Rose Consulting Group v Baulkham Hills Shire Council

Court of Appeal (NSW)|2003-07-29|Before: Meagher JA, Santow JA, Young CJ, Talbot J

BACKGROUND TO THE DISPUTE - SALIENT FACTS 6 It is convenient that I start with the nature and background to the dispute, as quoted from submissions; these also provide much of the salient facts. These can be accepted as uncontroversial, save for paragraph 17: "1. The appeal is from a decision of Talbot J in the Land and Environment Court (the Court), dated 25 June 2002. The Reasons for Judgment appear at Red 100-122.

On 14 February 2003, leave applications were heard and granted by this Court, following which: (a) the Appellant filed Notice of Appeal dated 26 February 2003; Red 123-125. (b) the Respondent filed Notice of Cross-Appeal dated 24 February 2003. Red 126-128.

The proceedings before Talbot J related to an appeal on a question of law by the Respondent council, under s56A of the Land and Environment Court Act 1979 (the Court Act ), from an earlier decision of Commissioner Nott.

Briefly, the dispute relates to the power of the Court to review the reasonableness of conditions imposed by the Respondent, pursuant to s94 of the Environmental Planning and Assessment Act 1979 (the EPA Act ), on 5 separate development consents for the subdivision of land at Kellyville. The respective Class 1 Applications are reproduced at Red 1 to 10.

The proceedings before Commissioner Nott were heard over 5 days. The Commissioner's Reasons for Judgment were published on 17 December 2001 and the Commissioner made final orders on 21 December 2001. Red 13-95.

The Commissioner found that in determining conditions in accordance with a contributions plan, the Respondent had taken into account matters which were unreasonable and irrelevant to the development the subject of the application. As a consequence of this finding, the Commissioner reduced the amount of monetary contribution payable in respect of each development consent.

The Commissioner did not impugn the validity of the contributions plan adopted by the Respondent, nor did he amend, redraft or redetermine the scheme of that plan. Indeed, the Commissioner expressly stated that: "The task of the Court in these appeals is not to rewrite a contributions plan but rather to determine the question whether the contributions actually levied on the applicant by the council are reasonable, and the factors discussed above relate to this question". Red 48G-I.

The s56A appeal was heard by Talbot J on 11 and 12 June 2002. His Honour published Reasons for Judgment on 25 June 2002 and made the following relevant orders: · Appeal upheld. · Proceedings referred back to Commissioner Nott for a re-hearing.

The principal ground of the appeal is that Talbot J erred in limiting the power of the Court under s94(12) and in holding that the Commissioner misdirected himself, asked the wrong questions and considered irrelevant matters.

Specifically, it is submitted [by the appellant] that s94(12) means what it says, and that Talbot J erred in holding: (a) that s94(11) operates to constrain the Court's wide power on appeal and under s94(12) (Red 113U, 118J, 122J); (b) that, notwithstanding s94(12), an amended condition must be determined by the Court in accordance with a contributions plan (Red 115E-N).

It is also submitted [by the appellant] that Talbot J erred, generally, in:

(a) failing to give any or any adequate reasons in respect of His Honour's opinion: (i) as to the proper construction of section 94(12); (ii) that the Commissioner erred in law; and (b) allowing the s56A appeal and deciding that the matter be referred back to the Commissioner for re-determination pursuant to s94(11) and s94(12) in the manner construed by His Honour (Red 122M-P).

The conditions in dispute required the payment of monetary contributions under s94 of the EPA Act. The general form of the subject conditions is shown at Red 19C-W. Conditions 34 and 35 of the development consent granted to the Appellant on 1 December 2000 (the subject of Application 10071/01).

The appeals at first instance are explained in the Commissioner's Reasons for Judgment at Red 16 to 20.

The relevant land, known as the Kellyville /Rouse Hill release area ( KR area ), is part of a pre-planned area to which Sydney Regional Environmental Plan No. 19 - Rouse Hill Development Area applies. The KR area is approximately one-seventh of the Rouse Hill Development Area and has a total area of 1,500 hectares, of which slightly more than 1,000 hectares is zoned for residential purposes. A map of the relevant area is shown in the Commissioner's Reasons for Judgment at Red 17.

Until 20 December 1999, contributions were levied and paid under the Kellyville / Rouse Hill Contributions Plan ( CP93 ). Approximately 50% of the KR area had already been developed and s94 contributions paid pursuant to CP93 as at 20 December 1999.

CP93 was replaced by the Section 94 Kellyville / Rouse Hill Contributions Plan No. 8A to 8D ( CP99 ) on 21 December 1999. CP99 continued until 17 July 2000. This comprised four separate contributions plans, viz. :

(a) Plan 8A - Open space and recreation; (b) Plan 8B - Roadworks; (c) Plan 8C - Community facilities; (d) Plan 8D - Studies and Administration. Subsequent plans followed a similar format.

[In dispute - appellant's submission] The subject contributions represent a substantial increase for principally the same facilities required under CP93. The Respondent also elected to impose a further obligation on the developers of land in CP93 to pay for amenities or services which only served the discrete and new "Norwest" residential release area, although no additional public facilities were to be provided for development in the KR area. The "Norwest" area covers part of what was formerly designated an employment area under the SREP 19 Structure Plan and is separated from the KR area by a large tract of land known as the "Future Balmoral Road Release Area". The inclusion of the "Norwest" area in CP99 resulted in a subsidy from owners in the KR area of approximately $11.17 million to the "Norwest" developer. Red 47J-R.

