) This section does not affect the jurisdiction of the Court under section 123.

16 Section 93L empowers the making of regulations with respect to planning agreements. Part 4 of the Environmental Planning and Assessment Regulation 2000 contains the regulations relevant to development contributions. Division 1A specifies more detailed provisions about the making, amendment, and revocation of planning agreements. Under cl 25C(3) a planning agreement may be amended or revoked by further agreement in writing signed by the parties to the agreement (including by means of a subsequent planning agreement).

17 Division 7 of Pt 4 of the EPA Act contains the provisions enabling development consents to be modified (s 96 to s 96A). The present application is made under s 96AA(1). Under s 96AA(1A), in determining an application for modification of a consent, the consent authority must take into consideration such of the matters referred to in s 79C(1) as are of relevance to the development the subject of the application. Section 96AA(1C) provides that: The modification of a development consent in accordance with this section is taken not to be the granting of development consent under this Part, but a reference in this or any other Act to a development consent includes a reference to a development consent as so modified.

18 Section 39(2) of the Land and Environment Court Act provides that: (2) In addition to any other functions and discretions that the Court has apart from this subsection, the Court shall, for the purposes of hearing and disposing of an appeal, have all the functions and discretions which the person or body whose decision is the subject of the appeal had in respect of the matter the subject of the appeal. Question 1A

19 The Council's argument on question 1A ran as follows: - (i) s 93I(3) empowers a consent authority to impose a condition on a development consent requiring entry into a planning agreement, (ii) a consent authority may do so only if the condition requires a planning agreement that is in the terms of an offer made by the developer in connection with, relevantly, a development application, (iii) the present application is not a development application but, rather, an application to modify a development consent, (iv) hence, even if the Council were willing to vary the planning agreement (which it is not), neither the Council nor the Court on appeal (by dint of s 39(2)) can impose a condition on any approval of the modification application having the effect of varying the planning agreement.

20 The argument appears to be a variation of the reasoning in Peter Duffield and Associates Pty Ltd v Canada Bay City Council (2002) 124 LGERA 349. In Peter Duffield Bignold J held that, as s 94 authorises a consent authority to grant development consent subject to a condition under that section in the nominated circumstances, the power to impose such a condition is not available on the modification of a development consent; the modification of a development consent is not the grant of consent in accordance with ss 96(4) and 96AA(1C). In Arkibuilt Pty Ltd v Ku-ring-gai Council (2006) 67 NSWLR 529 at [26] - [30] I held that the language of s 94 did not preclude a consent authority or the Court on appeal modifying a condition that had been imposed on a development consent under s 94.

21 Section 93I(3) is not in terms analogous to s 94. The modification of a development consent pre-supposes that a development application has been made and a consent granted in response to it. A consent authority may impose conditions on the approval of a modification application (1643 Pittwater Road Pty Ltd v Pittwater Council [2004] NSWLEC 685 at [27] - [41]). Although the modification of consent is taken not to be the grant of consent, any conditions imposed as part of the modification become part of the consent because the consent is taken to be the consent as modified (ss 96(4) and 96AA(1C)).

22 It follows that if a developer makes an offer to enter into a planning agreement in connection with a modification application, the offer will necessarily also be in connection with a development application (albeit a development application that has resulted in the grant of development consent). Nothing in s 93I(3) limits the power of a consent authority to then impose a condition on the approval of the modification application requiring entry into the planning agreement in terms of the offer so made. Any such condition will be a condition of development consent within the meaning of s 93I(3).

23 For these reasons, question 1A is answered "yes". Question 1 24 Question 1 arises because the facts agreed between the parties include the applicant's offer (accompanying the modification application) to enter into a further planning agreement varying the terms of the planning agreement entered into on 23 April 2007. The agreed facts also record that the Council does not wish to enter into the proposed planning agreement or otherwise to vary the planning agreement dated 23 April 2007. Subject to question 1A above (decided against the Council), the Council accepted that the Court could impose a condition under s 93I(3). However, the Council did not accept the applicant's contentions that s 39(2) of the Land and Environment Court Act operated so that: - (i) any such condition bound the Council to enter into the planning agreement referred to in the condition, and (ii) if the Council failed to comply with its obligations the Court could exercise the Council's function to execute the planning agreement, in effect, in the Council's name. The Council submitted that the function of entering into a planning agreement was separate from the function of imposing a condition under s 93I(3). The function of entering into a planning agreement was not within the scope of s 39(2). Accordingly, a condition imposed under s 93I(3) could only require the developer (not any planning authority) to enter into a planning agreement.

