Residents Against Improper Development Incorporated & Anor v Chase Property Investments Pty Ltd

CATCHWORDS: LOCAL GOVERNMENT - building control - development application - local environment plan - construction - principles - whether a provision of a local environment plan constituted a development standard - whether the application was for "designated development" - whether application amenable to an objection under the State Environmental Planning Policy No 1 - whether the application was "in respect of" designated development - LOCAL GOVERNMENT - appeals - procedure - whether appeal incompetent - WORDS AND PHRASES - meaning - "in respect of" - "in respect of designated development" - COSTS - principles -administrative review proceedings

Administrative Appeals Tribunal Act 1975 (Cth) Administrative Decisions Tribunal Act 1997 (NSW) ASIO Act 1979 (Cth), Environmental Planning and Assessment Act 1979 (NSW) Freedom of Information Act 1982 (Cth) LEGISLATION CITED: Land and Environment Court Act 1979 (NSW) Local Government Act 1919 (NSW) Magistrates (Summary Proceedings) Act 1975 (Vic) Social Security (Administration) Act 1999 (Cth) Supreme Court Act 1970 (NSW) Suitor's Fund Act 1951 (NSW) Victorian Civil and Administrative Tribunal Act 1998 (Vic)

Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 222 ALR 411 Attorney-General (Q); Ex rel Nye v Cathedral Church of Brisbane (1977) 136 CLR 353 Australian Guarantee Corporation Ltd v De Jager [1984] VR 483 Australian Prudential Regulation Authority v Administrative Appeals Tribunal [2005] FCA 1916 Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport Insurance Pty Ltd (1986) 10 FCR 177 Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404 Brokerage Pty Ltd v Cessnock City Council [No 2] [2006] NSWCA 292 Bushell v Repatriation Commission (1992) 175 CLR 408 CB Investments Pty Ltd v Colo Shire Council (1980) 41 LGRA 270 Chase Property Investments Pty Ltd v Blue Mountains City Council [2005] NSWLEC 442 Chase Property Investments Pty Ltd v Blue Mountains City Council (No 2) [2005] NSWLEC 457 Cotterell v Stratton (1872) 8 Ch App 295 Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460 Degmam Pty Ltd (In Liq) v Wright [No 2] [1983] 2 NSWLR 354 Evans v Maclean Shire Council (2004) 138 LGERA 229 Foodbarn Pty Ltd v The Solicitor-General (1975) 32 LGERA 157 Gee v Port Stephens Council (2003) 131 LGERA 325 Genders v Government Insurance Office of NSW (1959) 109 CLR 363 Georgakis v North Sydney Council (2004) NSWLEC 123 Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478 Grant v Kiama Municipal Council (2006) NSWLEC 70 Hardenbergia v Baulkham Hills Shire Council (2002) 125 LGERA 273 Helman v Byron Shire Council (1995) 87 LGERA 349 Hunter Development Brokerage Pty Ltd v Cessnock City Council [No 2] [2006] NSWCA 292 Hunter Development Brokerage v Cessnock City Council [No 2] [2006] NSWCA 92 Hynes Urban Planners Pty Ltd v Hawkesbury City Council (2003) 123 LGERA 312 Knight v Clifton [1971] Ch 700 Kuringai Municipal Council v Master Plan Consultants Pty Ltd [1999] NSWCA 167 Latoudis v Casey (1990) 170 CLR 534 Laurence Browning Pty Ltd v Blue Mountains City Council [2006] NSWLEC 74 CASES CITED: Legal & General Life of Australia Ltd v North Sydney Municipal Council (1990) 69 LGRA 201 Liversidge v Anderson [1942] AC 206 Logan-Bald Partnership v Byron Shire Council (2002) 123 LGERA 225 Lowy v The Land and Environment Court of New South Wales (2002) 123 LGERA 179 Maurici v Chief Commissioner of State Revenue (2001) 51 NSWLR 673 Maxwell v Hornsby Council (2002) 121 LGERA 186 McCabe v Blue Mountains City Council (2006) 145 LGERA 86 McDermott v The King (1948) 76 CLR 501 Momentum Architects Pty Ltd v Hornsby Shire Council (2002) 123 LGERA 207 National Vulcan Engineering Insurance Group Ltd v Pentax Pty Ltd [2004] NSWCA 218 Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 North Sydney Municipal Council v P D Mayoh (No 2) (1990) 71 LGRA 222 O'Donnell and Bob Blakemore Pty Ltd v Anson Bayco (Australia) Pty Ltd, New South Wales Court of Appeal, 23 March 1990 (unreported) Oshlack v Richmond River Council (1998) 193 CLR 72 Owen v Walton (1995) 36 NSWLR 77 Packer v Meagher [1984] 3 NSWLR 486 Pearson v Dennett (1911) 11 SR (NSW) 449 Penfold v Penfold (1980) 144 CLR 311 Penrith City Council v Waste Management Authority (1990) 71 LGRA 376 Pittwater Council v Moore Development Group Pty Ltd [2004] NSWCA 278 Poynting, Lowy and Woollahra Municipal Council v Carr (1985) 62 LGRA 263 Re Smith; Ex parte Rundle [No 2] (1991) 6 WAR 299 Segal v Waverley Council (2005) 64 NSWLR 177 State Government Insurance Office v Crittenden (1966) 117 CLR 412 Strathfield Municipal Council v Poynting (2001) 116 LGERA 319 Tekmat Investments Pty Ltd v Ward (1988) 65 LGRA 444 Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 Trustees Executors of Agency Co Ltd v Reilly [1941] VLR 110 Unsworth v Commissioner for Railways (1958) 101 CLR 73 Weddell v Pearce & Major [1988] Ch 26 Woollahra Municipal Council v Carr (1985) 62 LGRA 263

Residents Against Improper Development Incorporated PARTIES: Blue Mountains City Council Chase Property Investments Pty Limited

A1: T Robertson SC / L Byrne COUNSEL: A2: I Hemmings R: C W McEwen SC / S A Duggan

A1: Woolf Associates, Sydney SOLICITORS: A2: McPhee Kelshaw, Springwood R: Pike Pike & Fenwick

LOWER COURT JURISDICTION: Land & Environment Court

LOWER COURT DATE OF DECISION: 23 August 2005

LOWER COURT MEDIUM NEUTRAL CITATION: Chase Property Investments Pty Limited v Blue Mountains City Council & Anor [No 2] [2005] NSWLEC 457

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40090/06 CA 40714/06 L&E 10720/05

GILES JA TOBIAS JA McCLELLAN CJ at CL

Thursday 23 November 2006 RESIDENTS AGAINST IMPROPER DEVELOPMENT INCORPORATED & Anor v CHASE PROPERTY INVESTMENTS PTY LTD Judgment 1 GILES JA: I agree with Tobias JA. 2 TOBIAS JA: On or about 27 April 2005 the respondent made Development Application No X05/0418 (the application) to the second appellant (the Council) for consent to erect 39 buildings containing 78 tourist and/or residential dwellings, later amended to 36 buildings containing 72 dwellings (the proposed development). This was to occur on a parcel of land comprising 10.6 hectares being Lot 1 DP 840261 and located at Nos 132-174 Govetts Leap Road, Blackheath and known as "Parklands" (the site). Part of the proposed development comprised a community title subdivision of the site. Lot 1 DP 840261 originally comprised Lots 1 and 2 DP 22156, part Lot B DP 959609, Lot 2 DP 236203 and Lot 63 DP 751627. As a consequence of Amendment No 5 to Blue Mountains City Council Local Environmental Plan 1991 (the LEP) which took effect on 4 March 1994, development of the site for the purpose of integrated housing and subdivision became permissible with the Council's consent. That amendment is now relevantly part of Schedule 1 to the LEP. 3 Prior to that amendment the only relevant development permissible upon the site with the Council's consent was dwelling houses and subdivision. The site is zoned Residential Bushland Conservation (RBC) under the LEP. Accordingly, a number of provisions of the LEP applied specifically to land so zoned, including the site. Those relevant to the issues in the appeal arise as a consequence of the effluent disposal system proposed to serve or service the proposed development. 4 At the present time the development on the site comprises a manager's residence and three detached tourist accommodation buildings, each containing four dwellings. That development is serviced by an existing Sydney Water sewer main that bisects the site entering approximately half way along the site's frontage to Govetts Leap Road and leaving via Lakeview Avenue to the west. 5 Given the very low density of the proposed development, there will be extensive areas of common open space. At the time of the making of the application, the Sydney Water sewerage treatment plant servicing the area within which the site is located had limited spare capacity so that only 8,571 litres per day of sewage generated by the proposed development can be disposed of to the existing Sydney Water reticulated sewerage system servicing the site. 6 Consequently, an estimated 26,633 litres per day of sewage to be generated by the proposed development is proposed to be treated by an on-site sewerage treatment plant (the proposed STP). Treated effluent from the proposed STP will be disposed of on various parts of the site by means of a below-ground trickle irrigation system. The proposed STP is to be located at the northern end of the site. The proposed irrigation system with respect to the treated effluent is to be spread over approximately 3.2 hectares of the site. However, the site adjoins the Pope Glens Reserve to the north with which Pope Glens Creek is located. It is an environmentally sensitive area. Pope Glens Creek is a tributary of the Grose River that flows through the Blue Mountains National Park. The proposed STP is located within approximately 150 metres of the creek and within 250 metres of dwellings not associated with the development. The relevance of these facts will become apparent. 7 On 6 July 2005 the respondent lodged a Class 1 appeal to the Land and Environment Court (the LEC) against the deemed refusal by the Council of the application. At the same time, it lodged a notice of motion seeking the determination by a judge of the LEC of two preliminary questions of law which had arisen as a consequence of the proposed on-site effluent disposal system and which, as I have noted, does not involve connection to, or service by, Sydney Water's existing reticulated sewerage system.

The nature of the preliminary questions of law 8 The two preliminary questions of law arose as a consequence of the inability of the proposed development to be fully serviced by Sydney Water's reticulated sewerage system. The first concerned cl 10.8(e) of the LEP, which is in the following terms: "(e) The Council shall not consent to the subdivision of land to create additional lots or to the carrying out of development the Council considers is significant in the Residential Bushland Conservation zone unless - (i) each of the lots to be created which will require effluent disposal or the site on which the development will be carried out is to be serviced by a reticulated sewerage system; and (ii) the Water Board [now Sydney Water] has previously provided certification to the Council that the sewage treatment plant serving the area concerned has the capacity to accommodate the additional development." 9 Two sub-issues arose out of this provision. The first was whether the reference in cl 10.8(e)(i) to a "reticulated sewerage system" related to a public reticulated sewerage system being that of Sydney Water which ran through the site and the second was whether the clause was a "development standard" as defined in s4(1) of the Environmental Planning and Assessment Act 1979 (the EPA Act). 10 Relevantly, the expression "development standards" was defined in s4(1) to mean "provisions of an environmental planning instrument … in relation to the carrying out of development, being provisions by or under which requirements are specified or standards are fixed in respect of any aspect of that development, including, but without limiting the generality of the foregoing, requirements or standards in respect of: (m) the provision of services … demanded by development." 11 It was the respondent's contention that cl 10.8(e) constituted a development standard as it was a provision of the LEP in relation to the carrying out of the proposed development upon the site, being a provision by or under which requirements were specified in respect of an aspect of that development, namely, the disposal of effluent generated by it. Further, it was a requirement in respect of the provision of services namely, sewerage services within the meaning of sub-paragraph (m) of the definition. Accordingly, the proposed non-compliance with the requirements of the clause was the subject of an objection under State Environmental Planning Policy No 1 (SEPP1). 12 The second preliminary question was whether the application was for "designated development" within the meaning of the EPA Act. In this respect s77A provided that: "Designated development is development that is declared to be designated development by an environmental planning instrument or the regulation." 13 Clause 4(1) of the Environmental Planning and Assessment Regulation 2000 (the 2000 Regulation) relevantly so declared: "Development described in Part 1 of Schedule 3 is declared to be designated development for the purposes of the Act … " 14 Part 1 of Schedule 3 to the 2000 Regulation contained a list of some 34 categories under the heading "What is designated development?". Category 29 was headed "Sewerage systems or works" and was relevantly in the following terms: "(1) Sewerage system or works: (a) that have an intended processing capacity of more than 2,500 persons equivalent capacity or 750 kilolitres per day, or (b) hat have an intended processing capacity of more than 20 persons equivalent capacity or 6 kilolitres per day and are located: (i) on a floodplain, or (ii) within a coastal dune field. (2) Sewerage systems or works that incinerate sewage or sewage products. (3) Sewerage systems or works that store sewage, sludge or effluent and: (a) that have a capacity of more than 1,000 tonnes of material, or (b) that are located: (i) within 100 metres of a natural waterbody or wetland, or (ii) in an area of high watertable or highly permeable soils, or (iii) within a drinking water catchment, or (iv) on a floodplain, or (v) within 250 metres of a dwelling not associated with the development. (4) Sewerage systems or works that release or reuse more than 20 persons equivalent capacity or 6 kilolitres per day of sewage, effluent or sludge and that are located: (a) in or within 100 metres of a natural water body, wetland, coastal dune field or environmentally sensitive area, or (b) in an area of high watertable, highly permeable soils or acid sulphate, sodic or saline soils, or (c) on land that slopes at more than 6 degrees to the horizontal, or (d) within a drinking water catchment, or (e) within a catchment of an estuary where the entrance to the sea is intermittently open, or (f) on a floodplain, or (g) within 500 metres of a residential zone or 250 metres of a dwelling not associated with the development." 15 In the present case, the "Sewerage systems or works" referred to in par (4)(a), (b), (c) and (g) of category 29 applied to the proposed STP. This was common ground. The respondent therefore conceded that "taken in isolation" the proposed STP was designated development.

The course of the proceedings in the LEC 16 On 15 August 2005 an order was made by Pain J pursuant to a notice of motion filed by the first appellant that it be joined as a party to the proceedings for all purposes: Chase Property Investments Pty Ltd v Blue Mountains City Council [2005] NSWLEC 442. Accordingly, both appellants contested the notice of motion which had been filed by the respondent on 6 July 2005 and which raised two preliminary questions of law in these terms: (a) Whether on the proper construction of clause 10.8(e) of the LEP the proposed development in Development Application No X05/0412 is prohibited because the proposed development cannot be serviced by a reticulated sewerage system? (b) Whether Development Application No X05/0412 is designated development under the Environmental Planning and Assessment Act 1979? 17 Pain J heard argument on these preliminary questions on 19 August 2005 and on 23 August 2005 answered each question in the negative. In other words, her Honour held (at [43]) that clause 10.8(e) of the LEP operated as a development standard and that Development Application No X05/0412 was not "designated development" under the EPA Act: Chase Property Investments Pty Ltd v Blue Mountains City Council (No 2) [2005] NSWLEC 457. 18 It should be noted that although the first appellant argued before the primary judge for an affirmative answer to each of the two questions, the Council only argued for such an answer to the first question. It did not seek to argue the second question. It has maintained that position before this Court. 19 On 20 September 2005 the first appellant filed a holding summons (CA 40758/05) for leave to appeal to this Court pursuant to Pt 51 r 4(1)(b) of the Supreme Court Rules (the SCR) against the primary judge's interlocutory decision of 23 August 2005. Under those rules the first appellant was required to file and serve an ordinary summons at any time up to three months after the date of service of the holding summons (which was served on 21 September 2005). No holding summons was filed by the Council. 20 However, within a week of the holding summons being filed and served by the first appellant, the merits hearing of the respondent's Class 1 appeal commenced before Commissioner Bly. That hearing commenced on 26 September 2005 and continued on 27, 28 and 29 September, 10, 11, 12 and 17 October and 16 November upon which date the Commissioner reserved his decision. 21 On 16 December 2005 the first appellant filed a notice of motion in this Court for an extension of time for the filing and serving of an ordinary summons as the three month period for the filing of that summons was due to expire on 21 December. Registrar Schell heard that motion on 13 February 2006 and an order was made that an ordinary summons be filed within 14 days. As this order was not complied with, the holding summons was deemed discontinued on 28 February 2006. 22 In the meantime, on 10 February 2006 Commissioner Bly delivered his judgment in which he allowed the respondent's appeal and granted consent to Development Application No X05/0418 for the construction and community title subdivision of 36 buildings containing 72 dwellings for tourist/residential accommodation, subject to conditions (the consent). 23 Rather than filing an ordinary summon for leave to appeal pursuant to the order made by Registrar Schell on 13 February 2006, the first appellant on 27 February 2006 filed a Notice of Appeal with Appointment (No. CA 40090/06) in which it appealed against the 10 February 2006 decision of Commissioner Bly upon the basis that it had relied upon Pain J's interlocutory decision of 23 August 2005. 24 Accordingly, the first two grounds of appeal asserted that her Honour had erred in holding that cl 10.8(e) of the LEP operated as a development standard and that she ought to have found that the provision operated as a prohibition so that Commissioner Bly's decision should be set aside upon the ground that the proposed development could not be serviced be a reticulated sewerage system and was, therefore, prohibited. 25 The third ground of appeal asserted that her Honour had erred in finding that the application was not designated development under the EPA Act. The relief sought was a declaration that the consent granted was null and void and of no effect and that the respondent's Class 1 appeal to the LEC should be dismissed. 26 On 13 April 2006 Registrar Schell by consent ordered that the Council be joined as an appellant to the first appellant's appeal pursuant to Pt 51 r 9 of the SCR and granted leave for the Council to file and serve its own Notice of Appeal with Appointment and for the first appellant to file and serve an Amended Notice of Appeal with Appointment. On 28 April 2006 these orders were complied with.