Compared with the very significant changes made by CP99, relatively minor changes were made by later contributions plans: (a) CP7:00, which was operative from 18 July 2000 to 11 December 2000; and (b) CP12:00, which became operative from 12 December 2000.

The Respondent levied contributions under CP7:00 only in respect of the Stage 4 subdivision of a residential estate known as "The Outlook"; this development consent being the subject of Application 10071/01. The Respondent used CP99 for the earlier subdivisions in the four other appeals.

The same formula for the determination of contributions was specified in each contributions plan. Red 30 to 31.

The area in CP7:00 is the same as CP93 except for the inclusion of the additional areas indicated at Red 34D-P." 7 Paragraph 17, quoted above, is said by the respondent to be a re-statement of a conclusion by the Commissioner. That conclusion, the respondent argued, was one of the Commissioner's fundamental errors. The respondent maintains in this appeal that the statement contained in that paragraph is an error of fact. 8 For present purposes, it suffices if I give a general picture of the five appeals in Class 1 of the court's jurisdiction. These concerned the reasonableness of monetary contributions sought by way of conditions imposed in the five development consents granted by the council to the applicant. All of these appeals were successful before Commissioner Nott but were remitted back to the Commissioner by the trial judge. He did so on the ground that the Commissioner applied the wrong test in upholding those challenges. 9 Essentially, the trial judge concluded that applying a test of whether the provisions of the plan itself were reasonable and then proceeding to re-work the calculations in order to reach a different result, led to error. This was said to be on two counts, put as follows: "1. The test of reasonableness is not the test to be applied pursuant to s94(12). The test is whether it is unreasonable to allow the condition to remain in its present form or at all. 2. The test is to be applied to the terms of the condition and to the provisions in the plan for the purposes of re-writing the plan." (Red, 120) 10 The appeals relate to subdivisions of land within Lot 203 (or part thereof) DP 873271, Windsor Road, Kellyville. 11 The respondent council, Baulkham Hills Shire Council, levied contributions totalling $3,789,170, all in dispute. The appellant contended that the total of contributions should instead have been $2,414,104. Allowing for some adjustment to these two figures (because of the different times at which the determinations were made) the appellant was therefore claiming that the total contributions should be approximately $1.38 million less than the contributions actually imposed by the council. The Commissioner in fact upheld each of the appeals at first instance. He reduced the contributions by a total amount of $915,850. The specific amounts producing that aggregate sum are set out in the Commissioner's determination; Red, 86, para 231. 12 A useful overview of the appeals is contained in Table 1 of the Commissioner's determination (Red, 16). It refers to appeals 10001, 10003, 10004, 10005 and 10071. The first four appeals are cross-referenced to contributions plan 99 ("CP 99"). The last appeal 10071 is cross-referenced to contributions plan 7:00 ("CP 7:00"). 13 I shall take appeal 10071 for illustration. It applies to the stage 4 subdivision of a residential estate known as "the Outlook". The land is off Windsor Road, Kellyville, as identified in a map forming part of the Commissioner's reasons for judgment (Red, 17). The map shows the Outlook estate in the approximate centre. It in turn is comprised in a larger area described on the map as the "Kellyville / Rouse Hill Release Area", extending to the north. All of this is in turn comprised in the wider area generally identified as the Rouse Hill Development Area. 14 Then extending to the south, is an area which includes an industrial section from which has been re-zoned the area called "Norwest Residential Release Area". At the time of the release of the Kellyville / Rouse Hill Release Area, the Norwest Residential Release Area had not been so identified. It only later ceased to be non-residential, becoming residential when the owner successfully sought re-zoning from an employment area to residential area. Just below the Norwest Residential Release Area is a farm called the Bella Vista Farm. It had been identified for acquisition by all of the relevant authorities and was part of the open space required for the Norwest Residential Release Area. The subsequently created contributions plan known as CP 99 was said by the appellant to have resulted in a subsidy from the owners in the KR area of approximately $11.17 million to the Norwest developer (Red, 47J-R), this being one of the grounds of appeal before the Commissioner; see para 17 of earlier summary. 15 To illustrate the kind of conditions the subject of challenge before the Commissioner, one may take as the consent date 4 December 2000 in appeal 10071. Council imposed the following two conditions: "34. Section 94 Contribution (Kellyville/Rouse Hill) lots > 450m2 (a) A current contribution of $475,361.92 being paid to Council in accordance with Section 94 of the Environmental Planning and Assessment Act , 1979, to provide for the increased demand for public amenities and services resulting from the development. That is, currently $21,607.37 for each of the 22 additional allotments greater than 450m2 in area. Section 94 contribution rates are reviewed regularly and the amount payable will be at the rate applicable at the time of payment. (b) The contribution referred to above comprises the following payments for lots greater than 450m2 in area:- Per Lot Total $ $ Open Space/land 9,576.21 210,676.62 Open Space/Embellish 4,185.65 92,084.30 Community Facilities/Land 194.75 4,284.50 Community Facilities/Capital 1,889.21 41,562.62 Studies and Administration 292.40 6,432.80 Roadworks/Land 1,498.63 32,969.86 Roadworks/Capital 3,970.51 87,351.22 TOTAL $21,607.36 $475,361.92 Note: The total figure for each purpose takes into account the credit for existing lots. 35. Condition 34 has been imposed in accordance with Contributions Plan No. 8 - Kellyville/Rouse Hill Release Area. … … … …" 16 The relevant table 1 (Red, 18) refers to "conventional lots" comprising stage 4 the subject of the above condition. These were lots having an area greater than 450m2. These were subject to a contribution of $21,607.36 per conventional lot in terms of condition 34. That figure is then multiplied by the number of lots, namely 22, comprised in stage 4. That gave a total contribution of $475,362 required by the council for the stage 4 subdivision in that category, from the application of condition 34. What table 1 describes as the "applicant's contention" sought a reduction for that contribution for stage 4 from $475, 362 to $313,760 (Red, 16). 17 A similar approach is then applied to each of the other relevant stages with the overall outcome earlier stated. 18 What are described as the "applicant's contentions in general" appear at para 17 of the Commissioner's judgment (Red, 20) as follows: "17 The applicant contended that the court should determine amended contributions under s94(12) of the Environmental Planning and Assessment Act 1979, because the contributions determined by the council were unreasonable. The applicant contended:

The calculation of contributions in the CP [contributions plan] disproportionately burdens the lots in the subject development due to incorrect density assumptions used to determine population projections . Accepting an original population of 2000 persons in the KR area, the additional population is realistically likely to be 46,701 persons, and not 40,243 as estimated in the CP. 2. The cost of the Norwest open space (net of the Greenway link components) in the Norwest area should be excluded from the CP. 3. The costs of the Greenway links should be apportioned across the projected 2011 population of the whole Shire, as the Greenway links are a regional recreational resource, which join regional facilities. 4. The cost of the Cattai Creek conservation area, being a regional conservation and open space facility, should be apportioned across the entire projected population of the Shire for the year 2011. The cost of the Bella Vista Farm community facility should be excluded from the CP. 6. The cost of the Mungerie Park library should be apportioned across the entire projected population for the year 2011 of the whole Shire, with Kellyville/Rouse Hill residents paying a share of the cost of the Shire's central library at Castle Hill. 7. The cost of the community centre at Mungerie Park should be apportioned across the projected population for the year 2011 of the entire Rouse Hill Development Area. 8. Interest earned on deposit by the contributions' fund should be recognised and offset against the costs to be met under the CP. 9. The studies and administration costs in the CP are excessive and only costs that directly result in the CP should be included." 19 The respondent's council unsuccessfully contended before the Commissioner that the contributions for the various facilities were reasonable and that no adjustments were warranted. The Commissioner's determination to the contrary was ultimately overturned on appeal before Talbot J. 20 I should turn now to the relevant contributions plans. CP 99, contains notable differences between the predecessor contributions plan CP 93. Thus the Norwest Area was included for the first time in CP 99. This was the subject of particular complaint insofar as that then involved an increased contribution for open space in relation to what is described as the Bella Vista Farm. The contribution was, according to the appellant and accepted in the first instance by the Commissioner, not required by reason of any need for public amenities and services resulting from the appellant's development. Indeed the Commissioner referred to the then applicable CP 93 (though this was not the contributions plan applied by the council but rather CP 99) to illustrate how the increased contributions under CP 99 were inappropriately applied to the appellant. The Commissioner was at pains to explain that he was not thereby applying CP 93. Rather he was using it as a reference point to demonstrate the effect of adding the Norwest Area to CP 99 and in the subsequent CP 7:00 to the original KR area. The Commissioner concludes (para 36 Red, 28): "36. I wish to make it clear that in considering by way of rehearing whether the contributions imposed by the council were unreasonable, I am not determining any of the appeals in accordance with CP93. The council is obviously, as a matter of law, entitled to change and update its contributions plans at any time in accordance with the Act and regulations. If there is a significant and substantial increase in contributions levied for development in a particular locality under a new contributions plan compared with the plan that it repeals, there could well be a rational and reasonable explanation for the increase in contributions. And, depending on the particular facts of the case, the court might hold that the increased contributions are reasonable. Nevertheless, an examination of the repealed contributions plan and of the planning studies upon which it was based may highlight parts of the new contributions plan that appear to be unreasonable or at least might highlight the unreasonableness of certain contributions levied in accordance with the new plan." 21 At para 37 the Commissioner explains that when he refers to "reasonableness" he takes it to include "concepts of fairness, equity, sound judgment, moderation and proportionality". 22 I turn now to how the contributions plans actually operate. This can be illustrated by CP 99 (Blue, 3) within which Plan 8A covering open space and recreation is to be found. 23 The contribution plan explained its purpose as being "to enable the levying of development contributions towards the provision of open space and recreation facilities that will be required as a consequence of the development within the release area" (Blue, 10). It then identifies specific objectives of the plan. Then the various factors entering into the calculation of contribution are set out. Thus "occupancy rate assumptions" are set out at para 3.3 for particular dwelling types. For example, fringe/cluster has a stated occupancy rate of 3.7 persons. Thereafter we find "expected population" and "dwelling yield" for particular neighbourhood areas (Blue, 13 Table 2). These factors are then applied in what is described as a "contributions formula". The first is described as "for Open Space and Recreation - Capital". The second is described as "Open Space and Recreation - Land. As the Commissioner pointed out, when one looks at CP 93, CP 99, CP 7:00 or CP 12:00 the same formula is used to determine the contributions rate per lot for the particular public amenity or public service [Red, 30 para 46 of Commissioner's report]. One may illustrate this by reference to the actual contribution formula for open space and recreation, the first for capital cost and the second for land cost, as follows (Blue, 18): " Contributions formula for Open Space & Recreation - Capital Contribution Rate = C x O (per lot/dwelling) P-E* C - is the estimated cost of capital works (see Appendix A). O - is the assumed occupancy rate for the development (see Section 3.3) P - is the expected population of the Kellyville/Rouse Hill release area (see Section 3.4). E - is the existing population of the release area (see Section 3.1) * Refer Section 5.4 Contributions formula for Open Space & Recreation - Land Contribution Rate = L x O (per lot/dwelling) P-E* L - land cost (see Appendix A) O - is the assumed occupancy rate for the development (see Section 3.3) P - is the expected population of the Kellyville/Rouse Hill release areas (see Section 3.4). E - is the existing population of the release area (see Section 3.1) * Refer Section 5.4" 24 The two formulae and the factors each employs thus provide essential context for the earlier quoted para 17 of the "applicant's contentions in general", taken from the Commissioner's determination. It can be seen that while in the formula factor "O" is specific to the development, factors "L", "P" and "E" are general and derived from the contributions plan itself. The latter, certainly, could in the context of the particular development, be either reasonable or unreasonable, depending on the figures chosen by the Council in the Contributions Plan. It is important to emphasise that in a hypothetical case, extreme unreasonableness could result from, for example, an inflated figure for land cost, or a misstated population figure. The fact that those factors are "generic" should not therefore be reason for immunising them from any consideration of their reasonableness, yet permitting the non-generic, project specific factors to be tested for reasonableness. Such a proposition is inherently illogical. It pays but lip-service to the clearly mandated "reasonableness" review under s94(12) of the Act. In reality it eviscerates the capacity to test whether, as s94(2) requires, there has been a "reasonable" dedication or contribution for the provision, extension or augmentation of the public amenities and public services which the development, in terms of s94(1), "will or is likely to require". 