25 Section 39(2) of the Land and Environment Court Act has generated a significant number of disputes over many years. Both parties referred to numerous decisions in support of their competing positions. Most of the authorities are analysed in the recent decisions of Sydney City Council v Ipoh Pty Ltd (2006) 149 LGERA 329 and Goldberg v Waverley Council (2007) 156 LGERA 27. The difficulty for the applicant in the present case is that none of the authorities deal with the function of a consent authority under s 93I(3), being a function that forms part of a specific statutory scheme for planning agreements. Sanctuary Investments Pty Ltd v Baulkham Hills Shire Council (2006) 153 LGERA 355 at [44] considered only the power to impose a condition under s 93I(3). It did not suggest that the Court could require a planning authority to enter into a planning agreement or that the effect of a condition under s 93I(3) would be to bind the planning authority to do so.

26 Important features of the statutory scheme indicate that the decision of a planning authority to enter into a planning agreement (even where the planning authority is also the consent authority with respect to the application) is a matter for that authority alone to decide, and that its failure to enter into a planning agreement (which must encompass failure by reason of refusal) cannot be any part of "the matter the subject of the appeal" within the meaning of s 39(2). Matters relied on by the applicant (such as the capacity for planning agreements to be amended, the nature of the planning agreement as an executory contract, and the merits of the varied agreement sought by the developer) do not indicate to the contrary.

27 First, planning agreements, by definition, are voluntary (ss 93C and 93F(1)).

28 Secondly, the potential parties to a planning agreement are a developer and a planning authority (s 93F(1)). A planning authority might be, but is not necessarily, the consent authority (see the definition of planning authority in s 93C). A condition under s 93I(3), accordingly, might require a planning agreement to be entered into between the developer and a planning authority that is not the consent authority. Such a condition could not, by the mere fact of its imposition, bind the planning authority to enter into the planning agreement. The condition would be one that the developer must fulfil to comply with the development consent. As observed in Minister for Urban Affairs and Planning v Rosemount Estates Pty Ltd (1996) 91 LGERA 31 at 96, the fact that a condition may not be able to be performed other than with the co-operation of a third party does not make it invalid.

29 Thirdly, through s 76A(1)(b) of the EPA Act, conditions of development consent bind only those persons carrying out development (Hillpalm Pty Ltd v Heaven's Door Pty Ltd (2004) 220 CLR 472). To the extent that Mandalong Progress Association Inc v Minister for Planning (2003) 126 LGERA 408 decided to the contrary, it must be seen as inconsistent with the decision of the majority of the High Court in Hillpalm (and see also Wilkie v Blacktown City Council (2002) 121 LGERA 444). A consent authority and a planning authority are not persons carrying out development within the meaning of s 76A merely because they are identified as having some further function to perform in a development consent. Accordingly, and consistent with the Council's submissions, the mere imposition of a condition under s 93I(3) cannot have the consequences asserted by the applicant.

30 Fourthly, and critically, under s 93J(1) a person cannot appeal to the Court under the EPA Act against the failure of a planning authority to enter into a planning agreement or against the terms of a planning agreement. The applicant submitted that an appeal against a deemed or actual refusal of a development or modification application was not within the scope of s 93J(1) even if the applicant, as part of that appeal, sought to have the Court require the consent authority (also being a planning authority) to enter into a planning agreement. This submission, if accepted, would authorise precisely that which the legislature has prohibited in the clearest possible terms. The proscription in s 93J(1) does not distinguish between planning authorities that are also consent authorities and planning authorities that are not. It is a blanket proscription and operates whether or not the planning authority is also the consent authority. The proscription is consistent with the overall statutory scheme requiring mutual voluntariness on the part of the developer and the planning authority intended to be the party to the planning agreement. Contrary to the applicant's submissions, an appeal against a deemed or actual refusal of a development or modification application in which the applicant seeks the Court to require a consent authority (which is also a planning authority) to enter into or vary a planning agreement, in substance, is an appeal against the planning authority's failure to enter into a planning agreement. Section 93J(1) excludes any such appeal.