Are the appeals incompetent? 27 In its written submissions the respondent submitted that both appeals were incompetent as they concerned an appeal direct to this Court from the decision of Commissioner Bly granting the consent contrary to s57(3) of the Land and Environment Court Act 1979 (the Court Act). Section 57(1) of that Act relevantly provides that a party to proceedings in Class 1 of the Court's jurisdiction may appeal to the Supreme Court against an order or decision (including an interlocutory order or decision) of the LEC on question of law. However, ss57(3) and (4) qualify that right. They provide that such an appeal does not lie against an order or decision of the LEC that has been made by a commissioner other than a decision on a question of law determined by a judge pursuant to a reference under s36(5) of the LEC Act or a decision of a commissioner made after a judge's determination on such a question, where that determination is itself the subject of an appeal to the Supreme Court. 28 Section 36(5) of the Court Act provides that a commissioner may on his own motion or at the request of a party refer a question of law raised in the proceedings to the Chief Judge for determination. It was common ground that no such request had been made to Commissioner Bly in the present case as he had not entered upon the hearing of the Class 1 appeal at any relevant time. Rather, on 6 July 2005 the respondent had lodged at the same time both a Class 1 appeal as well as a notice of motion seeking the determination of the two preliminary questions to which I have referred above. 29 There is nothing in the Court Act or the LEC's Rules that expressly provides for the determination of a preliminary question of law in the manner which occurred, although it appears that it is common practice for that procedure to be followed before a commissioner commences the hearing of a Class 1 appeal where it is common ground between the parties that a question of law should be decided in circumstances where, as in the present case, a decision one way or another may avoid the hearing of a merits appeal before a commissioner. 30 Thus, if the appellants had succeeded on the first preliminary question before the primary judge, the proposed development would have been prohibited. If the first appellant had succeeded on the second question, the application would have been invalid unless and until an environmental impact statement had been lodged. In either case, this would have avoided in the one case or postponed in the other, a merits hearing. 31 As I have indicated, s36(5) of the Court Act was not invoked in the present case so that s57(3) denied an appeal to this Court from Commissioner Bly's decision. On the other hand, s57(4)(d) provides for an appeal to this Court against an interlocutory order or decision of a judge of the LEC with the leave of this Court. There is no doubt that Pain J's decision was such a decision so that it was open to the appellants to file a fresh ordinary summons seeking this Court's leave to appeal out of time against her Honour's decision. 32 It was accepted in the respondent's written submissions that any appeal by the appellants against the primary judge's decision required the leave of this Court pursuant to s57(4)(d) of the Court Act as well as an order of this Court extending the time for the making of any such application for leave. However it submitted that as a matter of discretion this Court should not grant such leave given that the respondent would be prejudiced in the event that leave was granted and the appeal successful as the appellants had permitted the Class 1 proceedings to be determined on their merits at significant expense to the respondent without first challenging the interlocutory decisions of Pain J. The respondent further submitted that if the appeal was successful, s57(2)(b) did not permit this Court to order that Commissioner Bly's decision be set aside. Rather, this result could only be achieved by the appellant's filing a summons seeking an order pursuant to s69(3) of the Supreme Court Act 1970 in the nature of a writ of certiorari that Commissioner Bly's orders be quashed. The respondent filed such a summons without objection on the day of the hearing of the appeal. 33 The first appellant responded to these submissions as follows:

(a) As the interlocutory decision of the primary judge was fundamental to the success of the respondent's Class 1 appeal before Commissioner Bly, that decision became part of its legal justification or foundation. Upon the authority of this Court in Pittwater Council v Moore Development Group Pty Ltd [2004] NSWCA 278, the appeal against the orders of Commissioner Bly was of right. I would reject this submission.

(b) The requirement in s57(4)(a) of the Court Act for a commissioner's reference to a judge under s36(5) had been met in that the LEC's practice was to avoid questions of law arising during the final hearing before a commissioner by requiring the parties to identify such questions at the pre-trial stage: Land and Environment Court Rules Pt 13 r 14; Practice Direction 1993, cl 7. Section 36 is the only procedural route to achieve this result where a matter has already been listed to be heard by a commissioner as had occurred in the present case. Accordingly, this Court may infer that a reference was made under s36(5) by application of the presumption of regularity as nothing in the Court Act requires the arrangement of the business of the LEC to be in writing and the LEC's Rules in Pt 2 r 7(3) expressly provides to the contrary. I would also reject this submission.

(c) The respondent had failed to object to the competency of the appeal in accordance with Pt 51 r 25(1) of the SCR. However, I observe that r 25(2) provides that if the respondent fails to comply with sub-rule (1) and the appeal is dismissed as incompetent, he shall not receive any costs of the appeal unless this Court otherwise orders. In other words, failure to comply with r25(1) is not fatal and only sounds in costs.

(d) The respondent did and will not suffer any prejudice as it had been served with the holding summons on 21 September 2005 prior to the commencement of the hearing of the Class 1 merits appeal by Commissioner Bly but had made the forensic decision to pursue the Class 1 hearing in the knowledge that the Commissioner was bound by the decision of the primary judge on the questions of law which she had determined. The respondent took no steps to request that the first appellant proceed expeditiously with its appeal against the primary judge's interlocutory decision prior to the commencement of the merits hearing before Commissioner Bly at its instigation. In my opinion, this submission should be sustained. 34 In my opinion, the procedure contemplated by s36(5) of the Court Act is different from, although not inconsistent with, that provided by the LEC Rules Pt 13 r 14 and cl 7 of the 1993 Practice Direction. At the end of the day, so much was conceded by the appellants. However, if the last-mentioned course is pursued then the result is an interlocutory decision in respect of which an appeal lies to this Court only by leave. That position remains the case even if, in the meantime, the merits appeal proceeds on the basis of the interlocutory decision which has been made and is successful. 35 In particular, I do not consider that as a consequence of Commissioner Bly's decision which was, I accept, clearly founded upon the answers of the primary judge to the preliminary questions, the appellants had a right of appeal against that decision to this Court. The relevant passage in the judgment of Handley JA, with whom Beazley and Ipp JJA agreed, in Moore and upon which the appellants relied, was in the following terms: "7. If the Class 1 appeal had succeeded the council would have had an appeal as of right from the final decision and on that appeal it could have challenged the interlocutory order. It could have done this because that interlocutory order would have affected the final result. See Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478. Since the final decision was in favour of the Council it had no right of appeal from the final order and had no right in such an appeal to challenge this interlocutory order." 36 In the circumstances of that case, Handley JA's remark that had the council been unsuccessful in the Class 1 appeal it would have had an appeal as of right from the final decision in that appeal and could have challenged the interlocutory decision on the basis of the High Court's decision in Gerlach was obiter as in fact the council had succeeded in the Class 1 appeal. 37 Furthermore, the decision in Gerlach proceeded on the basis that the defendant in that case had a right of appeal to the Court of Appeal and could therefore seek to correct any interlocutory order that had been made and which had affected the final order of the lower court. However, the joint judgment of Gaudron, McHugh and Hayne JJ (at 484 [8]) noted that: "[w]hether all decision of that kind [an interlocutory decision concluding an issue between the parties] may be challenged in an appeal against the final judgment in the proceedings is a question to which a general answer need not be attempted." 38 In the present case, s57(3) of the Court Act denies any right of appeal to this Court from a final order or decision made by a commissioner. An unsuccessful party before a commissioner may only appeal to the Supreme Court against those orders or decisions that are identified in s57(4) and then only by leave of this Court. In Moore it is not apparent from Handley JA's judgment whether the Class 1 merit hearing was determined by a commissioner or by a judge of the LEC. Of course, if that merit appeal was determined by a judge, then a right of appeal on a question of law lay to this Court pursuant to s57(1). 39 In my view the proper course is for the appellants to seek the leave of this Court pursuant to s57(4)(d) to appeal against the interlocutory decision of the primary judge. If leave is granted and the appeal succeeds then possibly pursuant to s57(2)(b) of the Court Act and certainly pursuant to s69(3) of the Supreme Court Act 1970, it would be open to this Court to set aside or quash the orders made by Commissioner Bly. 40 In summary, therefore, I see the position as follows:

(a) The respondent has failed to comply with the SCR in relation to giving of notice of its objection to the competency of the present appeals. However that only has consequences in respect of costs.

(b) The appellants have no right of appeal to this Court from the decision of Commissioner Bly by virtue of s57(3) of the Court Act.

(c) Section 36(5) of the Court Act was not invoked so that the determination by the primary judge of the preliminary questions was not undertaken pursuant to that provision. Accordingly, the exception to s57(3) has no application in the present case.

(d) The proper course for the appellants to pursue is by the filing of an ordinary summons for leave to appeal and for an order for an extension of time for the filing of that summons. Such a summons was filed on 17 October 2006 (No. CA 40090/06).

(e) In the circumstances, I would grant such an extension of time and, as will appear, I would also grant leave to appeal. 41 The first appellant foreshadowed in its written submission the filing of a summons for orders in the nature of prerogative relief pursuant to s 69(3) of the Supreme Court Act 1970 being a procedure adopted with the imprimatur of this Court in Kuringai Municipal Council v Master Plan Consultants Pty Ltd [1999] NSWCA 167. As noted in [32] above, during the hearing of the appeal such a summons was filed without objection from the respondent and to which the Council was joined as the second claimant. 42 Accordingly, the appropriate procedural course for the appellant to pursue to enable the substantive issues to be resolved comprises a combination of a summons for leave to appeal and for an extension of time and a summons for an order pursuant to s69(3) of the Supreme Court Act 1970. I now turn to those issues.

Is cl 10.8(e) of the LEP a development standard within the meaning of s 4(1) of the EPA Act and thus amendable to an objection pursuant to SEPP1? 43 The first appellant submitted both before the primary judge and this Court, that cl 10.8(e) was not a development standard because

(a) as a matter of construction of the LEP as a whole, cl 10.8(e)(i) exhibited a clear intention (unlike the position in other zones) that connection to and service by Sydney Water's sewer was a pre-condition for development likely to generate sewage effluent in the RBC zone; and

(b) the requirement in cl 10.8(e)(ii) for Sydney Water's certification of the existing capacity of its sewage treatment plant serving the area to accommodate the effluent generated by the proposed development did not relate to the "carrying out" of that development or to an aspect thereof so that the requirement did not fall within the definition of "development standards" in s 4(1) of the EPA Act. 44 Before referring to her Honour's reasons on this issue, it is appropriate to refer to the provisions of the LEP relied upon by each appellant in the context of the relevant legal principles which now dictate the approach to the question of whether a particular provision of a local environmental plan is a development standard as defined. 45 The relevant governing provision of the LEP relating to the control of development is cl.9 which is appropriately headed "GENERAL CONTROL OF DEVELOPMENT". The governing provisions are clauses 9.1 and 9.2 which are in the following terms: "9.1 With the consent of the Council, development for the purposes of any activity, building, place or work specified in the Table may be carried out on land within a zone where 'C' is shown in the Table. 9.2 Except as permitted by clause 9.1 or by some other specific provision of this plan, the carrying out of development is prohibited." 46 The Table referred to in cl 9.1 sets out a series of development types and indicates with the letter "C" whether that particular type of development is permissible with consent within each of the relevant zones. As I have indicated, so far as the RBC zone is relevantly concerned, dwelling houses and subdivision are so permissible. 47 Clause 9.4 contains a number of exceptions to cl 9.1. It commences with the words "Notwithstanding clause 9.1" and then refers to development for particular purposes within particular zones as either being prohibited or limited in some other way. 48 Had it not been for Schedule 1 to the LEP, the proposed development would have been prohibited: see cl 9.2. However, that provision is subject to "some other specific provision of this plan" which includes Schedule 1 under which the development is permissible with the consent of the Council. The chapeau to Schedule 1 is in the following terms: "A person may, with the consent of the Council, carry out development of the land described in this Schedule as specified in respect of the land, despite other provisions of this plan. Unless inconsistent with the specific provisions of this Schedule, the remainder of this plan shall apply." 49 The primary judge commenced her approach to the question of whether cl 10.8(e) was a development standard by reference to the passage in the judgment of Clarke JA in North Sydney Municipal Council v P D Mayoh (No 2) (1990) 71 LGRA 222 at 236 where his Honour said: "There is, in my view, a great difference between a clause which prohibits the carrying out of a particular development on identified land and one fixing the requirements to be complied with in carrying out that development."