25 To elaborate. The argument put by the respondent attempts to give some meaning to s94(2) and (12). They, on their face, start by imposing a requirement of reasonableness in conditions (s94(2)) and then predicates their disallowance should it be shown that they are unreasonable. That disallowance of an unreasonable condition is expressly provided by s94(12) "even if it was determined in accordance with the [contributions] plan"; s94(12). "Reasonable" in terms of s94(1) and (2) of the Act clearly means judged by the criterion of what the development will or is likely to require, in terms of providing for increased demand for public amenities and public services. Section 94(2) provides that a condition "is to be imposed only to require a reasonable dedication or contribution for the provision, extension or augmentation of public amenities or public services" and (s94(1)) within the area, as "the development will or is likely to require". Disallowance or amendment of conditions which are "unreasonable" in s94(12) are therefore directed at conditions which fail to meet that criterion, equating absence of reasonableness to unreasonableness. The respondent's argument is based on giving s94(11) overriding force, with the consequence that a condition permitted or mandated by a contributions plan cannot be overridden by a curial determination that it is unreasonable. To support that submission and in an attempt to reconcile it with the clear words of s94(12), the respondent sought to draw a somewhat strained distinction. It was between the supposed legitimacy of finding unreasonableness of a so-called project-specific condition based on "the particular circumstances of the case", as against the supposed illegitimacy of finding a so-called generic condition unreasonable; that is, unreasonable by reason of the contributions plan being somehow "faulty in itself"; (T, 54). The fundamental problem with that attempted distinction is this. To say that curial review is permitted, but only by reference to "the particular circumstances of the case" is essentially a platitude. The circumstances of the case are always necessarily relevant. But they are here invoked to distinguish permissible review of so-called "project specific" conditions, based on the circumstances of the case, from impermissible review of a condition reflecting the intrinsic requirements of the contributions plan. That is a somewhat arbitrary distinction, difficult to justify and not readily reconcilable with the plain words of s94(12). I shall return later to this problematic underpinning proposed by the respondent to the trial judge's reasoning, invoked as it is to give some meaning to curial review of unreasonable conditions under s94(12). 26 The Commissioner set out a summary of his main findings at Red, 83. These are supported by his earlier detailed analysis. He made findings of fact as to what was reasonable "on the particular evidence and submissions presented". He did not simply accept as immutably unchallengeable, the relevant input variables in the relevant contributions plan. Talbot J said that was erroneous. I quote the summary of the Commissioner's main findings below: "Summary of main findings [219] On the evidence, the population projection in the CPs is likely to be understated. The additional residential population of the KR area in CP7:00 is realistically likely to be at least 46,000 persons, including about 3,440 persons in the Norwest area. There generally appears to be a reasonable provision of pubic amenities and services ("facilities") for the revised population figures. However, in several cases there is an unreasonably high standard of provision. [220] The applicant (being a developer of land within the original KR area) should not have to contribute to any of the costs of the Norwest open space (excluding the Greenway). The applicant is required to make reasonable contributions for all other open space in the CP7:00 area. [221] The contributions payable by the applicant under the CP for the Greenway should be reduced to better reflect a regional usage of this facility by persons coming from outside the CP7:00 area. [222] The Cattai Creek conservation open space is partly a regional facility, and only 80% of the costs should be borne by the additional population of the original KR area. [223] A contribution towards the Bella Vista Farm community facility is not required, having regard to the adjusted contributions payable by the applicant for all other community facilities. [224] The costs of the Mungerie Park hub library should be notionally apportioned across a wider population (about 55,000 persons) than the projected population of the KR area. [225] The cost of the multi-purpose community centre at Mungerie Park should be apportioned over a much larger population than the KR area, to reflect a wider or regional use of the facility, apart from the limited need for the facility generated by the population of the KR area. [226] Interest previously earned on the contributions' fund should be recognised and offset against the costs to be met under the CP. [227] The studies and administration costs in the CP appear to be too high, and some of the costs are not sufficiently related to the provision of public facilities." 27 Talbot J on appeal from the Commissioner, concluded that the question as to whether the contribution was "unreasonable in the circumstances" (Red, 113) did not invoke the Wednesbury test in its application of s94(12) (Red, 114). I consider he was quite correct to do so. Talbot J then however went on to conclude that, "Whether a condition imposed by the council in accordance with the contributions plans is unreasonable", called for an objective test to be applied "according to the idiosyncratic circumstances of each case judged on the merits" (Red, 114). 28 But in then applying what appeared on the surface to be an approach consistent with the Commissioner's consideration of the circumstances of the case, Talbot J nonetheless allowed the appeal against the Commissioner's determination. This was on the basis that the Commissioner "embarked upon a task of determining reasonable contributions having regard to his own judgment, guided by the provisions of previous and current contributions plans". That he said, was an approach "inconsistent with the constraint imposed by s94(11) and (12)"; Red, 118. That constraint was said to preclude any determination which led to amending (or presumably disallowing) a condition as unreasonable, on the basis that the resultant determination was "not in conformity with a relevant [contributions] plan". 29 Thus Talbot J concluded that the Commissioner misconceived the court's statutory function and thereby misdirected himself, asking the wrong questions and taking into account irrelevant matters in so doing. Talbot J concludes that while "[T]he results achieved by the Commissioner may be eminently reasonable" …. "that is not the overall test". "Some conditions have not been determined in accordance with a contributions plan approved under s94B". That is said to be a fatal flaw in the Commissioner's approach, because the resultant determination is "not in conformity with a relevant plan … as required by s94(11)"; see Red, 22. Thus when the Commissioner "went to some trouble to adjust the formula used to determine contribution rates per lot for particular public amenities or services and apparently adjusted the formula to reach what he considered to be a reasonable result" and "reviewed population estimates and projected density based upon the evidence before him, rather than the rates developed from the relevant contributions plan" Talbot J concluded that he thereby fell into error. 30 I understand Talbot J to be saying that amending the condition to make it reasonable in its application to the development is not permissible, if the condition as so amended is no longer "determined in accordance with a contributions plan approved under section 94B". The fundamental premise of this reasoning is that if a contributions plan in its input variables such as population size, actual or projected, gives rise to a condition which produces an unreasonable result for a particular development, then notwithstanding that the Commissioner may look at "the circumstances of the case" to determine if a condition is reasonable, the Commissioner may not do so if this is to depart from the relevant contribution plan. And this is so, however unreasonable may be the condition derived from it. The fundamental question for this appeal is whether the requirement in s94(2), that a condition be reasonable as regards any required dedication of land or monetary contribution, and the capacity to disallow a condition as unreasonable, are now subject to an overriding requirement. It is that laid down by subsection (11) of s94, namely that any condition be "of a kind allowed by, and … determined in accordance with, a contributions plan approved under s94B". I should add that subs(11) and its predecessor subs(7) were introduced after s94(2); likewise subs(8) and its later equivalent subs(12).