31 The proscription in s 93J(1), construed in context, thus ensures that the function of imposing a condition under s 93I(3) of the EPA Act (which the Court may exercise on appeal under s 39(2) of the Land and Environment Court Act) is separate and distinct from the function of the planning authority entering into a planning agreement. A failure to exercise the latter function can never be part of the matter the subject of the appeal within the meaning of s 39(2). It follows that any exercise of power by the Court under s 39(2), including the imposition of any condition under s 93I(3), cannot have the effect of requiring any planning authority (including one which is also the consent authority) to enter into a planning agreement. Such a condition may only bind the developer to do so in terms of the developer's offer. This has a practical consequence. In this case the Council (being the relevant consent authority and planning authority) has unequivocally declared its refusal to enter into a further planning agreement or vary the existing agreement. It follows that the imposition of a condition under s 93I(3) (although possible, in terms of power) would be of no, or questionable, utility, as such a condition could not bind the Council to enter into the further or varied planning agreement.

32 These conclusions do not affect the fact that the developer's offer is a relevant consideration in determining the application (s 79C(1)(a)(iiia)). So too the fact of refusal of the offer might be a relevant matter (s 79C(1)(e)). What weight those considerations receive and how they interact with all other considerations in the exercise of the discretion to determine an application is a matter for the consent authority or the Court exercising the functions of the consent authority on appeal, and cannot be addressed in the context of separate questions. What is clear is that the idea that the Court can require any planning authority to enter into a planning agreement by dint of s 39(2) of the Land and Environment Court Act is fundamentally inconsistent with the statutory scheme with respect to planning agreements.

34 The Council submitted that a consent authority and the Court on appeal could impose a condition on a modification approval under s 94 of the EPA Act where, as in this case, the development consent sought to be modified contained no condition under s 94 but did contain a condition under s 93I(3) (being condition 4B). The Council said that a condition under s 93I(3) dealt with the topic of contributions and thus, by varying the manner of dealing with contributions, condition 4B could be modified (from a planning agreement alone to a planning agreement supplemented by contributions under s 94). To understand this argument it is necessary to appreciate that the modification application seeks approval to increased floor space over and above the floor space in the development the subject of the original consent, being the development referred to in the planning agreement. In essence, the Council wishes to seek imposition of a condition requiring the applicant to pay s 94 contributions on the additional floor space.

35 The difficulty for the Council is the language of the legislation. First, a condition under s 93I(3) is a condition requiring a planning agreement to be entered into in terms of a developer's offer. That is not a condition under s 94 of the EPA Act. It involves no exercise of power under s 94. As s 93F(4) discloses, the offer a developer makes might be incapable of being the subject of a valid condition under s 94. A planning agreement may include matters outside the scope of any contributions plan (in contrast to conditions under s 94 which are limited by the contents of such plans (s 94B)). Secondly, the language of s 94(1) is intractable. The power to impose conditions under s 94(1) is available on the grant of development consent. Arkibuilt contemplated that any such condition, once imposed, could be modified in reliance on the modification power in s 96. But that is different from the facts of the present case, where the consent contains no condition under s 94 to be modified.

36 This restriction on the power to impose conditions requiring s 94 contributions, while occasionally inconvenient, is not particularly surprising when considered in the context of the legislation as a whole. The modification power is not available unless the consent authority is satisfied the modified development is substantially the same as the original development. The fact that conditions cannot be imposed under s 94 on the approval of a modification application (as opposed to conditions under s 94 being modified on such approval), ultimately, is but one more factor that must be weighed in the balance in determining the modification application. In Peter Duffield, for example, the inability to impose conditions under s 94 was a significant factor in the Court determining to refuse approval to the modification application. Again, resolution of these discretionary issues must await the appeal and cannot be addressed in the context of separate questions.

38 Question 4 depends on question 3 having been answered "yes". It follows that question 4 does not arise and I decline to answer it.

Conclusions 39 The answers to the separate questions are as follows: 1A. Yes. 1. No. 3. No. 4. Does not arise. ****************************

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