In the same case, Mahoney JA similarly stated at 234: "There is, in my opinion, a distinction in the provisions between a provision which in form provides: 'On land of characteristic X no development may be carried out' and a provision which in form provides: 'On such land development may be carried out in a particular way or a particular extent'." 50 This reference by Mahoney JA to the form of the provision in question as a determinant of whether or not it constituted a development standard has not found favour with this Court in more recent decisions. All parties accepted that the relevant principles were authoritatively stated by Giles JA, with whom Heydon JA and Young CJ in Eq agreed, in Strathfield Municipal Council v Poynting (2001) 116 LGERA 319. After considering a number of decisions on the question, his Honour at 343 set out the following two step approach: "96. A provision prohibiting the development in question (the use of land, subdivision of land, erection of a building etc, see the definition of 'development' in the Act) under any circumstances will be a provision controlling development, but it will not be a development standard. The availability of SEPP No 1 will fail at the first step. 97. Beyond this, the debate should be over the second step, whether the provision specifies a requirement or fixes a standard in relation to an aspect of the (non-prohibited) development. I consider one can profitably return to the observations of McHugh JA in Woollahra Municipal Council v Carr , to his Honour's reminder of the need to define the development and its aspects before it can be whether the provision in question is a development standard. Referring again to the definition of 'development standards', there must be a provision in relation to the carrying out of development, and the then provision must specify a requirement or fix a standard in respect of an aspect of that development. Having identified the development in relation to which there is the provision, the aspects of that development must be considered in order to say whether the provision specifies a requirement or fixes a standard in respect of an aspect of the development. 98. If the provision does not prohibit the development in question under any circumstances, and the development is permissible in circumstances expressed in the provision (whether positively or negatively, see the forms of provision earlier stated), in most instances the provision will specify a requirement or fix a standard in respect of an aspect of the development. In the absence of control, and subject for example to the private law of nuisance, a landowner may develop his land as he sees fit. Control by complete prohibition on the development in question will not leave room for requirements or standards. But anything less than complete prohibition means that there can be the development in question, and provided a relevant aspect of the development is identified the control will be by imposition of a development standard. 99. In the debate over the second step, whether the provision specifies a requirement or fixes a standard in relation to an aspect of the (non-prohibited) development, the key will be identification of a relevant aspect of the development. The list of aspects in paragraphs (a) to (n) of the definition of 'development standards' in s4(1) of the Act shows that a broad view of what is an aspect of a development should be taken. North Sydney Municipal Council v P D Mayoh Pty Ltd (No 2) must be regarded as a case in which the majority considered that the provision in substance prohibited the development under any circumstances, no because of something in the definition of the development (see Clarke JA's comments on the observations of McHugh JA in Woollahra Municipal Council v Carr ) but because, as part of the environmental planning instrument as a whole, in the prohibition on erection of a residential flat building the governing characteristic was land with adjoining high buildings, so there was relevantly a prohibition on development in any circumstances." 51 Given the form of the provisions in the LEP upon which the appellants rely and, in particular, the opening words of cl 10.8(e) that "The Council shall not consent to … unless …", it should be emphasised that Giles JA (at 342 [93]) observed that "[c]are must be taken lest form govern rather than substance. A provision in the form, 'A building may be erected on land in a particular zone if the land has an area greater than a particular area' appears regulatory, whereas a provision in the form 'a building must not be erected on land if the land has an area less than a particular' appears prohibitory, but the substance is the same." 52 This point was emphasised by Young CJ in Eq in his judgment in Poynting where his Honour observed that mere form of drafting would not necessarily disclose whether a provision was a development standard. His Honour continued (at 347 [126]): "The dichotomy between a development standard and an absolute prohibition provides a valuable guideline as long as it is remembered that a development standard may contain expressly or impliedly some sort of prohibition. However, the sort of prohibition involved is a prohibition on the extent of development, not a prohibition as to whether development is possible at all." 53 Giles JA reiterated his reasoning in Poynting in Lowy v The Land and Environment Court of New South Wales (2002) 123 LGERA 179. In that case, the relevant clause of the planning instrument provided that a building should not be erected between a foreshore building line shown on a plan and the mean high-water mark of the waters of Port Jackson. It was proposed to extend part of an existing building beyond that line. The question was whether the provision was a development standard. 54 Mason P and Giles JA held that it was and Handley JA dissented. Giles JA, with whom Mason P agreed, said (at 203 [116]): "It has been said many times that whether a provision is a development standard depends on the particular provision seen as part of the planning instrument as a whole. Rather than be caught up in a raft of decisions on their own facts and fine distinctions, I consider it better to address the LEP by regard to principle and its own structure and provisions." 55 His Honour then proceeded with the first step to which he had referred in Poynting namely, whether the erection of a building for the purpose of a dwelling house was prohibited under any circumstances, answering that question in the negative. In particular, his Honour considered that the subject provision could not be seen as prohibitory as the development control table permitted dwelling houses in the subject zone. Rather, the provision in question was a special one which dealt with an associated requirement material to the permitted development and regulating the carrying out thereof. 56 As to the second step, his Honour considered that the subject provision specified a requirement in respect of an aspect of the permitted development in that it required the location or siting of the building (or its extension) on land within the zone to be on the foreshore side of the foreshore building line. Accordingly, it was a development standard in the relevant sense. 57 It should be observed that in Lowy the difference between the approach of Giles JA on the one hand and the dissenting position of Handley JA on the other was that the latter considered that it was legitimate to determine the first step by reference solely to the land between the foreshore building line and the waters of Port Jackson within which any form of development was prohibited. On the other hand, Giles JA took a broader approach considering that the relevant land was not confined to that on the foreshore side of the foreshore building line (in which case of necessity there was a prohibition) but to land generally within the subject zone given that the relevant local environmental plan was a planning instrument and primarily addressed land in terms of zones within which development was either prohibited or permitted. In the present case, the whole of the site was within a zone where the proposed development including the proposed STP was permissible with consent. 58 The two-step process identified by Giles JA has since been applied consistently in the Land and Environment Court: see, for instance, Georgakis v North Sydney Council (2004) NSWLEC 123 at [38] and [39]. It was also adopted and applied by the primary judge in the present case. 59 After recording the passages from the judgment of Giles JA in Poynting which I have set out in [50], the primary judge then turned to the first of the steps in the two-step process as identified. In [25] of her judgment, she observed that the proposed development was specifically permissible with consent in the RPC zone by virtue of Schedule 1 to the LEP. At [26] she then asked herself whether cl 10.8(e) was a complete prohibition in all circumstances. She answered this question in the negative as the site could be developed if there was sewerage capacity in the Sydney Water sewage system. She continued in these terms with respect to the second step: "26. ... Secondly, 'services' is included in the definition of development standard in s4 of the EP&A Act which are provisions of an environmental planning instrument which relate to the carrying out of development in which requirements are specified. Contrary to [the first appellant's] submissions, the provisions of clause 10.8(e) is not a characteristic of the land. The clause, in its terms, does not operate to require the land to have a certain characteristic, rather, it requires the development to have a certain requirement. Such is made plain by the prospective nature of the requirement of that development for which consent is sought 'is to be serviced' by a reticulated sewerage system. 27. I consider that in the context of this LEP the clause relates to an aspect of development rather than relating to the land and is a requirement that it be connected to the Sydney Water Sewer. It is therefore able to be subject to an application Pursuant to SEPP 1." 60 The first appellant referred to the distillation of the relevant principles by Jagot J in Laurence Browning Pty Ltd v Blue Mountains City Council [2006] NSWLEC 74 at [26]-[31] which her Honour had derived from Poynting, Lowy and Woollahra Municipal Council v Carr (1985) 62 LGRA 263 and which she recently reiterated in McCabe v Blue Mountains City Council (2006) 145 LGERA 86 at 101-2. 61 It is convenient to set out the following propositions adopted by her Honour as I regard them as accurately summarising the principles articulated by Giles JA in Poynting: "(1) The provision in question must be 'seen as part of the environmental planning instrument as a whole' ( Poynting at 342 [94]). The 'wider context' of the provision, as part of the instrument overall, should be considered in construing the provision ( Lowy v The Land and Environment Court of NSW & Others (2002) 123 LGERA 179 at 182 - 183 [2] per Mason P). (2) If a provision falls within one of the matters in sub-paras (a) to (o) of the definition of 'development standard', that fact alone does not mean that the provision is thereby a development standard. The provision must be 'in relation to the carrying out of development' and must fix requirements or standards in respect of an aspect of the development ( Poynting at 333 -334 [58]). (3) Although [there is a distinction] between a provision that is a development standard and a provision controlling development in some other way, the dichotomy between 'regulation' and 'prohibition' cannot replace the definition in the EPA Act. As this conceptual division 'will bring finely divided decisions', 'care must be taken lest form govern rather than substance' ( Poynting at 342 [93]). (4) A provision that prohibits the development under any circumstances controls development, but is not a development standard ( Poynting at 343 [96] and [98]). (5) If the provision does not prohibit the development under any circumstances and the development is permissible in the circumstances expressed in the provision (whether expressed positively or negatively), then 'in most instances the provision will specify a requirement or fix a standard in respect of an aspect of the development'. Hence: Control by complete prohibition on the development in question will not leave room for requirements or standards. But anything less than complete prohibition means that there can be the development in question, and provided the relevant aspect of the development is identified the control will be by imposition of a development standard. ( Poynting at 343 [98]). (6) It is necessary to identify the development in order to say whether the provision specifies a requirement or fixes a standard in respect of an aspect of the development ( Woollahra Municipal Council v Carr (1985) 62 LGRA 263 a 269-270 per McHugh JA and Poynting at 343 [97]). (7) An essential condition of the definition of 'development standard' is that the 'requirements specified or standards fixed in respect of any aspect of the development must be requirements or standards which, ex hypothesi, are external to the aspects of that development' ( Carr at 269 -270 per McHugh JA). (8) Hence, the key consideration in any debate over this second step (the question whether the provision specifies a requirement or fixes a standard in respect of an aspect of the development) is identifying a relevant aspect of the development. In this regard, the list of aspects of development in sub-paras (a) to (n) of the definition of 'development standard' shows that 'a broad view of what is an aspect of a development should be taken' ( Poynting at 343 [99])." 62 The first appellant sought to analyse cl 10.8(e) in the context of cls. 10.8(d) and (f) which are in the following terms: "(d) Where a development application is for consent to (i) subdivision; or (ii) other development which the Council has been required by the Water Board to refer to the Board, the Council shall - (iii) where on-site disposal of effluent is proposed, require the applicant to furnish a geotechnical and water balance report to establish that the land is capable of such disposal; and (iv) include in any development consent a provision which requires that satisfactory arrangements be made with the Water Board for the provision of water and sewerage facilities. … (f) the Council shall not consent to any development that requires effluent disposal, unless - (i) the development is to be connected to a reticulated sewerage system; or (ii) the Council is satisfied by means of a geotechnical and water balance report that the effluent may be effectively disposed of on that part of the site on which the development is permissible." 63 The first appellant's argument then proceeded in the following steps. First, sub-clause (d) was a general provision concerning subdivision or other development where on-site disposal of effluent was proposed in which event the applicant was required to furnish a geotechnical and water balance report to establish that the land was capable of such disposal (the requirements for such a report being set out in subclause (h)) and any development consent was required to include a provision requiring satisfactory arrangements being made with Sydney Water for the provision of water and sewerage facilities. Second, sub-clause (e) related solely to the subdivision of land or a development the Council considered significant in the RBC zone. Third, subclause (f) related to any form of development in any zone (with one exception) requiring effluent disposal and provided that the development was either to be connected to a reticulated sewerage system or disposed of on that part of the site on which the development was permissible provided a satisfactory geotechnical and water balance report was provided. 64 Critically according to the first appellant, sub-clause (f) expressly provided that it did not apply to the subdivision of land in the RBC zone. Accordingly, so the argument ran, on-site disposal of effluent was specifically contemplated only outside the RBC zone subject to the technical requirements for the preparation of the geotechnical and water balance report. 65 The first appellant accepted that sub-clause (d) was capable of application to development in the RBC zone, at least prima facie. However, where that development comprised a subdivision which created additional lots or was one which the Council considered significant in the zone, then subclause (e) was the governing provision. It was pointed out that there were several types of development permissible within the RBC zone which did not necessarily involve a subdivision which created additional lots or development which the Council might consider significant such as childcare centres, bed and breakfast establishments, display gardens, dwelling houses etc. Sub-clause (e) was, so it was submitted, a special provision to which the generalia specialiabus principle of statutory construction should apply. 66 Accordingly, the structure of sub-clauses (d), (e) and (f) was that sub-clause (d) applies generally whereas sub-clause (e) applied to specific forms of development and, critically, sub-clause (f) applies generally but did not apply to the subdivision of land in the RBC zone. The specific exclusion of sub-clause (e) from sub-clause (f) was, so it was submitted, "telling". 67 It was thus submitted that the clear intention of cl 10.8(e) of the LEP was that the subdivision of land in the RBC zone which created additional lots was not to be offered the concession of a merits-based approach to resolve sewerage disposal issues by way of on-site disposal of effluent as distinct from disposal by a reticulated sewerage system. It was hardly probable, so it was submitted, that the author of the LEP intended that the requirements of sub-clause (e) could be derogated from by the use of SEPP1 where that derogation was expressly permitted by sub-clause (f) except in the case of subdivision of land in the RBC zone. Accordingly, the underlying purpose was to ensure that subdivision development in the RBC zone did not occur without Sydney Water's approval, such that further unserviced lots were not provided in what was an environmentally sensitive area. 68 It thus followed that cl 10.8(e) was not a development standard as it imposed a pre-condition to the grant of consent to subdivision creating additional lots which was dependant upon two matters, namely

(a) a characteristic of the land to be subdivided (that the additional lots "be serviced by a reticulated sewerage system"), and

(b) an external certification by a third party (Sydney Water) that its STP servicing the area had the capacity to accommodate the servicing of those additional lots.

Thus Sydney Water was in effect given a power of veto by cl 10.8(e)(ii), a point not adverted to by the primary judge. 69 Finally, the first appellant submitted that sub-paragraphs (i) and (ii) of cl 10.8(e) were to be read in conjunction so that each needed to be satisfied before the Council was empowered to grant consent to a subdivision which created additional lots. As it was conceded by the respondent that sub-paragraph (ii) was not a development standard, it followed that it was not susceptible to waiver pursuant to SEPP1. Accordingly, even if sub-paragraph (i) was a development standard, that was irrelevant given the necessity to comply with sub-paragraph (ii), which was not. 70 The Council's submissions generally mirrored those of the first appellant, repeating the contention that cl 10.8(e) operated as a specific control on land within the RBC zone which involved the subdivision of land to create additional lots or the carrying out of development that the Council considered significant. In either case it excluded the on-site disposal of effluent. 71 As has been said many times, any form of control or regulation of an aspect of a development otherwise permissible with consent involves prohibition. The development referred to in cl 10.8(e) is permissible provided the additional lots which create a requirement for effluent disposal or the site on which the development will be carried out is to be serviced by a reticulated sewerage system which Sydney Water certifies as having the capacity to accommodate the additional effluent load. Absent compliance with that requirement, the development is prohibited. 72 Of itself that is no different from any of the other provisions in cl 10. Thus, for instance, cl 10.6(a) provides that the Council "shall not consent to development for the purpose of a building which exceeds two storeys." 73 Thus if a building does not exceed two storeys, it is permissible; if it does exceed two storeys then the Council is prohibited from consenting to it so that there is no difference in substance in this respect between that provision and cl 10.8(e)(i). 74 However, the Council, unlike the first appellant, submitted that sub-clause (e) failed at the first step of the process. The provision did not merely specify requirements in relation to the development identified in its chapeau but was in fact definitional of that development. It thus related to a specific category of subdivision defined by the sub-clause which was permissible and into which the proposed subdivision did not fall. In other words, the Council attempted to bring cl 10.8(e) into the definitional category of prohibition referred to by this Court in Carr. The only form of subdivision which created additional lots permissible with consent, was one whereby those lots were to be serviced by a Sydney Water reticulated sewerage system with appropriate capacity. Any other form of subdivision was prohibited. Accordingly, only a particular form of subdivision having certain characteristics was permissible. 75 Having made that submission, the Council then proceeded, correctly in my view, to analyse cl 10.8(e) as identifying a particular form of subdivision, namely, one which created additional lots which would require effluent disposal, which was only permissible with consent if the requirement that the lots be serviced by a reticulated sewerage system could be satisfied. However, if substance is to trump form, as it clearly must, then the Council's argument is not assisted by asserting that the particular form of subdivision to which sub-clause (e) applies is only permissible if that pre-condition to the grant of development consent is satisfied. 76 The substance of the sub-clause is that the subdivision of land in the RBC zone creating additional lots is permissible with consent but there is a requirement that each of the lots requiring effluent disposal are to be serviced by a reticulated sewerage system which is certified as having the necessary capacity to accommodate the effluent generated. 77 The Council's definitional submission also fails to appreciate the chapeau of Schedule 1 which I have set out in [48] above. That part of Schedule 1 relating to the site expressly refers to development of the nature of that the subject of the application including the creation of additional lots therefrom by subdivision. That form of development is permissible with consent "despite other provisions of this plan". Although the chapeau states that the remainder of the plan shall apply, this is only so if the provisions in the remainder of the plan (which would include cl. 10.8(e)) are not inconsistent with the specific provisions of the Schedule. 78 In my opinion, the definitional construction of cl 10.8(e) advanced by the Council as constituting a prohibition of the proposed development would be inconsistent with the relevant provision of the Schedule relating to the site which specifically permits that development with consent. Accordingly, the terms of the chapeau to the Schedule deny to cl. 10.8(e) the effect of absolutely prohibiting that which is otherwise specifically made permissible with consent. This conclusion lends further force to cl 10.8(e) being a development standard. 79 For the foregoing reasons I would reject the Council's argument that a subdivision of land in the RBC zone which creates additional lots is prohibited in any circumstance. That is simply not the case. Accordingly, it passes the first step referred to by Giles JA in Poynting. Thus if the sub-clause is to constitute a prohibition and not a development standard, it must fail the second step of the two-step process. 80 As I have already observed, the first appellant relies heavily upon the exclusion of the subdivision of land in the RBC zone from clause 10.8(f) of the LEP which otherwise permits the on site disposal of effluent in the circumstances there referred to. Because of that exclusion, it was submitted that sub-clause (e) must have been drafted with the intention that the requirement that the additional lots created by a subdivision of land in that zone be serviced by a reticulated sewerage system was not to constitute a development standard. 81 As I see it, there are a number of difficulties with this argument. First, the exclusion in sub-clause (f) is confined to the subdivision of land in the RFB zone, whereas sub-clause (e) applies not only to the subdivision of land which creates additional lots but also to the carrying out of what the Council considers to be significant development in that zone. It therefore follows that whereas sub-clause (f) may not apply to the subdivision of land within the RBC zone, it will apply to development which the Council considers is significant. 82 Second, under sub-clause (f) on-site disposal is only permissible where the Council is satisfied by means of a geotechnical and water balance report that effluent may effectively be disposed of on the relevant part of the land. The definition of "geotechnical and water balance report" set out in subclause (h) requires that the report demonstrate that the development site is capable of the disposal of effluent without it adversely affecting bushland, water courses, ground water or any environmentally sensitive areas.