Meaning of subs94(11) and (12) 31 It is instructive to start by setting down so they can be seen as a whole the principal provisions of s94 in its present form, before turning to that legislative history. These provisions are as follows: " 94 Payment towards provision or improvement of amenities or services (1) Subject to subsection (2), if a consent authority is satisfied that a development, the subject of a development application or of an application for a complying development certificate, will or is likely to require the provision of or increase the demand for public amenities and public services within the area, the consent authority may grant consent to that application subject to a condition requiring: (a) the dedication of land free of cost, or (b) the payment of a monetary contribution, or both.

(2) A condition referred to in subsection (1) is to be imposed only to require a reasonable dedication or contribution for the provision, extension or augmentation of the public amenities and public services mentioned in that subsection.

(3) Subject to subsection (4), if: (a) a consent authority has, at any time, whether before or after the date of commencement of this Part, provided public amenities or public services within the area in preparation for or to facilitate the carrying out of development in the area, and (b) development, the subject of a development application or of an application for a complying development certificate, will, if carried out, benefit from the provision of those public amenities or public services, the consent authority may grant consent to the application subject to a condition requiring the payment of a monetary contribution towards recoupment of the cost of providing the public amenities or public services.

(4) A condition referred to in subsection (3) is, subject to any direction of the Minister under section 94E (1), to be imposed only to require a reasonable contribution towards recoupment of the cost referred to in subsection (3).

(5) The consent authority may accept: (a) the dedication of land in part or full satisfaction of a condition imposed in accordance with subsection (3), or (b) the provision of a material public benefit (other than the dedication of land or the payment of a monetary contribution) in part or full satisfaction of a condition imposed in accordance with subsection (1) or (3). (6) The consent authority is to hold any monetary contribution paid in accordance with a condition referred to in subsection (1) (and any additional amount earned from its investment) for the purpose for which the payment was required and apply the money towards providing public amenities or public services or both within a reasonable time and in such a manner as will meet the increased demand for those amenities or services or both.

(7) The consent authority is to apply any monetary contribution paid in accordance with a condition referred to in subsection (3), if the whole or any part of the cost incurred in providing the public amenities or public services with respect to which the contribution is paid remains unpaid, towards repayment of that cost.

(8) Land dedicated in accordance with a condition imposed under subsection (1) or in part or full satisfaction of a condition imposed under subsection (3) is to be made available by the consent authority for the purpose of providing public amenities or public services or both within a reasonable time.

(9) If a consent authority proposes to impose a condition in accordance with subsection (1) or (3) in respect of development, the consent authority must take into consideration any land or other sum of money that the applicant has elsewhere dedicated free of cost within the area or previously paid to the consent authority other than as a condition of the grant of consent under this Act.

(10) If: (a) a condition imposed under subsection (1) or (3) in relation to development the subject of a development application has been complied with, and (b) a public authority would, but for this subsection, be entitled under any other Act to require, in relation to or in connection with that development, a dedication of land or payment of money in respect of the provision of public amenities or public services or both, then, notwithstanding that other Act, compliance with the condition referred to in paragraph (a) is taken to have satisfied the requirement referred to in paragraph (b) to the extent of the value (determined, if the regulations so provide, in accordance with the regulations) of the land dedicated or the amount of money paid in compliance with the condition.

(11) A council may impose a condition referred to in this section only if it is of a kind allowed by, and is determined in accordance with, a contributions plan approved under section 94B.

(12) A condition of a kind allowed by a contributions plan may be disallowed or amended by the Court on appeal because it is unreasonable, even if it was determined in accordance with the plan.