83 However, a test based on the Council's satisfaction is different from the test which must be satisfied before an objection under SEPP1 to strict compliance with a development standard can be allowed. Before consent can be granted utilising SEPP1, clause 7 requires the Council to be satisfied that the objection is well founded which, in turn, requires it to find that compliance with the relevant development standard is unreasonable or unnecessary in the circumstances of the case. In my opinion the test in SEPP 1 involves a higher threshold for success than does cl 10.8(f)(ii). 84 Furthermore, consent to a development application notwithstanding, non-compliance with a development standard the subject of an objection under SEPP 1 can only be granted with the concurrence of the Director. Although it is true that the two tests in all probability will overlap to a degree, they are not identical. It therefore does not follow that the provision in sub-clause (f) that it is not to apply to subdivision of land in the RBC zone was intended to oust the provisions of SEPP1 with respect to sub-clause (e). If that had been the draughtsman's intention, it could have been provided for in a far more direct manner. 85 Like the first appellant, the Council also relied upon the provisions of cl 10.8(e)(ii) and the concession by the respondent that that provision was not a development standard when taken in isolation. It was therefore submitted that even if cl 10.8(e)(i) was a development standard, it was still necessary for there to be compliance with sub-paragraph (ii) as (i) and (ii) were cumulative. In particular, it was submitted that cl 10.8(e) depended not on action taken by the applicant for consent but upon the agreement of a third party, namely Sydney Water, to accept the disposal of effluent into its reticulated sewerage system which it could only do if it determined that the sewerage treatment plant serving the relevant area had the capacity to accommodate the additional effluent load. 86 I accept that sub-paragraph (e)(ii) cannot, and was not intended to, operate in isolation from the requirement of sub-paragraph (i). If sub-paragraph (i) is a development standard (as I consider it is), then if an objection to compliance with it is upheld under SEPP1, development consent may be granted notwithstanding non-compliance with that requirement. If it is therefore unreasonable or unnecessary that the additional lots or the development (if Council considers it significant) be serviced by a reticulated sewerage system, then it must follow that any question of the capacity of Sydney Water's sewage treatment plant servicing the area concerned to accommodate the additional effluent into its reticulated sewage system becomes academic. This is because the requirement of sub-paragraph (i) is the controlling provision. 87 In those circumstances no proper basis exists for the assertion that the requirement of certification referred to in cl 10.8(e)(ii) is a separate requirement which must still be complied with before consent can be granted to the development in question. That would be a nonsensical construction of the provision and, therefore, one which should be rejected. 88 Finally, it was submitted that sub-clause (e) did not specify a requirement in respect of an aspect of the proposed development. This submission was allied with that of the Council that the requirement that the additional lots be serviced by a reticulated sewerage system was a characteristic of the site (a proposition which I have rejected) rather than an aspect of the development in respect of which the sub-clause specified a requirement. 89 In my opinion, there can be no doubt that an aspect of a development by way of subdivision which creates additional lots which require effluent disposal or any other form of development that has a similar requirement, is the manner in which that effluent is to be disposed of. It is a characteristic of the development that it generates the need for effluent disposal. The creation of additional lots per se is incapable of generating a requirement for effluent disposal: it is the erection of buildings thereon which are occupied which creates that need. 90 It follows that the provision of a reticulated sewerage system with sufficient capacity to enable the disposal of effluent to be generated by a subdivision which creates additional lots is a requirement which is specified by sub-clause (e) in respect of an aspect of that form of development namely, the provision of sewerage disposal. Furthermore, the requirement in cl 10.8(e)(i) that the lots be serviced by a reticulated sewerage system is one in respect of the provision of sewerage services demanded by the development within the meaning of paragraph (m) of the definition of "development standards". 91 In my view there can be no doubt that a requirement that effluent be disposed of in a particular manner is a requirement specified with respect to an aspect of the development which is, ex hypothesi, external to that development as well as to any aspect of that development: relevantly, in the present case, the aspect of the development constituted by the necessity to provide for effluent disposal. 92 It follows from the foregoing that in my opinion the primary judge was correct in characterising cl 10.8(e) of the LEP as a development standard. However, I would take the opportunity to wholeheartedly endorse the remarks of McClellan CJ at CL in [212] of his judgment which I have had the benefit of reading in draft with respect to the unnecessary and time consuming litigation that had been generated over many years concerning whether a provision of a local environmental plan is a development standard. The responsible authorities should carefully consider the solution proffered by his Honour.

Whether Development Application X05/-0412 is " in respect of designated development"? 93 I state the question this way rather than in the form stated in the second question asked of the primary judge (see [16] above), as it is the correct question to ask. It is the question posed under s78A(8) of the EPA Act, see below. The respondent accepted that when considered in isolation the proposed STP would fall within category 29(4) of Schedule 3 to the 2000 Regulation. As her Honour posed the question (in [29]) of her judgment, the issue which arose was whether the use of part of the site for an on-site STP could be characterised as an independent use of part of the site so that that development was, therefore, designated development. As I have foreshadowed, the issue as identified raises the wrong question, as I shall later seek to demonstrate. 94 The first appellant (the Council not seeking to argue this issue) nevertheless submitted that the area of land proposed for on-site wastewater disposal and for construction of the proposed STP was of such a scale that it constituted an independent and separate use of the site. In this respect the proposed system would utilise an area of more than two hectares. 95 Relying on the decision of this Court in Penrith City Council v Waste Management Authority (1990) 71 LGRA 376 in which it was emphasised that each case had to be considered on its own merits, it was submitted to the primary judge that the proposed STP would be constructed on an area separate from the residential development which was confined to another area of the site and, consequently, constituted an independent use of that part of the site on which it was to be located. 96 The first appellant also submitted to her Honour that the proposed STP could be characterised as an independent and separate use of the site on the basis that the tourist and residential component of the development was dependant on the proposed STP for its existence. Accordingly, the proposed STP would have an ongoing function following the construction of the balance of the development. 97 The respondent submitted that the application was not for "Sewerage systems or works" within the meaning of the expression in category 29 of Pt 1 of Schedule 3 to the 2000 Regulation. Rather, the proposed STP could only be characterised as a necessary and interrelated component of the primary use of the site namely, the construction of tourist and residential accommodation. It was therefore not a separate and independent use of the site, as it had no independent operation other than to service the tourist and residential accommodation. 98 Her Honour (at [34]) referred to the well-known statement of Glass JA in Foodbarn Pty Ltd v The Solicitor-General (1975) 32 LGERA 157 at 161 that "[i]t may be deduced that where a part of the premises is used for a purpose which is subordinate to the purpose which inspires the use of another part, it is legitimate to disregard the former and to treat the dominant purpose as that for which the whole is being used." 99 She then referred to Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404 where Meagher JA said (at 409) "Notwithstanding the principles laid down in Foodbarn , it does not follow that a use which can be said to be ancillary to another use is thereby automatically precluded for it being an independent use of the land, it is a question of fact and degree in all the circumstances of the case whether such a result ensues or not." 100 The only other case in this Court where the issue has been discussed was in Penrith City Council v Waste Management Authority where the Court, comprising Kirby P, Meagher and Handley JJA, in a single judgment said (at 384): "Because the words of the statutory definition may relate to parts only of the development as proposed, it is necessary, in performing the task of characterisation to consider the 'character and extent and other features of the activities' proposed to decide whether, properly classified for legal purposes, they fit into the definition against which they are being measured. This is what Glass JA suggested in Foodbarn Pty Ltd v The Solicitor-General (1975) 32 LGERA 157 at 161. It is what Hope JA said explicitly in CB Investments Pty Ltd v Colo Shire Council (1980) 41 LGRA 270." 101 At 387 the LEC referred to the emphasis which Hope JA in Colo, Clarke JA in Blakemore and Meagher JA in O'Donnell placed "upon the need to look at the facts in their detail and to consider, on the way to the characterisation finally assigned, whether, notwithstanding the existence of another 'primary' use or development purpose, it may be properly be said that a 'ancillary' use or development purpose is involved. If it is, it will attract legal consequences." 102 Finally, at 388 their Honours repeated that "what is involved, and has been repeatedly stressed, is always a question of fact and degree." 103 I mention these references in Penrith to the question of characterisation being a question of fact and degree depending upon the facts and circumstances in each case as any appeal to this Court pursuant to s57(1) of the Court Act is confined to a question of law. Accordingly, if what is said to be the approach of this Court in Penrith is still to be regarded as the proper approach to the issue of characterisation for the purpose of determining whether an activity which would otherwise fall within one of the list of categories of designated development in Pt 1 of Schedule 3 of the 2000 Regulation is to be treated in law as such, it would follow that if it was open to her Honour to find as a matter of fact that the proposed STP did not constitute a separate and independent use of the site, then that was a finding of fact which is not open to appellate review in this Court. 104 In this respect, her Honour (at [39]) referred to Penrith as emphasising that the particular circumstances of each case must be considered. She continued: "The extent of the use the land for the STP must be determined to see if it is sufficiently separate and substantial use from the tourist/residential development as to hold that the proposal is designated development." 105 Her Honour then referred (at [40]) to a report of the respondent's consultant that the proposed STP was to occupy a minimum 1.7 hectares of the 10.6 hectare site which included several areas identified for the on-site irrigation of treated effluent. The actual plant was to be located at the northern end of the site in circumstances where, of the estimated sewerage generation rate for the development of 35,240 litres per day, 8,571 litres per day would be discharged into Sydney Water's sewer and the balance of 26,633 litres per day treated and disposed of on site. 106 In the foregoing circumstances her Honour's conclusion was as follows: "41. I do not consider that the proposed sewerage disposal system is so significant that it can be characterised as a separate use of the site. While the area to be potentially used by the system is not small, that area consists largely of irrigation areas where treated effluent is used on gardens and vegetated areas. That scale of use does not render this a separate use. The actual STP occupies a relatively small area to the north of the site. Given the site area of 10.6 hectares this is not a sufficiently large to warrant a finding that it is a separate use. It is also material to consider … the reason why the STP is necessary. Its sole purpose is to support the tourist/residential use proposed for the land. While that is not conclusive of the matter, it is another factor to consider and suggest the proposal is not designated development." 107 In order to raise a question of law on the appeal, the first appellant submitted that the approach adopted by her Honour based upon the decision of this Court in Penrith was in error. In particular, it was submitted that the characterisation approach adopted in Penrith was only appropriate for determining whether a particular form of development is permissible or prohibited within the zone in which the land is located so that the same activity may be permissible or prohibited depending upon whether it is characterised as ancillary or subservient to the dominant use of the land on the one hand or, as an independent use of the land or part thereof on the other. However, once the development is characterised as permissible, the function of the development control process required by the EPA Act is to assess the impact of the proposal on the environment. 108 Thus, if the development application is in respect of designated development, then a particular level of assessment is assigned to it requiring the preparation of an environmental impact statement as required by s78A(8)(a). If the application is in respect of development on land that is, inter alia, likely to significantly affect threatened species, then the level of assessment assigned to it requires the preparation of a species impact statement as required by s78A(i)(b). The designation system whereby development identified as designated development controls the procedure for the assessment of an application for such development which is in any event permissible with consent, looks to the specific activities encompassed by the proposed use and contains in its own code for measuring impact levels identified with respect to that particular form of development. 109 The first appellant acknowledged that whether a particular activity falling within the definition of "development" in s4(1) of the EPA Act also fell into one of the categories listed in Pt 1 of Schedule 3 involved a factual enquiry based on the material that described that activity in the development application and required a determination of whether its elements fell within one of the statutory descriptions of those categories. However, once a finding was made that the activities fell within a category, there was no room for the intrusion of unstated exceptions to the legal consequences of that finding such as a further finding that the activity constituting the category was merely ancillary to some other development the subject of the application which is said to be the dominant land use proposed by the application for the land to which it related. 110 Accordingly, the first appellant submitted that development which is declared to be designated cannot be removed from that category simply by the device of asserting that it is ancillary to the dominant use proposed by the development application or of a scale which is insufficient for it to be characterised as an independent use so that it is thereby excluded from the category of designated development into which it had otherwise fallen. 111 It was thus submitted that cl 4(1) of the 2000 Regulation, which provides that development described in Pt 1 of Schedule 3 is declared to be designated development for the purposes of the EPA Act, provides a self-contained code for determining what types of development are designated development. Once the factual enquiry as to whether a particular form of development falls within one of the designations set out in Pt 1 of Schedule 3, that is the end of the inquiry. That activity, being designated development, if made the subject of a development application must comply with the requirements of s78A(8)(a) that the application be accompanied by an environmental impact statement. 112 In the present case, it was conceded that the proposed STP fell within the statutory description in category 29(4) of Pt 1 of Schedule 3 and was, therefore, a sewerage system or work declared to be designated development for the purposes of the EPA Act. It therefore did not matter whether the proposed STP was ancillary to some other form of development proposed by the application for the site and this was so irrespective of whether that development was to be regarded as the dominant use of the site or whether the proposed STP was to be regarded as an independent use of that part of the site on which it was to be located. 113 The agreed fact that the application included as part of the overall development an on-site STP which fell within the description set out in category 29(4) of Pt 1 of Schedule 3, thus led to the automatic result that that application must be accompanied by an environmental impact statement for it to be valid. 114 Such an approach was adopted by the primary judge in Maxwell v Hornsby Council (2002) 121 LGERA 186. In that case, her Honour held that the fact that a proposed STP, which was intended to service a retirement village, fell within Part 1 of Schedule 3 of the 2000 Regulation was conclusive of whether the development application was in respect of designated development. Penrith and cases which had followed it, were distinguished. Her Honour accepted the council's submission in that case (at 194 [41]) that there was no rationale for distinguishing between, for example, sewerage treatment plants that were an independent development or use of the land and were therefore designated development in accordance with the test set out in Penrith and sewerage treatment plants that fell within Pt 1 of Schedule 3 but would not require an environmental impact statement because they could be characterised as being ancillary or fulfilling a subservient purpose to another development the subject of the application. 115 One of the grounds upon which her Honour came to that conclusion and which she regarded as significant was that since the decision of this Court in Penrith, there had been a change in the wording in relation to designated development in the then regulation which had removed the preamble to Schedule 3. At the time Penrith was decided, cl 70 of the Environmental Planning and Assessment Regulation 1980 (the 1980 Regulation) provided as follows: "The development described in Schedule 3 is declared to be designated development for the purposes of the Act."