(13) This section does not apply to public amenities or public services comprising water supply or sewerage works." 32 The predecessor provisions to subss94(11) and (12) were inserted by the Environmental Planning and Assessment (Contributions Plans) Amendment Bill 1991 No. 64. The background to these amendments was summarised in a Second Reading Speech relating to the Environmental Planning and Assessment (Contributions Plans) Amendment Bill 1991. The Hon. R J Webster stated; p4840 of NSW Legislative Council Hansard of 19 November 1991: "[a]n inquiry chaired by Commissioner Simpson investigated the many problems associated with section 94 and the criticisms levelled at councils' administration of it. Among these criticisms was the lack of justification for how contributions were arrived at, the inappropriate purposes for which they were being raised and the fact that many services or amenities were not available within a reasonable time. … Baulkham Hills shire is another example of another council found to have no clear expenditure plans and no satisfactory system for recording and monitoring section 94 contributions. My intention in introducing this draft bill is to eliminate such problems and to ensure that councils administer section 94 in a more consistent, professional and accountable way." 33 The Minister went on to note that: "[a] condition of a kind allowed by a contributions plan remains appealable as unreasonable"; see p4842 of New South Wales Legislative Council Hansard of 19 November 1991. 34 It will thus be apparent that the predecessor provisions to subss94(11) and (12), which did not differ in any material particular to their later counterparts, were introduced to remove the ad hockery of councils applying conditions for contribution with no rational plan. Before those provisions were introduced, the Land and Environment Court had the power to test reasonableness in the manner mandated by subss94(1) and (2). There was no suggestion that this involved any unacceptable degree of ad hockery or subjectivity on the part of the court. The problem as enunciated by the Minister lay with councils, not with the court on review. The respondent's argument therefore that the predecessor provisions of subss94(7) and (8) were somehow directed, not merely at the councils but also at the court, in order to give primacy to the contributions plan, is implausible. This is more especially when the consequence of such an interpretation would be to protect from court challenge systemic council unreasonableness in imposed conditions, merely because those conditions were mandated or permitted by a contributions plan. One could, for example, hypothesise a contributions plan which projected, quite fallaciously, a huge increase in population from a particular development in order to maximise exactions from the developer. One could envisage conditions requiring an exorbitant contribution that was utterly unreasonable when tested against a realistic population increase from the development, as compared to a fictitious larger one. One has only to state that consequence to see the absurdity of the construction which would produce it. It was suggested, in part response, that the fact that a Council contributions plan involves a degree of formality in terms of public exhibition equates them to some form of delegated legislation equivalent to a Local Environment Plan ("LEP"). But even if that were so, and the readiness with which they are altered shows otherwise, this would not justify a contributions plan becoming an instrument of oppression, compelling exorbitant contributions having no rational relationship to any increased demand for public amenities or services from the development. 35 I prefer the interpretation that the court on an appeal has a broader discretion than that of Council in amending an unreasonable condition so no longer unreasonable, even if no longer permitted or mandated by the contributions plan. Consistent with the plain words of subss94(12), reference to "even if it was determined in accordance with the plan" contemplates that the result of amending a condition on appeal may well produce an outcome different from the condition mandated or permitted by the plan. It must be assumed that this phrase was inserted deliberately. I should add that such an interpretation is, as the appellant contends, wholly consistent with Talbot J's earlier impeccable reasoning in Trehy & Ingold v Gosford City Council (1995) 87 LGERA 262. At 276 he says: "the amount of s94 contributions, except for open space land, have been allowed otherwise than in accordance with the formulae in Contributions Plan 8A … the claim by the council has been allowed or amended by the court because it is unreasonable, notwithstanding that it was determined in accordance with the plan …". At 276 he adds, "apart from the discretion whether or not to impose a condition, the council has no discretion under s94(7). The contributions must be determined in accordance with the contributions plan. On appeal to this court, a condition may be disallowed or amended because it is unreasonable even if it was determined in accordance with the plan". 36 I agree with the appellant's submission that the reasoning of Talbot J in Trehy & Ingold v Gosford City Council (supra) could not be reconciled with the reasons given for the instant decision. The contortions required to attempt to reconcile the two decisions simply point to the fundamental difficulty of, on the one hand, accepting that the statute still requires that conditions be tested for reasonableness, but on the other, precluding that testing for those "generic" conditions mandated or permitted by the contributions plan, even though they produce an unreasonable result by reason of the formulae or input variables of the plan. 37 It does not follow that where a contributions plan mandates an unreasonable result in terms of conditions, the effect of a court amending or disallowing a condition is to amend the contributions plan itself. That is not the result at all. What it does mean is that until the contributions plan is amended, anyone who challenges such a condition is likely to succeed. It is of course open to a council to avoid that result by adopting a new and sensible contributions plan provided it follows the mandated process including public participation; see Pearlman J in Stockland (Constructors) Pty Limited v Baulkham Hills Shire Council [1996] NSWLEC 185. 38 Indeed Pearlman CJ in the later case of Security Storage v Leichhardt Municipal Council [1997] 93 LGERA 176 adopted an approach materially similar to that of the Commissioner in the present case, reflecting the "wider discretion" conferred by s94(12), as is clear from the passages quoted below: " For these reasons, I do not think that the Plan is unreasonable so far as regards the requirement of levying a contribution to meet an increased demand, and I do not consider that the contribution sought in condition 12 should be adjusted to apportion between existing demand and increased demand. … Mr McEwen [for the council] submitted that apportionment for regional use is already taken into account by the setting of the standard at 22m2, because the existing provision upon which that standard was based already includes some foreshore open space. I reject this submission. The Plan sets that standard by having regard to existing provision of open space and it does so for the purpose of identifying a standard to apply to increased demand for open space. It pays no regard to what proportion of the existing provision meets a regional demand. My conclusion from the evidence is that it is unreasonable to require the incoming population to contribute to open space which satisfies a regional demand, even though that contribution is set at a standard which is based on existing provision which itself has a regional component . In the light of Mr Lay's evidence as to use, it being based on his 16 years as an officer of Leichhardt council, I consider that an apportionment of 70/30 is a more reasonable proportion than 50/50 as suggested by Mr Neustein . Not every change in circumstances would lead to a change in the rate of contributions. The test is whether the contribution is reasonable in the circumstances. Here, it would, in my opinion, be unreasonable to levy a contribution based on a particular projected population increase in circumstances where the basis for that projection has changed . The rationale for excluding 1,200 persons by reference to dual occupancies has disappeared, and it had disappeared at the time the development consent was granted in November 1995". [Emphasis added]." 39 The respondent, particularly in its written submissions, sought to buttress its interpretation of s94(12) by reference to the powers of the Minister or Director General under ss94A to E, read with the relevant regulations. That argument can be easily disposed of. It is true the Minister may direct a consent authority including a council as to the public amenities and public services in relation to which a condition may or may not be imposed. Likewise, in the case of a condition requiring the payment of a monetary contribution, the Minister may direct the means by which, or the factors in relation to which, the amount of the contribution may or may not be calculated or determined and the maximum amount of any such contribution. But that does not mean that the court is denied the power to disallow or amend a condition, even of that kind, where it is unreasonable. It does so in conformity with the plain words of s94(12). 40 The respondent made much of s94A(5). It provides that "the Minister or the Director General may impose a condition … even though it is not of a kind allowed by or is not in accordance with, a contributions plan". While that language may be even more emphatic than that in s94(12), it is no justification for reading down the plain words of s94(12). Rather s94A(5), in employing the words "allowed by", ensures that the Minister or Director General can override a contributions plan that would otherwise disallow a condition, in requiring the imposition of such a condition notwithstanding. There is no warrant for treating this administrative power as precluding, by implication, curial disallowance which operates on a wholly distinct basis. 41 Finally, if it is permissible for the Commissioner, as Talbot J stated, to permit as a reason for not requiring contribution to the Bella Vista Farm community facility that the sum was so large or that the substantial part of the restoration should be borne by the wider community, then it should be equally permissible to have regard, contrary to the conclusion of Talbot J, to the fact that a grant from the Department of Urban Affairs and Planning was available; see Red, 121.

Summing up 42 I conclude that subss94(11) and (12) are cumulative in their operation so far as the council is concerned. Their combined effect is (a) to compel the council, if it is to impose a condition for contribution, to do so pursuant to a contributions plan, yet (b) still rendering such a condition, though in accordance with such a plan, subject to disallowance or amendment by the court, where shown to be unreasonable even if the resultant amended condition would no longer be in conformity with the contributions plan. 43 The distinction between determining a condition to be "unreasonable" (s94(12)), and determining a condition not to be "reasonable" (s94(2)) is purely semantic and does not, contrary to the conclusion of Talbot J, point to any error on the part of the Commissioner. Likewise the distinction cannot be justified between supposedly unchallengeable "generic" conditions derived from a plan and challengeable project specific conditions, likewise so derived; the latter able to be challenged by invoking "the circumstances of the case". The simple test is whether a condition is not reasonable, in terms of s94(1) and (2) so as to be challengeable under s94(12) as unreasonable even if the curial result is no longer in conformity with a contributions plan.