As such, the provision was identical to cl 4(1) of the 2000 Regulation. 116 However, Schedule 3 of the 1980 Regulation contained a preamble or chapeau to the effect that "development for the undermentioned purposes or development of the undermentioned types is designated development". 117 Schedule 3 of the 1980 Regulation then set out a list of categories defined in terms somewhat narrower than those now to be found in Pt 1 of Schedule 3 of the 2000 Regulation. In 1994 Schedule 3 of the 1980 Regulation was amended by the deletion of the chapeau or preamble to Schedule 3 and in its place was inserted the heading: "Part 1 What is designated development?". This was then followed by a list of categories of development in alphabetical order. This has been carried through into the 2000 Regulation. 118 In Penrith this Court recognised that the "purposes" or "types" of development listed in Schedule 3 were purposes or types of development generally with the serious potential to cause harm to the environment. There were more than 40 categories and sub-categories listed which ranged from abattoirs, brewery works, chemical factories, bitumen works, scrap recovery works to wood milling and joinery works. 119 Clause 70 of the 1980 Regulation was authorised by s158 of the EPA Act as it then stood, which provided as follows: "The regulations may contain provisions declaring any class or description of development (whether by reference to the type, purpose or location or otherwise) to be designated development for the purposes of this Act." 120 The equivalent of s158 in the EPA Act in its present form is s77A which is in the following terms: "Designated development is development that is declared to be designated development by an environmental planning instrument or the regulations." 121 Again, at the time when Penrith was decided s77(3) of the EPA Act relevantly provided as follows: "A development application shall - (a) be made to the consent authority; (b) be made in the prescribed form and manner; … (d) where the application is in respect of designated development, be accompanied by an environmental impact statement in the prescribed form prepared by or on behalf of the applicant." 122 The current equivalent of s77(3) is s78A which relevantly provides as follows: "(1) A person may, subject to the regulations, apply to a consent authority for consent to carry out development. (2) A single application may be made in respect of one or more of the types of development referred to in (a)-(f) of the definition of development in section 4(1). … (8) A development application must be accompanied by: (a) if the application is in respect of designated development - an environmental impact statement prepared by or on behalf of the applicant in the form prescribed by the regulations." 123 Again at the time of Penrith, s4(1) of the EPA Act defined "designated development" to mean "any class or description of development that is declared pursuant to section 29 or 158 to be designated development for the purposes of this Act" 124 In the present form of the EPA Act the expression "designated development" is defined by s4(1) to have "the meaning given by section 77A". 125 In Maxwell (at 194 [40]) her Honour considered that the scheme of the EPA Act at the time of Penrith "required that in each case the application as lodged had to be measured against the various classes of development specified in Schedule 3. The Court of Appeal's comments set out above emphasised the potential for environmental impact from designated development in making that assessment." 126 Her Honour continued: "41. The council argued that there was no rationale for distinguishing between, for example, sewerage treatment plants that were an independent development and were therefore designated development and sewerage treatment plants that fell within Schedule 3, but would not require an environmental impact statement because they could be characterised as being for a subservient purpose to another development. I accept this submission. As was highlighted by the Court of Appeal in Penrith , activities are listed as designated development because they are activities which are considered to pose a greater threat to the environment; they are inherently risky activities. The EP&A Act imposes greater requirements on activities that constitute designated development in terms of the investigation and consideration of the consequences the development will have on the environment, by requiring the applicant to carry out and publicly exhibit an environmental impact statement. The importance of public participation in relation to designated development is emphasised in the procedures set out in Pt 4 of the EP&A Act." 127 Her Honour accepted that the change in the wording in relation to designated development in the EPA Act and the removal of the preamble (or chapeau) to Schedule 3 was significant. She further accepted the council's argument in that case that the consequence must be that the fact that a development falls within Pt 1 of Schedule 3 of the 2000 Regulation was now conclusive of whether a development was designated. 128 The first appellant acknowledged that her Honour's decision in Maxwell has not been followed in subsequent decisions of the LEC concerning whether a sewerage system or work forming part of a development application was designated development within the meaning of the Regulation: Momentum Architects Pty Ltd v Hornsby Shire Council (2002) 123 LGERA 207 per Talbot J; Logan-Bald Partnership v Byron Shire Council (2002) 123 LGERA 225 per Cowdroy J; Hardenbergia v Baulkham Hills Shire Council (2002) 125 LGERA 273 per Bignold J and Hynes Urban Planners Pty Ltd v Hawkesbury City Council (2003) 123 LGERA 312 where the primary judge declined to follow her decision in Maxwell largely on the basis of judicial comity given that the other judges of the LEC had declined to follow it. See also Evans v Maclean Shire Council (2004) 138 LGERA 229. 129 Because this Court has not been called upon to decide the issues raised in the single judge decisions of the LEC since the change in the provisions of the regulation concerning designated development and, in particular, since the omission in 1994 of the preamble or chapeau to Schedule 3 of the 1980 Regulation, the first appellant submitted that this Court should look at the matter afresh and, in effect, reinstate her Honour's decision in Maxwell. 130 The respondent submitted that contrary to the first appellant's submissions, the amendment to the 1980 Regulation in 1994 by the omission of the preamble or chapeau to Schedule 3 had not altered the applicability of the approach to the determination of whether an environmental impact statement is required with respect to a development application than was the case prior to that amendment. It was therefore submitted that the approach in Penrith was still applicable and as the factual finding of her Honour that the proposed STP was ancillary to the primary development of the site the subject of the application was one reasonably open to her on the evidence (and in fact was not challenged in the first appellant's submissions), it followed that her Honour's decision was one of fact and no relevant question of law requiring this Court's intervention had been demonstrated. It follows that it is necessary to analyse this Court's decision in Penrith more closely. 131 In Penrith the Waste Management Authority of New South Wales (the Authority) had applied to Penrith City Council for development consent for the establishment of a regional waste disposal depot on 290 hectares of vacant Crown land at Londonderry. The relevant land was zoned in a manner which permitted development for that purpose with the council's consent. Also permissible with consent in the same zone was "extractive industries". That expression was defined in the relevant planning instrument in substantially similar terms to par (n) of Schedule 3 to the 1980 Regulation. 132 Paragraph (n) relevantly provided that designated development included "extractive industries being - (i) the winning of extractive material …; or (ii) an industry or undertaking … which depends for its operations on the winning of extractive material from the land upon which it is carried on". 133 The council in that case submitted that the proposed activity fell within both limbs of par (n) in that it had a double character, namely, both waste disposal and an extractive industry. In this respect, the proposal involved the progressive excavation of large pits, the depositing and compacting therein of solid waste and the covering thereof with the excavated material. It was proposed to deposit 23 million cubic metres of solid waste on the site over a period of 20-25 years. On the other hand, the Authority submitted that the development of a waste disposal depot was not an industry which involved the winning of extractive material. Accordingly, sub-clause (i) of par (n) was not satisfied. Nor was sub-clause (ii) satisfied because there was no undertaking which depended for its operation on the winning of extractive material from the land. 134 The basis for the Authority's submission was that the removal of soil served no purpose other than as an activity subsumed in another use - that of waste disposal. The digging of a hole to be filled in with soil already dug out was not capable of being an "independent use" of the land. This was particularly so since the soil was not be used off-site. 135 At first instance ([1990] 71 LGRA 108), Stein J held (at 113) that although the proposed activity was an extractive industry within the meaning of sub-paragraph (ii) of par (n) that was not the end of the matter. His Honour was of the opinion that the question of whether the proposal came within par (n) "may be academic if the extractive operation is merely incidental to the main purpose and subsumed into that purpose." 136 His Honour then asked himself the question: "Does the proposed activity have a 'double character' - waste disposal and extractive industry, such that they are separate and independent activities? Such an assessment will of course involve questions of fact and degree." 137 Stein J then referred to the passage from the judgment of Glass JA in Foodbarn (at 161) to which I have already referred and to passages from the judgment of Hope JA in CB Investments v Colo Shire Council at 272. He acknowledged that the quantity of materials to be extracted for the purpose of providing the necessary holes for the disposal of landfill was "immense" so that the potential environmental impacts of the proposal, including those relating to extraction in the landfill, were obviously "major". His Honour's conclusion was stated in the following terms (at 115): "It seems to me to be unduly straining the facts to conclude that the proposed activity has a double character with independent and separate uses of the land. This conclusion is not arrived at on the basis that the extraction of materials enables the ultimate purpose, but rather the difficulty I perceive in categorising the extractive operation as other than incidental and ancillary to the primary purpose of waste disposal. The extractive operations are plainly subsidiary to and bound up with the disposal of the waste delivered to the site. The removal of the soil and its replacement cannot in my opinion, be seen as an independent activity. It is, to use the terminology of Glass JA in Foodbarn entirely subservient and subsumed to the main purpose and cannot be treated as independent from the purpose which it serves. The function (and essentially the only function) for the removal of soil is waste disposal. I conclude that the soil removal and replacement cannot be seen as a separate activity from waste disposal. … It follows that the development application is not one of designated development". 138 On appeal this Court recognised and duly acknowledged the significance of the requirement to lodge an environmental impact statement with respect to those types of development which the legislature regarded as requiring a higher standard of environmental assessment. Reliance was placed upon the Second Reading Speeches with respect to the Bill which became the EPA Act. At 383 the Court observed that although it was correct that the task before it was to give meaning to the applicable clause of the categories of "designated development" in Schedule 3 to the 1980 Regulation, it was also true that the generality in which the Second Reading Speeches were typically couched was no substitute for precision in the application of the words the Parliament had adopted in the legislation itself. 139 Their Honours continued: "Nevertheless, it is important to be alert, when embarking upon the task of statutory construction, to the context in which that task is enlivened and, here, the purpose for which kinds of 'development' are collected in a schedule of 'designated development'. That purpose includes the requirement to submit with any application for such development a statutory environmental impact statement which has significant consequences." 140 Under the heading "The task of characterisation", the Court (at 383) referred to the acknowledgement by Stein J that questions of fact and degree were involved in the allocation of any particular activity (as proved in evidence) to the categories of "designated development" listed in Schedule 3. The kinds of "designated development" which could be envisaged in particular applications lodged by developers for development consent will be multitudinous and of great variety. The catalogue of described developments in Schedule 3, their Honours observed, was meant to have general application for an indefinite period and to reflect the purposes for which it was provided. 141 The Court then observed: "However, the schedule is not open ended. It is necessary in each case to measure the application as lodged with the various classes specified in Schedule 3 . Because the task is one of classification the consideration of the development proposed against the various categories specified in the schedule will inescapably result in decisions which are partly impressionistic, upon which different minds may entertain genuine differences. In the nature of the great variety of the classes of development collected in Schedule 3, and the lack of a common genus or a residual clause, it will be easy to dismiss the great majority of the classifications as being wholly irrelevant to the development proposed. Then there may appear one, or possibly more, classifications which the local authority considers to apply but which the developer contests. It is at that stage that the task of characterisation is required… In the nature of the cases which involve a costly contested hearing in the Land and Environment Court … it will not be unusual for a genuine difference to exist as to whether the 'development' described in the application fits appropriately into the category described in Schedule 3 or does not." (Emphasis added) 142 After referring (at 384) to the fact that questions of degree were inescapably involved in cases such as that under consideration, the Court referred to a number of earlier decisions and then observed: "At least this much emerges from the earlier decisions. Because the words of the statutory definition may relate to parts only of a development as proposed, it is necessary, in performing the task of characterisation to consider the 'character and extent and other features of the activities' proposed to decide whether, properly classified for legal purposes, they fit into the definition against which they are being measured. This is what Glass JA suggested in Foodbarn. " 143 The Court then considered some recent authorities on characterisation including O'Donnell and Bob Blakemore Pty Ltd v Anson Bayco (Australia) Pty Ltd (Court of Appeal, 23 March 1990 unreported) and continued (at 387): "It is an unproductive activity for this Court to examine Glenpatrick (which is not under appeal) or other decisions at first instance where, on their special facts, the use of land having a number of purposes was nonetheless held sufficient to fall within a prohibited purpose, properly so understood. It is enough to deal with this appeal. We can do so the more readily because of the emphasis which Hope JA in Colo , Clarke JA in Blakemore and Meagher JA in O'Donnell placed upon the need to look at the facts in their detail and to consider, on the way to the characterisation finally assigned, whether, notwithstanding the existence of another 'primary' use or development purpose, it may properly said that an 'ancillary' use or development purpose is involved. If it is, it will attract legal consequences." 144 The Court then turned its attention to whether the subject development application was for designated development. It agreed with Stein J that the creation of a waste deposit depot could not be properly characterised as an industry and hence did not fit within sub-paragraph (i) of the definition of "extractive industries" in par (n). Nevertheless, it was considered that within the terms of par (n), it was clear that attention was to be focussed on the particular development proposed and not "extractive industries" in their generality. This was signalled by the fact that although the words "extractive industries" appear in the plural, the sub-definition in sub-paragraph (ii) par (n) brought the class back to the singular by reference to "an industry or undertaking". 145 Accordingly, having regard to the reference in the definition of "designated development" in Schedule 3 to "an … undertaking", it was clear that in that context the operations proposed by the Authority were required to be measured, not against "extractive industries" in their generality, but against an undertaking which depended for its operations on the winning of extractive material from the land on which it was carried on. The question was, therefore, whether the undertaking proposed by the Authority so depended. 146 The Court's response to the question so posed was as follows (at 388): "It was urged that if the Court said so it would mean that every building site which involved the extraction of materials from the land (as for car parking) would attract par (n), and the obligation (with consequential expense and delay) of providing an environmental impact statement. Again, we must say that each case will depend upon its own facts and circumstances. What is involved, as has been repeatedly stressed, is always a question of fact and degree. As is clear from the authorities, and particularly from O'Donnell , there are two alternative tests. We agree that, when classified by reference to its principal purpose, the Authority's activities would not be described as an extractive industry. However, this does not mean that it cannot be an extractive industry within the second limb of the definition when it is classified by reference to the dependence of its operations on the winning of extractive material from the land on which it is carried. It is in this regard that we consider that Stein J erred. The task of classification being one which addresses the 'character extent and other features' of the proposed activity, we are left in no doubt in this case that those features, together with the character and extent of extraction of soil inherent in the Authority's proposed operations, brings the case within Schedule 3. It requires the characterisation of the development proposed as 'designated development'. It hence attracts the obligation to support the application with an environmental impact statement. This the Authority failed to do."

147 The foregoing approach recognises that an environmental impact statement was then only required pursuant to s77(3)(d) of the EPA Act and is now only required by s78A(8)(a), if the development application is one "in respect of" designated development. Accordingly, so it was submitted, it was necessary to determine whether the application was in respect of designated development or whether it was in respect of non-designated development notwithstanding that an activity which formed part only of the overall development the subject of the application (the proposed STP) fell within one of the categories listed in Pt 1 of Schedule 3. According to the respondent, characterisation of the development the subject of the application was still required "for legal purposes": that is, for the purpose of determining whether the application was one in respect of designated development within the meaning of s78A(8)(a). It was submitted that this was the characterisation exercise undertaken in Penrith and was still applicable. 148 However, it must be remembered that the classification exercise undertaken by this Court in Penrith depended upon the true construction of par (n) of Schedule 3 which related to "extractive industries" which were relevantly defined as the winning of extractive material and, on the other, as an undertaking which depended for its operations on the winning of extractive material. Although this Court agreed with Stein J that the particular development there under consideration, namely, a waste disposal depot which involved the progressive excavation of large pits, did not fall within the first limb of the definition as it did not involve the winning of extractive material, it held that it fell within the second limb as being an undertaking dependant for its operation on the winning of extractive material. In other words the contest in that case was as to whether the operations or activities involved in the proposed development of a waste disposal depot fell within either limb of par (n) which could only be resolved by undertaking the task of characterisation. 149 There is no such contest in the present case. It is common ground that the proposed STP falls within the description set out in category 29(4) of Pt 1 of Schedule 3 and is, therefore, designated development. The question is whether that is the end of the inquiry and, if not, what is the nature of any further inquiry. In my opinion the only further inquiry is whether the application is "in respect of" a sewerage system or work within the meaning of s78A(8)(a) of the EPA Act. 150 Although the first appellant placed reliance, as did her Honour in Maxwell, upon the deletion in 1994 of the preamble to Schedule 3, I do not regard that amendment as either significant or relevant to the issue at hand. Although it is true that the various categories listed in Pt 1 of Schedule 3 are described in a manner which will often give rise to a factual enquiry as to the type and scale of the activity described for the purpose of determining whether it falls within the statutory description of a particular category of development, that is the first enquiry but not the last. If that enquiry is answered in the negative, then that is the end of any question of designated development. But if the enquiry is answered in the affirmative (as in the present case) then, as I have observed, there is a further exercise that must be undertaken. The contest between the parties was with respect to the nature of that exercise. 151 The first appellant submitted that the only further enquiry was whether the development application was "in respect of" one of the categories listed in Pt 1 of Schedule 3 and declared to be designated development. It was submitted that the words "in respect of " were extremely broad and merely required that the particular category of designated development, in this case, a sewerage system, was part, and possibly an essential part, of the application. It was noted that the prepositional phrase "in respect of" in s78A(8)(a) did not require that the application be only in respect of a category which had been declared designated development. 152 It followed according to the first appellant that an enquiry as to whether that part of the application which constituted designated development involved a separate and independent use of the site or whether it was only ancillary to another "primary" use or development purpose proposed by the application, namely, tourist/residential dwellings, was irrelevant. Once it was determined that the proposed STP was a sewerage system or work within the meaning of category 29 and, therefore, designated development, it must follow that the application in the present case was "in respect of" that development notwithstanding that, as her Honour found, the proposed STP could not be characterised as a separate use of the site or that its sole purpose was to support the primary or dominant tourist/residential use and was therefore ancillary or subservient thereto. 153 It was therefore submitted that the approach taken by the judges of the LEC since Maxwell was in error and that her Honour's approach in Maxwell was correct and should be, as it were, reinstated. 154 As I have already noted, in Maxwell the development application was for a retirement village which was to be serviced by a sewerage treatment plant with associated works. It was agreed that the sewerage works fell within category 29 of Pt 1 of Schedule 3 of the 2000 Regulation. Her Honour regarded as pertinent the remarks of this Court in Penrith (at 381-382) that the common element which ran through the various categories of designated development was the potential risk to the environment. Accordingly, the potential for environmental impact from designated development took on a particular emphasis when that impact was being assessed and so required the preparation of an environmental impact statement. 155 After referring to the objects of the EPA Act set out in s5(a) and (c), and noting the change in the wording in relation to designated development in the Act, the removal of the preamble to Schedule 3 which her Honour regarded as significant, she concluded (at 195 [43]) that: "It would seem to be contrary to the intention of the legislation now in force to hold that an activity that the Parliament considered to have potential for environmental harm (i.e. the activities in Schedule 3) should necessarily lose that character because it forms part of the greater development or is not the main purpose of the development in question. The whole basis behind designated development is to ensure that activities of a potentially greater environmental impact are properly considered through a process of environmental impact assessment." 156 The primary judge recognised in Maxwell the consequences of that approach when she said (at 195 [45]): "A consequence of not adopting the council's submission is that for every development that falls entirely or partly within Schedule 3, the obligation will arise to conduct an environmental impact statement for the development, as required by the EP&A Act. Other consequences also flow from the development being designated in relation to public exhibition requirements and appeal rights, amongst other matters. A potentially greater number of developments will now be classified as designated and, usefully, there is greater certainty in deciding whether a development is designated." 157 Finally, her Honour noted but did not find it necessary to decide an alternative submission of the council in that case that it was necessary to characterise the development in question to determine whether its purpose was in respect of designated development. The council had argued that the sewage treatment plant should properly be characterised as an independent purpose, which did not lose that characterisation because it was part of the retirement village development. The character and extent and features of the plant rendered it development in its own right. 158 As I have indicated, the approach of the primary judge in Maxwell has not been followed in subsequent decisions of judges of the LEC. Thus, in Momentum Architects, a development application for 140 dwellings pursuant to SEPP 5 included provision of a sewerage work to temporarily store sewage to facilitate outflow to the Water Board's sewer main. Talbot J held that the plain words of category 29(3)(v) of Pt 1 of Schedule 3 were unqualified in any way and that the stated criteria related to the function of the work and its location, namely, sewerage systems or works that stored sewage, sludge or effluent and which were located within 250 metres of a dwelling not associated with the development. 159 However, in applying Foodbarn and refusing to follow Maxwell, his Honour held that the proposed sewage storage was not such that it should be regarded as a separate development. It was subsumed as a matter of fact and degree in the overall development so that the development proposed by the development application was not designated development but, rather, an SEPP 5 development. 160 Talbot J found that the proposed sewage disposal system fell within the description in category 29 of Pt 1 of Schedule 3. However, he rejected what he considered to be the basis of the decision of the primary judge in Maxwell, namely, that the change in wording in relation to designated development in the EPA Act effected in 1994 and the removal of the preamble to Schedule 3 required a different approach to the issue of characterisation. His Honour expressed the view (at 212 [18]) that those changes did not permit the LEC to redetermine the approach to be taken for the purpose of ascertaining whether a particular development fell within one of the listed categories of designated development. 161 His Honour considered (at 212 [18]) that the arguments accepted by the primary judge to the effect that there was no rationale for distinguishing between sewerage treatment plants that are an independent development and were, therefore, designated development and those which fell within Schedule 3 but would not require an environmental impact statement because they could be characterised as being for a subservient purpose to another development, were a equally available prior to the changes upon which her Honour had relied. Further, they were not arguments which had influenced earlier decisions either of the LEC or this Court in the process of characterisation. 162 In Momentum Architects, the council had submitted that the legislation now expressly contemplated that more than one development can be the subject of a development application relying on the specification for an environmental impact statement in cl 71 of the 2000 Regulation which consistently refers to "development to which the statement relates" as opposed to development the subject of the development application. 163 To this argument his Honour responded (at 212 [22]) that there was previously nothing to say that one development application could not relate to separate developments, one or more of which may be designated development. Clause 71 did no more than recognise that an environmental impact statement was only required to address the impacts of the designated development rather than the whole of the composite developments which incorporated or operated together with the designated development where the latter was considered not be subsumed by the other development. 164 Talbot J therefore concluded in these terms (at 212-13 [23]): "In the circumstances, the Court is not satisfied that the development proposed by the development application is designated development. It should be characterised as an SEPP 5 development. The proposal for sewerage storage is not such that it should be regarded as separate development. It is subsumed as a matter of fact and degree in the overall development." 165 The decision of Talbot J in Momentum Architects was followed by Cowdroy J in Logan-Bald. In that case approval was sought for the construction of eight x two bedroom townhouses and the strata subdivision of the relevant land. The applicant proposed to discharge effluent from two of the townhouses directly into the council's sewer and to discharge waste from the remaining six townhouses into an on-site sewerage disposal installation known as an Ecomax system. His Honour found that that system fell within the description contained in category 29(3) of Pt 1 of Schedule 3 of the 2000 Regulation. 166 His Honour referred to the legislative changes to which reference has already been made and which he considered (at 231 [22]) had made the classification of a use as "designated development" more readily identifiable. The proposed use as listed in Pt 1 of Schedule 3 to the 2000 Regulation constituted "designated development" within the meaning of s77A. 167 However, Cowdroy J considered (at 231 [23]) that: "whilst the task of classification of an activity as 'designated development' has been simplified by the amendments, the obligation of the consent authorities to characterise the use proposed for the whole development remains. Where a proposed use includes the use which is designated development, the latter may be a subordinate or ancillary use. Accordingly it is necessary to determine the dominant purpose of the development." 168 His Honour continued (at 231 [25]): "If the 'designated development' use is the dominant or sole or independent purpose an environmental impact statement is required pursuant to s78A(8)(a) of the EP&A Act."

Thus his Honour considered (at 231 [26]) that the legislative changes did not operate to displace that test so that the real and substantial purpose of the development must still be determined to establish its true character. Accordingly, the ability readily to classify a use as " designated development " resulting from the amendments did not lead to the conclusion that the whole use necessarily assumed the character as one of " designated development " if only part of the use was so classified. 169 The foregoing approach of the LEC to the determination of whether a proposed development is "designated development" has been adopted in subsequent cases. The question that arises for determination in this appeal is whether that approach is correct. In my opinion, it is not. 170 The cases to which I have referred have all proceeded upon the basis that part of the development the subject of the relevant development application was "designated development" in that, taken in isolation, it fell within one of the list of categories in Pt 1 of Schedule 3. The majority, if not all, of the cases seem to relate to sewerage systems such as the proposed STP in the present case. However, such systems have been consistently found to be ancillary to the primary or dominant development the subject of the application. As the sewerage systems in question have been designed only to service the dominant, primary or main purpose for which the development application has been made, they have been held to be "ancillary" or "subsumed" by that primary or dominant purpose so that, not being an independent use of the relevant land, the developments, the subject of the relevant development application, have been not held to be designated development. 171 It seems to me, however, that none of the decisions in the LEC which have continued to adopt what the judges of that court have perceived to be the approach to characterisation adopted by this Court in Penrith, have appreciated that once it has been determined that a particular part of the overall development the subject of an application is "designated development" in that it falls within one of the categories listed in Pt 1 of Schedule 3 to the 2000 Regulation, the only other relevant question is whether, within the meaning of s78A(8)(a), the application is "in respect of" designated development. 172 If it is, it matters not in my opinion whether it is subsidiary or ancillary to some other form of development to which the application relates and which is regarded as the dominant or primary development or whether it constitutes some form of independent use of the land to which the application applies. 173 None of the single instance decisions of the LEC have approached the matter in the way I have indicated. In fairness, it should be acknowledged that this is because the judges of the Court have considered themselves bound by the approach they perceived to have been adopted by this Court in Penrith as still being applicable notwithstanding the changes which had been made to the EPA Act and the 1980 Regulation by the 1994 amendments. 174 It is true of course that s77(3)(d) which was extant at the time of this Court's decision in Penrith, is in the same terms as s78A(8)(a) of the EPA Act in its present form. But what I think has been overlooked is that in Penrith the issue before this Court was whether the proposed waste disposal depot could be characterised as an undertaking which depended for its operations on the winning of extractive material within the meaning of subparagraph (ii) of par (n) of Schedule 3 of the 1980 Regulation. This Court determined that that question should be answered in the affirmative with the result that the development proposed was "designated development". In other words, the only issue determined by this Court was whether the proposed development fell within the relevant category of designated development in Schedule 3. Once that issue had been determined, no further issue arose as to whether that undertaking was merely ancillary to some other more dominant use proposed by the Authority's development application. 175 In other words, the issues that arose in cases such as Maxwell, Momentum Architects, Logan-Bald and the present case simply did not arise in Penrith. It is true that at first instance, Stein J (at 115) expressed the view that he had difficulty in categorising the extractive operation portion of the development of the waste disposal depot as other than incidental and ancillary to the primary purpose of waste disposal. His Honour considered that the extractive operations were plainly subsidiary to and bound up with the disposal of the waste delivered to the site. He therefore utilised the terminology of Glass JA in Foodbarn. But this was not the approach of this Court on appeal. 176 It is also true that their Honours emphasised the need to look at the facts in their detail "and to consider, on the way to the characterisation finally assigned, whether, notwithstanding the existence of another 'primary' use or development purpose, it may properly be said that an 'ancillary' use or development purpose is involved." 177 But when this Court turned to the question of whether the application was for designated development, the only issue for determination was whether the operations proposed by the waste disposal depot constituted an undertaking which depended for its operations on the winning of extractive material from the land on which it was to be carried on. Once that question was answered in the affirmative that was the end of the enquiry. For these reasons I do not consider that the decision of this Court in Penrith mandates the approach adopted by the judges of the LEC in the authorities to which I have referred. 178 Rather, once it is determined or conceded that at least part of the development the subject of a development application falls within one of the categories listed within Pt 1 of Schedule 3 to the 2000 Regulation, such as in the present case, then that part is thereby declared to be "designated development". As I have noted, the only question then is whether the development application in question is "in respect of" that part of the development which is so declared. In my opinion, that question is not resolved by undertaking a further exercise in characterisation dependant upon whether that part of the proposed development is an independent use of the land to which the application relates or whether it is ancillary to some other part of the development proposed which is the dominant or primary purpose of the application. 179 As I have already indicated, there is no proper basis for construing s78A(8)(a) as applying to an application only in respect of designated development. I agree with the primary judge in Maxwell (at 195 [43]) that it would be contrary to the intent of the legislation now in force to hold that an activity which falls within one of the categories listed in Pt 1 of Schedule 3 should necessarily lose that character because it only forms part of a greater development or is not the main purpose of the development in respect of which the application has been made. 180 It is of little significance to observe that the critical words in s78A(8)(a) are "in respect of" and not "for". There is authority in other contexts that the prepositional phrase "in respect of" is of great width and certainly wider than the preposition "for": Unsworth v Commissioner for Railways (1958) 101 CLR 73 at 87 per Fullager J; Genders v Government Insurance Office of NSW (1959) 109 CLR 363 at 387. Further, in State Government Insurance Office v Crittenden (1966) 117 CLR 412 at 416 Taylor J referred to the observation of Fullager J in Unsworth that the expression "in respect of" was wider than the preposition "for" when considered alone (that is, not in the composite phrase "for and in respect of"). His Honour then adopted the comment of Mann CJ in Trustees Executors of Agency Co Ltd v Reilly [1941] VLR 110 at 111 that "[t]he words 'in respect of' are difficult of definition but they have the widest possible meaning of any expression intended to convey some connexion or relation between the two subject matters to which the words refer."

See also, National Vulcan Engineering Insurance Group Ltd v Pentax Pty Ltd [2004] NSWCA 218 at [74] and [123]. 181 As is always the case when construing a phrase such as "in respect of", much depends on the context and the discerned purpose of the legislative provision in which it is used. In the present case, the phrase is used in connection with a provision which requires an environmental impact statement to be prepared where development is declared to be designated development. By definition such development is more likely than other forms of development to have significant environmental impacts on sensitive areas such as wetlands and the like. 182 It would be a curious and unlikely result and, in my opinion, contrary to a purposive construct of the relevant provision of the EPA Act the objective of which is the protection of the environment, if development which is admitted or found (after being appropriately characterised) to be designated development can escape the legal requirements deemed necessary by the legislature to enable the impacts of that development to be properly assessed by the device, unexpressed in that provision, of characterising that development as subsidiary to some other non-designated development which is regarded as the dominant or primary development proposed in a particular development application. In my opinion, clear words would be required in the EPA Act before such a result could be embraced as a matter of statutory construction of s78A(8)(a). 183 To adopt and adapt the observation of Menzies J in Genders at 387, while in some cases there may be good reason for confining the meaning of the general words "in respect of", there is no reason for restricting their amplitude in a statutory provision such as s78A(8)(a). When taken in the context of the objects of the EPA Act set forth in ss5(a)(vi) and 5(c) and in conjunction with provisions such as ss79, 80(9) and 98 which single out designated development for particular attention, it becomes clearly enough that the requirement for an environmental impact statement to accompany a development application "in respect of" designated development was intended to secure for the public good the comprehensive protection of the environment from those forms of development which by their nature, have been declared by the legislature to be likely to significantly impact thereon. 184 As her Honour said in Maxwell (at 195 [43]) and I repeat: "The whole basis behind designated development is to ensure that activities that will potentially have greater environmental impact are properly considered through a process of environmental impact assessment." 185 It is true that there is some inconsistency in the language used in the provisions to which I have referred. Thus s79 applies to a development application "made for consent to carry out designated development". Sections 80(9) and 98 speak of a development application "for" designated development. However, I do not regard these differences as requiring the phrase "in respect of" in s78A(8)(a) to be read down or to be construed in the more narrow sense in which the preposition "for" has been in some contexts construed. Section 78A(8)(a) is the primary or governing provision from which the other provisions to which I have referred follow. In the present context, it would not be inappropriate to construe it as an equivalent to "involving". On that construction the application in the present case was one involving designated development. 186 The first appellant sought support for its contentions in the publication by the Minister of Planning in June 1994 of a document entitled "EIS Report" which purported to explain the changes to the EPA Act and the 1980 Regulation. The report presented a revised schedule for designated development introducing more appropriate thresholds of development scale. It was also intended to broaden the designating criteria to include locational factors to reflect the sensitivity of the receiving environment as well as performance and cumulative impacts. 187 It was thus submitted that these observations in the EIS Report represented the source of the 1994 amendments in that the new Schedule 3 was a deliberate departure from the scheme underlying the provisions it replaced. This was said to be further emphasised by the following passage in the EIS Report: "Sewerage treatments plants which are constructed and operated by public authorities do not require development consent and their environmental impacts are assessed under Part 5 of the EP&A Act. However, there has been an increase in private residential subdivisions, retirement villages, tourist developments and major industrial projects incorporating sewerage treatment plants in the development." 188 Accordingly, the EIS Report indicated an intention of the Minister and the Parliament that on-site sewerage treatment plants, although provided to service a particular subdivision or other form of development, should be regarded as designated development for the purpose of requiring the preparation of an environmental impact statement. 189 In my opinion there is force in these submissions. They certainly accord with a purposive approach to the construction of s78A(8)(a) which I favour whereby an application is "in respect of" designated development where a not insignificant part of the development can be so categorised. 190 The respondent countered by submitting that acceptance of the approach in Maxwell would mean that the disposal of sewage effluent by way a septic tank servicing a dwelling house which was located within 250 metres of a single dwelling not associated with that dwelling house would fall within the description in category 29(3)(b)(iv) of Pt 1 of Schedule 3 and thus require the preparation of an environmental impact statement where otherwise consent to the erection of the dwelling house was required. It was suggested that the only way in which such a prima facie absurd result could be avoided would be if one construed the expression in sub-paragraph (3) "sewerage systems or works that store sewage" as in some way excluding a septic tank, albeit that such a tank stores sewage. As paragraph (3)(a) is an alternative to sub-paragraph (b), a system that stores sewage is not required to have any particular capacity. It can store one tonne or 1000 tonnes. It was not submitted that the use of the plural "sewerage systems or works" could avoid such a result. And yet the consequences of such a construction requiring an environmental impact statement on every occasion that a development application is made to erect a dwelling house with a septic tank sewerage disposal system would (or at least might) be unreasonably onerous to say the least. 191 The first appellant's response was that the result referred to in the preceding paragraph could be avoided as the word "sewerage" is defined by the Macquarie Dictionary 4th ed to mean "the removal of waste water refuse by means of sewers" or "a system of sewers". As a septic tank is not a sewer (the word itself defined in the Macquarie Dictionary to mean "an artificial conduit, usually underground, for carrying off waste water and refuse"), it was at least arguable that a septic tank was not a "sewerage system" within the meaning of category 29(3) even though it stores sewage or effluent. 192 On the other hand, there may well be good environmental reasons why a septic tank sewage disposal system should be the subject of an environmental impact statement even though it only services a single dwelling; a fortiori where it services a series of dwellings or one very substantial dwelling. After all, the effluent from a septic tank, albeit treated to a point, is usually piped to a trench where it is permitted to soak into the ground. Depending on the composition of the soil or ground in question, it may have a significant impact if it is located, for instance, within 100 metres of a natural body of water or wetland. Accordingly, in my opinion, it is not self-evident that if otherwise a septic tank disposal system falls within the category of "sewerage systems or works" in category 29 of Pt 1 of Schedule 3, it would be either absurd or unreasonable to require the assessment of the impact of that form of disposal of sewage to be the subject of an environmental impact statement. 193 The extent of the detail to be included in any such statement would, no doubt, depend upon the particular circumstances. It does not necessarily follow that it would be an inordinately expensive exercise. 194 The fact remains, however, that sewerage treatment systems or works, including septic tanks, are capable of having unacceptable environmental impacts as they have the potential for surface and ground water contamination, odour and health risks depending on their size and location. The legislative purpose in expanding the list of categories which are declared to be designated development and the width of the descriptions of those categories, such as those relating to "Sewerage systems or works" evidences the concern of the legislature as to the potential environmental risks associated with the storage or disposal of sewage, particularly if located within a relatively short distance of environmentally sensitive areas. 195 Accordingly, one's initial reaction to the possibility of a septic tank being designated development needs to be tempered by considerations of the nature of those referred to above. In any event, it is always open to the Minister to amend category 29 of Pt 1 of Schedule 3, if so advised, to exclude a septic tank servicing a single dwelling house. In my opinion, that would be a more appropriate response to the respondent's submission than one which adopts an approach to the issue of designated development which in my view cannot be sustained and is contrary to the purpose and objects of the EPA Act as a whole. 196 Accordingly, in my opinion the primary judge was in error in answering question (ii) in the negative. In my opinion, Development Application No X05/0412 was in respect of designated development so that the failure to prepare and lodge an environmental impact statement prior to the granting of development consent to that application by Commissioner Bly resulted in that application being invalid. Consequently, the Commissioner's consent to that application is also invalid.

Costs of the proceedings before the primary judge 197 The power to award costs in the LEC is to be found in s.69(2) of the Court Act which relevantly provides as follows: "(2) Subject to the rules … (a) costs are in the discretion of the Court." 198 So far as proceedings in Classes 1, 2 and 3 of the LEC's jurisdiction are concerned, Pt 16 r.4(2) of the Court Rules provides as follows: "(2) No order for the payment of costs will be made in proceedings to which this Rule applies unless the Court considers that the making of a costs order is, in the circumstances of the particular case, fair and reasonable." 199 McClellan CJ at CL has addressed the effect of this rule in his reasons for judgment in this matter. So far as Class 1 proceedings are concerned, his Honour has observed (at [252]) that the existing practice of the LEC was to continue but with a clear statement that it would be departed from where it concluded that it was "fair and reasonable" to do so. His Honour confirmed that in his decision in Gee v Port Stephens Council (2003) 131 LGERA 325 he intended to say that when a party seeks in the course of a Class 1 proceeding to raise as a separate or preliminary matter of law whether or not the proposed development is prohibited, the character of the litigation changes and the usual approach to costs in Class 1 proceedings may not be appropriate. Relevantly, the raising of such a separate matter may well inform the answer to the question raised by the rule as to whether it is "fair and reasonable" to depart from the usual position that there be no order for costs and that if it is determined that such a departure should occur, the form of any order including whether "costs should follow the event" will require consideration. 200 In the present case, as articulated in [252] of his reasons, his Honour considered that as the proceedings before the primary judge had the character of ordinary litigation rather than a "merits review", he was satisfied that an order for costs in those proceedings should be made and that it was fair and reasonable that that order should be that costs should follow the event as determined by this Court in respect of each of the preliminary questions. In the particular circumstances of this case, I agree with the orders proposed by McClellan CJ at CL, and that agreement is reflected in the orders which I propose below. 201 However, it is necessary to observe that in Hunter Development Brokerage Pty Ltd v Cessnock City Council [No 2] [2006] NSWCA 292, Basten JA, with whom Santow and Bryson JJA agreed, adopted an approach to the application to Pt 16 r.4(2) of the Court Rules which differs from that adopted by McClellan CJ at CL in Gee as explained by his Honour in his reasons in the present matter. 202 As I perceive that difference, whereas his Honour espouses the approach to r.4(2) that, as a general provision, the resolution in Class 1 proceedings of preliminary questions of law should result in an order that costs should follow the event, Basten JA approached the Rule upon the basis that it did not distinguish, for the purposes of determining whether it was fair and reasonable to depart from the prima facie position that there be no order for the payment of costs in Class 1 proceedings, between a preliminary hearing on questions of law to which the "costs follow the event" principle should generally be applied and the "merits review" proceedings before a commissioner where the "no order for costs" principle should generally apply. 203 Thus, in Hunter Development Basten JA observed (at [60]) that it was : "difficult to derive from the principle underlying the rule a policy that would identify questions of legal capacity as definitively different from other legal questions which might be determined by a judge rather than a commissioner or to separate cases which turn entirely on the facts from those which may involve mixed questions of fact and law. Each of these classifications may be relevant: the subject matter, scope and purpose of the rule do not require that any be treated as definitive of whether an order that costs follow the event should be made." 204 It appears to me, therefore, that there is a fundamental tension between the approach to the application of Pt 16 r.4(2) as adumbrated by this Court in Hunter Development and that which McClellan CJ at CL in his reasons in the present matter has indicated as being the proper approach to the application of the rule given the circumstances under which it was made and in the light of the history of the approach of the LEC to the awarding of costs in Class 1 proceedings given their particular character so identified by his Honour. 205 In my opinion, it is neither necessary nor appropriate for me to determine whether the Chief Judge's approach as articulated in the present case or this Court's approach in Hunter Development constitutes the correct approach to the application of the rule. In particular, it would be inappropriate to do so as the matter was not argued before us no doubt because the argument took place before judgment was delivered in Hunter Development. I appreciate that McClellan CJ at CL's views on the one hand and those of this Court in Hunter Development on the other may result in difficulties in the application of the rule by judges of the LEC although I would consider that, at the present time, they are bound by the approach in Hunter Development unless and until leave is granted by this court to review that decision. 206 Accordingly, for present purposes it is unnecessary for me to comment on which of the approaches to the application of the rule is the one which I would prefer and I therefore do not do so. 207 I have already observed that in [252] of his reasons in the present case, McClellan CJ at CL has proposed that as the proceedings before the primary judge had the character of ordinary litigation and was not a merits review, his Honour was satisfied that an order for costs in the proceedings before her Honour should be made as it would be fair and reasonable in those proceedings that costs should follow the event. 208 However, in the present case, it is sufficient to adopt the approach of Basten JA in Hunter Development as articulated in [60] of his Honour's judgment where he acknowledged the distinction (to which McClellan CJ at CL would give particular or even definitive weight) between the hearing of a preliminary question of law by a judge and a merits review by a commissioner as being a consideration of some importance although not one rising to a level requiring a particular result. Thus, in the present case I would regard the circumstances under which the preliminary question of law arose and were determined as justifying a finding that it would be fair and reasonable to depart from the "no order for costs" principle in relation to those separate questions. 209 On the other hand, given that the determination of the merits appeal before Commissioner Bly proceeded to a hearing within a few days of the primary judge determining the preliminary questions in circumstances where neither party sought the adjournment of that hearing until her Honour's determination of those questions could be challenged on appeal, I do not consider that it would be fair and reasonable to depart from the ordinary rule that there should be no order for costs with respect to those proceedings.

Conclusion 210 For the foregoing reasons, I would therefore propose the following orders:

(a) In proceedings No. CA40090/06 extend the time in which the first appellant is to file the summons for leave to appeal up to and including 17 October 2006;

(b) Grant leave to appeal with respect to the decision of Pain J of 23 August 2005;

(d) Set aside her Honour's answer to the question "Whether Development Application No X05/0412 is designated development under the Environmental Planning and Assessment Act 1979"; and answer that question "Yes";

(e) In proceedings No. CA 40714/06 order that the decision of Commissioner Bly in proceedings No 10720/05 in the Land and Environment Court of New South Wales on 10 February 2006 be quashed; (f) As to all proceedings: (i) The first appellant to pay the respondent's costs of the proceedings before Pain J with respect to Question 1 and the respondent to pay the first appellant's costs of those proceedings with respect to Question 2, the costs in each case to be set off against each other; (ii) The second appellant to pay the respondent's costs in the proceedings before Pain J with respect to Question 1; (iii) The appellants to pay the respondent's costs in this Court with respect to Question 1 determined by Pain J and the respondent to pay the first appellant's costs in this Court with respect to Question 2, the costs in each case as between the first appellant and the respondent to be set off against each other;

(g) The parties against whom such costs orders have been made to have to a certificate under the Suitor's Fund Act 1951, if otherwise qualified. 211 McCLELLAN CJ at CL: I agree with Tobias JA. However, it is appropriate that I should add some observations of my own on two issues. For that purpose I shall adopt the abbreviations in the judgment of Tobias JA. 212 This is yet another case in which this Court and the LEC have been required to consider whether a provision in a local environmental plan (LEP) is a "development standard." As Tobias JA makes plain in his reasons for judgment the task of construing a particular provision in an LEP can be difficult. The history of judicial decisions over many years demonstrates that properly informed minds may legitimately reach different conclusions about whether a particular provision is a development standard. There has been and will continue to be very significant burdens on public funds and costs to private individuals and corporations from this type of litigation unless steps are taken to alter the situation. 213 It is instructive to reflect on the purpose for which SEPP 1 was made. The intention was to allow for development to take place which was environmentally appropriate notwithstanding that it did not comply with a numerical requirement or other provision of an LEP which controlled development on that site. Experience had shown that the constraints which at the time a local plan was made were thought to be generally appropriate may not be necessary or reasonable in a particular case. The limitation of only minor departures from an applicable numerical standard which was commonly allowed when development was controlled by the Local Government Act 1919 (the 1919 Act) was also believed to be unnecessarily rigid. Accordingly, a power of general dispensation was provided - see Legal & General Life of Australia Ltd v North Sydney Municipal Council (1990) 69 LGRA 201. It is now apparent that the complexity of particular provisions in LEP's and the difficulty in determining whether they are a development standard, has meant that the benefit of flexibility which SEPP 1 was intended to provide has been eroded in many cases by the monies and time wasted in litigation. A change is long overdue. 214 There are a number of approaches which could be taken to deal with the problem. Although I understand that efforts are being made to bring consistency of expression to similar provisions in different LEP's, the reality is that, although desirable, a return to the uniform approach originally taken to provisions in Planning Scheme Ordinances made under the old Pt 41A of the 1919 Act may not be entirely possible. An alternative solution needs to be found. 215 Section 36(2) of the EPA Act relevantly provides that a SEPP prevails over an LEP whether made before or after the LEP to the extent of any inconsistency, if the SEPP expressly so provides. SEPP1 so provides: see cl 5. The relevant inconsistency is between the obligation imposed by the LEP that development consent cannot be granted unless there is compliance with a provision which is a development standard and the power in cl 7 of SEPP1 to grant such a consent notwithstanding non-compliance with that standard. 216 The effect of s 36(4) of the EPA Act is to enable SEPP1 to be amended by a later LEP to provide for a way in which that inconsistency is to be resolved. Accordingly, one method of avoiding the problem would be to amend existing LEPs and to insert into new LEPs a provision which amends SEPP1 to provide that its provisions are not to apply to identified clauses of the LEP which are development standards. Those clauses would be those which the Minister does not, as a matter of policy, wish to be made subject to an objection under SEPP1 in respect of their non-compliance.

Costs 217 Tobias JA has proposed orders in relation to the costs of this appeal. In my view those orders are appropriate. 218 However, it has also been necessary in this appeal to consider whether this Court should make orders in relation to the costs of the hearing before Pain J and Commissioner Bly, and if so, the terms of those orders. This requires consideration of the principles by which orders for costs are made in Class 1 proceedings in the LEC. 219 When exercising jurisdiction in Classes 1, 2 and 3 the LEC is given power by the Court Act to inform itself in any manner it thinks fit, determine its own procedure, conduct informal hearings, dispense with the rules of evidence and dispose of proceedings expeditiously (s 38). These are the hallmarks of an inquisitorial process rather than an adversarial process (see the discussion in Creyke and Bedford: Inquisitorial Processes in Australian Tribunals (AIJA, Melbourne, 2006, at 15)). The proceedings are appropriately described as administrative review and are commonly referred to as merits review. 220 The nature of administrative review proceedings was considered by Brennan J in Bushell v Repatriation Commission (1992) 175 CLR 408 where his Honour said (424-425): "Proceedings before the AAT may sometimes appear to be adversarial when the [Repatriation] Commission chooses to appear to defend its decision or to test a claimant's case but in substance the review is inquisitorial. Each of the Commission, the Board and the AAT is an administrative decision-maker, under a duty to arrive at the correct or preferable decision in the case before it accordingly to the material before it. If the material is inadequate, the Commission, the Board or the AAT may request or itself compel the production of further material." 221 In Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 222 ALR 411 at [26], Gleeson CJ, Gummow, Kirby, Hayne and Hayden JJ said: "The [Refugee Review] Tribunal was not an independent arbiter charged with deciding an issue between adversaries. The Tribunal was required to review a decision of the Executive made under the [Migration] Act and for that purpose the Tribunal was bound to make its own inquiries and form its own views upon the claim which the appellant made." 222 When sitting as President of the Administrative Appeals Tribunal (rather than in his judicial capacity as a judge of the Federal Court), Downes J expressed the opinion that this statement relates "to merits review tribunals generally", not just to the Refugee Review Tribunal: see also Australian Prudential Regulation Authority v Administrative Appeals Tribunal [2005] FCA 1916 at [16]. 223 I appreciate that for many years Class 1 proceedings in the LEC were apparently conducted in the form of conventional adversarial litigation. This no doubt explains the statements by Tobias JA in Segal v Waverley Council (2005) 64 NSWLR 177 especially at [42], [51] and [95]. However, the statutory framework has remained the same from the inception of the LEC and the assumption that proceedings in Class 1 of its jurisdiction were conventional adversarial litigation was contrary to the expectation of the legislature when the planning legislation was enacted. When the Court Bill was introduced into the Parliament the Minister said, inter alia: "The court is a novel concept bringing together in one body the best attributes of a traditional system and of a lay tribunal system. In consequence, the court will be able to function with the benefits of procedural reform and lack of legal technicalities as the requirements of justice permit in accordance with clause 38" (Second Reading Speech, Legislative Assembly, 14 November 1979, p 3051). 224 In recent years the LEC has reformed a number of its previous practices and procedures have been implemented for the purpose of ensuring that its proceedings are conducted in a manner which reflects the original policy in the Court Act - (McClellan, "Recent Changes and Reforms at the Land and Environment Court", speech delivered to the Local Government Association of New South Wales, 27 July 2004; McClellan, "Amendments to the Court Rules and Practice Direction", speech delivered at the Local Government Executive Briefing Seminar on Amendments to the Court Rules and Practice Directions, 10 June 2004, McClellan, "Achieving the best outcome for the community", speech delivered at the EPLA Conference, Newcastle, 28-29 November 2003). 225 The jurisdiction which the LEC exercises in Classes 1 and 2 was formerly exercised by the Local Government Appeals Tribunal. The usual practice of the Tribunal was to make no order for costs in proceedings before it. However, if a question of law was raised pursuant to s 342BK of the 1919 Act, that question would be determined in the Supreme Court where costs would normally "follow the event." When the LEC assumed the jurisdiction of the Local Government Appeals Tribunal it adopted a similar approach to that of the Tribunal in relation to costs in Classes 1 and 2. That approach was reflected in a Practice Direction which provided: "The practice of the Court is that no order for costs is made in planning and building appeals unless the circumstances are exceptional." 226 The Practice Direction was criticised by this Court in Maurici v Chief Commissioner of State Revenue (2001) 51 NSWLR 673. Although now recognised as probably invalid, the Practice Direction reflected the intention of the legislature that proceedings in Classes 1 and 2 should eschew adversarial processes. However, its invalidity was not because it reflected an inappropriate policy but rather because it may have imposed an impermissible fetter on the discretion of the Court to make an order for costs as provided by s 69(2) of the Court Act. 227 It is usual in administrative review proceedings that an order for costs will not be made in other than unusual circumstances. Generally where a body has been created by statute with only an administrative review function the statute will modify any general discretion in relation to costs. For instance, except in relation to applications under s 54 of the ASIO Act 1979 (Cth), the Commonwealth Administrative Appeals Tribunal is given no power to order costs at all under the Administrative Appeals Tribunal Act 1975 (Cth). Specific legislation may give the Tribunal the power to order or "recommend" the paying of costs in relation to specific decisions (see eg s 66 of the Freedom of Information Act 1982 (Cth)), but the Tribunal has no general power to make costs orders. Similarly, the Migration Review Tribunal and the Refugee Review Tribunal do not have power under the Migration Act to make costs orders. The New South Wales Administrative Decisions Tribunal may only make a costs order if satisfied that there are "special circumstances" (Administrative Decisions Tribunal Act 1997 (NSW), s 88). Parties must bear their own costs in the Victorian Civil and Administrative Tribunal unless the Tribunal is satisfied that it is "fair" to make a costs order (Victorian Civil and Administrative Tribunal Act 1998 (Vic), s 109) and the default position in the Social Security Appeals Tribunal is also that the parties should bear their own costs (Social Security (Administration) Act 1999 (Cth), s 176). 228 The issue of costs in administrative (as distinct from judicial) review proceedings has been considered on a number of occasions by Committees of Inquiry and Law Reform Commissions. Their recommendations and conclusions have been consistent with these principles: (see the Franks Committee (Report of the Committee on Administrative Tribunals, London, Cmnd 218, 1957, para 94); the Kerr Committee (Report of the Commonwealth Administrative Review Committee, 1971, para 297); the Bland Committee (Final Report of the Committee on Administrative Discretions, 1973, para 217); the WALRC (Review of Administrative Decisions, Report 26, 1982, paras [5.21]-[5.22]); the South Australian Law Reform Committee (Report Relating to Administrative Appeals, 1984, pp 34-35); the Administrative Review Council (Eleventh Annual Report 1986-1987, p. 80 and p. 84); and see also Re Verus Capital Ltd (as mgr of the Benwood Property Trust) and Australian Securities and Investments Commission (2001) 66 ALD 349 per Deputy President Handley at 360). 229 The Australian Law Reform Commission considered the matter in 1995 in its report Cost Shifting - who pays for litigation? when it said at [5.1]: "The administrative actions and decisions of government may be reviewed in a number of ways. They may be subject to judicial review by a court, administrative review by a tribunal or investigation by an ombudsman. The costs rule in administrative law proceedings vary according to the type of review a party pursues" ( Cost Shifting - who pays for litigation? Report 75, 1995) 230 The Commission expressed the view that the degree to which proceedings are or are not adversarial should influence whether the "costs follow the event" principle should apply (see esp [5.8], [5.12] and [5.15]). 231 The former Practice Direction of the LEC and the usual orders made by that Court when exercising its administrative review function are consistent with this approach. The reason for such an approach is well known. It is accepted, in my view correctly, that where an individual or corporation believes that an administrative decision which affects it is unreasonable, it should not be discouraged from seeking to have the decision reviewed by a concern that it may have to pay the costs of the decision-maker (invariably a public body) if the application fails. This approach acknowledges the fact that the nature of the proceedings is a review of an administrative decision where, unless review is provided, an individual will have no means of challenging the decision, however unreasonable, except if the high threshold of Wednesdbury unreasonableness can be overcome. It is derived from considerations of fundamental fairness and seeks to strike an appropriate balance between the resources of the decision-maker and those of the citizen affected by its decision. 232 The Court Act contains two provisions relevant to costs. Section 52 provides for costs in Class 5 proceedings and s 69 provides for costs in Classes 1 to 4 and Class 6. Section 69(2)(a) states that "costs are in the discretion of the Court." Section 69(6) provides that "the Court may determine by whom and to what extent costs are to be paid." 233 Section 69 was considered by the High Court in Oshlack v Richmond River Council (1998) 193 CLR 72. That case concerned proceedings in Class 4 of the LEC's jurisdiction where the applicant, who failed at the trial, was not ordered to pay the respondent's costs. Applying the principles in Latoudis v Casey (1990) 170 CLR 534 this Court reversed that decision. By a majority the High Court restored the decision of the trial judge. Latoudis v Casey is authority for the proposition that in civil litigation costs orders are generally made to compensate the party who has been put to expense by reason of the legal proceedings. However, it is important to remember that Latoudis turned upon the correct application of s 97(b) of the Magistrates (Summary Proceedings) Act 1975 (Vic) in summary criminal proceedings. To the extent that the High Court passed observations on the appropriate approach to an award of costs in civil proceedings, it is apparent that it had in mind conventional inter partes civil litigation: (Dawson J at 561; McHugh J at 567 (and the case to which he refers); at 568). 234 As I have indicated the High Court divided in Oshlack. Brennan CJ, who with McHugh J was in the minority, held that to uphold the order of the trial judge would be to depart from the principle laid down in Latoudis which governs civil cases. McHugh J adopted the statement of principle articulated by Gleeson CJ in Owen v Walton (1995) 36 NSWLR 77 to 79 that "the purpose of an order for costs is to indemnify or compensate the person in whose favour it is made, not to punish the person against whom it is made." Neither Brennan CJ nor McHugh J gave consideration to the appropriate exercise of a discretion to make an order for costs in administrative review proceedings. 235 Gaudron and Gummow JJ published joint reasons. After discussing the antecedents to s 69 they considered whether rules of practice "in other species of litigation have so hardened that they look like rules of law" (McDermott v The King (1948) 76 CLR 501 at 514) [36] effectively dictating the approach which a court should take when vested with a discretion to make an order for costs. Their Honours concluded with observations of general relevance which are apposite to the present matter: "There is no absolute rule with respect to the exercise of the power conferred by a provision such as s 69 of the Court Act that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. Nor is there any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party: Knight v Clifton [1971] Ch 700 at 710, 713-714, 716, 724-725; Tekmat Investments Pty Ltd v Ward (1988) 65 LGRA 444 at 446. If regard be had to the myriad circumstances presenting themselves in the institution and conduct of litigation, and to the varied nature of litigation, particularly in the equity jurisdiction, it will be seen that there is nothing remarkable in the above propositions. Several examples will suffice. In a suit for redemption, the successful mortgagor, being obliged to do equity, was required to bear the mortgagee's general costs of the suit, unless the mortgagee had forfeited them by some improper defence or other misconduct: Cotterell v Stratton (1872) 8 Ch App 295; Pearson v Dennett (1911) 11 SR (NSW) 449 at 453-454. One of several joint promisees who refused to be joined as a plaintiff could, after an offer of indemnity against costs, be made a defendant: Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460 at 493. Likewise an equitable assignor of a present legal chose in action could, on receiving a similar indemnity, be required to permit an assignee to sue in the name of the assignor: Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 27; Weddell v Pearce & Major [1988] Ch 26 at 38-41. However, if the recalcitrant joint promisee or assignor had not been offered the indemnity before joinder as a defendant, the promisor or assignee who had failed to take that step, although otherwise successful in the action, was obliged to bear the costs of that defendant: see Daniell's Chancery Practice, 7th ed (1901), vol 1, p 980.

As the practice in this Court testifies, an applicant for special leave to appeal may be required to undertake to bear, in any event, an order for the costs of the other party to the appeal Such undertakings are given and accepted on the generally applicable footing that there cannot thereby be conferred upon the court a power to make orders which are otherwise beyond power: Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 163, 165. Further, Liversidge v Anderson [1942] AC 206 at 283 is a celebrated example of 'a matter of very general importance' in which it was not appropriate for the successful party to seek costs .

Nor, before or since the introduction of the Judicature system, has there been any absolute proposition that the sole purpose of a costs order is to compensate one party at the expense of another. As a general rule, wherever an estate or fund is administered by the court, the costs of all necessary and proper parties to the proceedings should be defrayed out of the fund: Daniell's Chancery Practice, 7th ed (1901), vol 1, p 987. An example in this Court is the costs order made in Attorney-General (Q); Ex rel Nye v Cathedral Church of Brisbane (1977) 136 CLR 353 at 377.

It may be true in a general sense that costs orders are not made to punish an unsuccessful party. However, in the particular circumstance of a case involving some relevant delinquency on the part of the unsuccessful party, an order is made not for party and party costs but for costs on a "solicitor and client" basis eg Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport Insurance Pty Ltd (1986) 10 FCR 177 at 178. See also Packer v Meagher [1984] 3 NSWLR 486 at 500; Australian Guarantee Corporation Ltd v De Jager [1984] VR 483 at 502 or on an indemnity basis eg Degmam Pty Ltd (In Liq) v Wright [No 2] [1983] 2 NSWLR 354. See also Re Smith; Ex parte Rundle [No 2] (1991) 6 WAR 299 at 301. The result is more fully or adequately to compensate the successful party to the disadvantage of what otherwise would have been the position of the unsuccessful party in the absence of such delinquency on its part.

This background suggests that, in its operation upon litigation under s 123 of the EPA Act, s 69 of the Court Act is not to be narrowly construed. Further, it is applicable to a new species of litigation and the discretion it confers is to be exercised so as to allow for the varied interests at stake in such litigation." 236 Kirby J was also in the majority. His Honour recognised, as did Gaudron and Gummow JJ, that Class 4 litigation in the LEC, with open standing provided by s 123 of the EPA Act, was a different form of litigation to that with which the law was familiar. Kirby J recognised (at [134]) that the proper approach to the exercise of a statutory discretion may be illuminated by the particular language of the statutory provision and said that it would be a "mistake similar to that exposed in Latoudis, to ignore the functions, powers and peculiar procedural provisions governing the Land and Environment Court in the jurisdiction which it had exercised" when considering whether a costs order should be made." 237 The High Court was not called upon in Oshlack to consider the administrative review jurisdiction of the LEC. However, the discretion provided by s 69(2) must be exercised not only with respect to Class 4 matters but in relation to Classes 1 and 2 as well as Class 3. In as much as Class 4 proceedings, together with s 123 of the EPA Act provided "a new species of litigation", the jurisdiction being exercised in Classes 1 and 2 is of a significantly different character to that which is traditionally exercised by a court. (I have not overlooked the fact that the Land and Valuation Court and, before it, the District Court had previously exercised jurisdiction in some areas which were given to the Local Government Appeal Tribunal. There is a discussion of the Land and Valuation Court's approach to costs in Wilcox: The Law of Land Development at 159). 238 Following public criticism of some of the workings of the LEC, a review was conducted by the Hon Jerrold Cripps QC (Report of the Land and Environment Court Working Party, September 2001) (the Cripps Report). By the time his report was published the Court of Appeal's decision in Maurici had been handed down. Recognising that the Practice Direction was no longer appropriate, the Cripps Report recommended that a rule be made with respect to costs in Classes 1, 2 and 3 of the court's jurisdiction. The wording of the rule suggested in the Report was adopted when Pt 16 r 4(2) was made. The Rule provides: "No order for the payment of costs will be made in proceedings to which this Rule applies unless the Court considers that the making of a costs order is, in the circumstances of the particular case, fair and reasonable." 239 The Cripps Report also identified a number of reasons why the rule which he proposed should provide that, notwithstanding the usual approach that there should be no order for costs in Classes 1, 2 and 3, an order could be made where the court considered it to be "fair and reasonable." It is unnecessary to provide an extensive statement of his reasons but they include circumstances in which an entirely unmeritorious application was made or where there was an equally unmeritorious refusal of an application by a council. There have been cases of applications which have been pursued when there was no real expectation of approval but which sought the LEC's guidance as to the appropriate level or form of development of a site. Equally, councils have resisted applications, even those which conform with their own adopted policies or standards, where there was no rational prospect of defeating the proposal. Rather the defence was motivated by "political considerations", the court becoming the consent authority and not the council. By this means any opprobrium for the decision could be diverted from the council to the court. 240 When a judge of the LEC, I was required in Gee v Port Stephens Council (2003) 131 LGERA 325 to determine an application for costs in Class 1 proceedings. Although an appeal had been made to the Court by the applicant seeking a merits review of its application, the council, as a separate question, raised an issue as to whether the development, the subject of the application, was prohibited. The development depended upon the existence of existing use rights which the council, at least in the litigation, submitted did not exist. The costs question was determined after Maurici was decided by this Court but before Pt 16 r 4(2) was made. 241 In the course of my reasons I reviewed some of the history of costs orders in the LEC and its predecessors. (More recently Preston J carried out an extensive review in Grant v Kiama Municipal Council (2006) NSWLEC 70 (at [15])). It may be, having regard to the subsequent discussion of my reasons in Hunter Development Brokerage v Cessnock City Council [No 2] [2006] NSWCA 92, that I did not adequately explain the position. I intended to make plain that the approach which the LEC had taken to the exercise of its discretion with respect to costs in Class 1 matters was that, being an administrative review of a council's decision, in the ordinary case a costs order would not be made in favour of the successful applicant. The purpose of the LEC in providing the Practice Direction was to ensure that all members of the public who may be contemplating an appeal against a decision to refuse their development application would not be in fear of the prospect that if they lost they would suffer an order to pay the costs of the consent authority in defending an appeal. The parties should know "upfront" the general approach which the LEC would generally adopt. 242 I identified in Gee that the usual approach of the LEC was not to order costs in Class 1 proceedings, but concluded that where a party raised as a separate question whether the consent authority had the power to consent to the application, notwithstanding the usual approach, an order for costs may be appropriate. By raising a question of permissibility the character of the litigation, at least for the purpose of resolving that question, changes, and assumes the character of conventional adversarial litigation. Professor Enid Campbell and Mathew Groves expressed the principle in the following terms: "Distinctions can be made between cases in which the appeal succeeds on the ground that the person or body whose decision is the subject of appeal had no power whatsoever to make that decision; and cases in which the decision under appeal is reversed simply on the ground that the appeals tribunal has taken a different view on how an administrative discretion ought to have been exercised, and the tribunal, standing in the shoes of the primary repository of the discretion, substitutes another decision. In cases of the former type, an award of costs against the respondent administrator may well be justified. It is, however, less easy to justify award of costs against administrators when their decisions are, on appeal, upset on the latter ground" ("Award of costs in administrative proceedings" (2004) 11 Australian Journal of Administrative Law 121 at 134). 243 The distinction, although not with respect to costs, was recognised by Brennan J in Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 643:

"…the making of a discretionary administrative decision is to be distinguished from the making of a curial decision. Generally speaking, a discretionary administrative decision creates a right in or imposes a liability on an individual; a curial decision declares and enforces a right or liability antecedently imposed. The distinction is too simply stated, but it suffices to show that the adjudication of rights and liabilities by reference to governing principles of law is a different function from the function of deciding what those rights and liabilities should be." 244 Once a separate question of permissibility is raised in a Class 1 or 2 appeal, the proceedings become litigation of a character previously determined in the Administrative Law Division of the Supreme Court and in respect of which, in my opinion, the conventional approach to costs in adversarial litigation may be appropriate. This is also the approach which has been adopted in this Court whenever a "separate question" has been determined on appeal. Notwithstanding that this Court is in fact hearing an appeal in Class 1 proceedings, it usually orders that costs should follow the event: see eg Hunter Development at [61]; Strathfield Municipal Council v Poynting (2001) 116 LGERA 319; Helman v Byron Shire Council (1995) 87 LGERA 349. 245 In coming to my conclusion in Gee I was mindful, amongst other matters, of the fact that time, or more correctly delay, will often be critical to the financial viability of a project and that by raising a separate question a council or third party could delay its implementation for months. Even if the council or third party lost the separate question, this delay could destroy the project. Unless costs orders were a real possibility in such a case, a party could take a point in relation to power without the risk that it may be liable for a costs order if it failed. 246 As I have indicated this Court has recently considered in Hunter Development an appeal with respect to orders for costs in Class 1 proceedings in the LEC. The issue for consideration as a separate question arose in proceedings which were commenced before Pt 16 r 4(2) of the LEC Rules came into effect. The issue for determination in this Court was whether the trial judge had erred when exercising his discretion not to make an order for costs in favour of the successful applicant on that separate question. 247 In his discussion of the relevant principles, Basten JA relied upon Latoudis and Penfold v Penfold (1980) 144 CLR 311 and concluded that the practice of the LEC dating back to 1980 in ordering costs in Class 1 proceedings only where special circumstances had been established, was "untenable." With respect, although as Handley JA stated in Maurici the Practice Direction may have imposed a rigid fetter and was accordingly invalid, the practice which had been adopted and applied over many years was, as I have indicated, based on appropriate principles. As Basten JA recognised, there was a divergence of view in the LEC as to the type of case where the usual practice might not be followed. In Gee I endeavoured to deal with one type of case where costs orders may be appropriate. However, I did so before the Rule was made. The matter has now been addressed by the Rule by which it was intended that the existing practice of the LEC was to continue, but with a clear statement that it would be departed from where it concluded that it was "fair and reasonable" so to do and not only when "exceptional circumstances" existed. 248 In Hunter Development Basten JA (at [50]) observed that the "costs follow the event" principle is based on perceived questions of fairness as between litigants. His Honour considered that it depends entirely on the outcome of the litigation and not on the reasonableness of the parties in litigating. However, his Honour does not discuss whether that principle is appropriate and operates fairly in administrative review proceedings. Neither Bryson JA nor Basten JA consider the nature of administrative review and the reasons why it differs from usual inter partes civil litigation. 249 All that I intended to say in Gee was that when a party seeks in the course of merit review proceedings to raise as a separate matter of law being whether or not the proposed development is prohibited, the character of the litigation changes and the usual approach to costs in Class 1 proceedings may not be appropriate. There is no question of encouraging or, as it should be properly understood, not discouraging litigation, which is the principle accepted to be of great importance in administrative review. Of course, each case must be determined in accordance with its individual circumstances which will include the issues raised, the conduct of the litigants and the outcome of the proceedings. These circumstances will inform the answer to the question raised by the Rule, being whether it is "fair and reasonable" to depart from the usual position that there be no order for costs. If it is determined that departure should occur, the form of any order including whether "costs should follow the event" will require consideration. 250 I accept the criticism made in Hunter Development that in Gee I may not have defined the appropriate principle with sufficient care. However, my concern, which is now reflected in the Rule, was to identify that where a separate challenge to the capacity to approve an application was raised in merit review proceedings, the parties should be mindful of the fact that the character of the litigation would change and would no longer be a merits review of an administrative decision. Accordingly, the usual practice of the LEC that there should be no order for costs may not be appropriate. This fact, as well as the conduct of the parties and the outcome of the proceedings, is relevant to whether an order for costs should be made and the terms of any order. 251 There are other matters in my judgment in Gee which may not have been appropriately explained to the Court in Hunter Development. However, Pt 16 r 4(2) has since been made and it is unnecessary to reflect upon them. I should also indicate that I have not considered the position with respect to costs in Class 3 matters, when a dispossessed owner challenges the resuming authority's assessment of appropriate compensation. That class of proceedings raises other issues not considered by the High Court in Oshlack nor by this Court in Hunter Development. However, the principles have been discussed in many decisions of the LEC and it would not be appropriate to consider them in this matter. 252 In the present case the appellant made application to be joined to the proceedings before Pain J and, in separate proceedings, challenged the capacity of the Council and accordingly the LEC to approve the application. The Council joined in the challenge to the extent of the argument that there was a development standard. The appellant wholly failed before Pain J but has succeeded on the second question in this Court. The Council's challenge failed in both courts. As the proceedings before Pain J had the character of ordinary litigation, and were not merit review, I am satisfied that an order for costs in these proceedings should be made. In my opinion it is fair and reasonable that orders should be made in those proceedings so that costs follow the event. I agree with the form of those orders as proposed by Tobias JA. I am also satisfied that in relation to the hearing before Commissioner Bly, which was confined to the merits, there should be no order as to costs.

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