Appellate powers of the Land and Environment Court 44 This question in the cross-appeal can be dealt with briefly. It is clear from the statutory provisions referred to below that the power of the Land and Environment Court to hear and dispose of an appeal including in relation to s94(12) involves that court in the exercise of its original jurisdiction. In effect it re-hears the matter earlier determined by the Council, or by the Commissioner by delegation. The decision of the court is then deemed to be a development consent granted by the court. Talbot J acknowledged that was the effect of the statute when he concludes (Red 113): "the practical effect of the deeming provisions in s83(4) of the EP&A Act and s39(5) of the Court Act is recognised in s96(7) and s83(5)(a) and (b) by the use of the descriptive phrases "a development consent granted by the Court" , "results in the granting of the consent" and "consent granted by (the Land and Environment) Court" . Section 96(7) also refers to "a development consent granted by the Court" ". 45 The other relevant statutory provisions provide as follows:

(i) Section 80A(1)(h) of the Act provides that a condition of development consent may be imposed if it is authorised to be imposed, inter alia, under section 94 for payment towards the provision or improvement of amenities or services.

(ii) The "appeal" referred to is an appeal under s97(1) of the Act by an applicant who is dissatisfied with the "determination" of a consent authority with respect to the applicant's development application.

(iii) A "determination", within the meaning of s80 of the Act, encompasses both: (a) granting consent to the development application, either unconditionally or subject to conditions, or (b) refusing consent to the development application.

(iv) The Court has jurisdiction under s17(d) of the Land and Environment Court Act ("the Court Act" and relevantly referred to as "Class " of its jurisdiction), to hear and dispose of (inter alia) appeals under s97 of the Act.

(v) The distinction between Class 1 planning appeals and Class 4 proceedings (which are in the nature of judicial review), is well established; ULV Pty Ltd v Scott (1990) 69 LGRA 212 at 221.

(vi) Section 39 of the Court Act provides that in Class 1: "(2) In addition to any other functions and discretions that the Court has apart from this subsection, the Court shall, for the purposes of hearing and disposing of an appeal, have all the functions and discretions which the person or body whose decision is the subject of the appeal had in respect of the matter the subject of the appeal. (3) An appeal in respect of such a decision shall be by way of rehearing, and fresh evidence or evidence in addition to, or in substitution for, the evidence given on the making of the decision may be given on the appeal. (4) In making its decision in respect of an appeal, the Court shall have regard to this or any other relevant Act, any instrument made under any such Act, the circumstances of the case and the public interest. (5) The decision of the Court upon an appeal shall, for the purposes of this or any other Act or instrument, be deemed, where appropriate, to be the final decision of the person or body whose decision is the subject of the appeal and shall be given effect to accordingly. … (7) The functions of the Court under this section are in addition to and not in derogation from any other functions of the Court". (vii) The concluding words of s39(2) have been described as being "of extremely broad connection and wide denotation"; McDougall v Warringah Shire Council (1993) 30 NSWLR 258 at 268; Concrite Pty Ltd v South Sydney City Council (1998) 101 LGERA 170 at 191.

(viii) It is well settled that the Court's function of 'hearing and disposing of an appeal' involves the Court in the exercise of original jurisdiction; Ervin Manrer and Partners v Strathfield Council (No. 2) (2001) 115 LGERA 259 at 274; Janlz Constructions Pty Ltd v Randwick Municipal Council [1976] 2 NSWLR 427 at 430; and Nalor Pty Ltd v Bankstown City Council [1980] 2 NSWLR 630. The Court on appeal, in deciding whether or not to grant consent, either conditionally or unconditionally, determines the development application. Nothing that occurs before the council is binding on the Court.

(ix) Section 83(4) of the Act then provides, by way of deemed effect, that the decision by the Court " is taken to be a consent granted' by the consent authority and is 'effective and operates from the date of that decision ".

(x) Section 96(7) provides that subsection (6) or (6A) does not enable an appeal to be made against the determination of, or the failure to determine, an application to modify a development consent, " being a development consent granted by the Court ". 46 Finally, as regards whether s94(12) requires unreasonableness to a Wednesbury standard, I agree with the decision of Talbot J and the written submissions of the appellant. These I quote below: "26. The Respondent seeks to import into s94(12) the 'third limb' of the validity test set down in Newbury District Council v Secretary of State for the Environment [1981] AC 578. This submission should be rejected.

The Respondent submits that the " Wednesbury unreasonableness test had been applied in respect of s94 in Parramatta City Council v Peterson " (1987) 61 LGRA 286. However, nothing in Peterson could be remotely determinative as to the proper construction of s94(12). That case preceded the amendments made by the Environmental Planning and Assessment (Contributions Plans) Amendment Act 1991 No. 64, which inserted s94(8) (the precursor to s94(12)). Accordingly, at the time Petersen was decided there was no power akin to s94(12) in the Act. The proceedings in that case were instead framed as a challenge to the validity of the relevant conditions. Decisions since the insertion of s94(8) disclose no hint that " Wednesbury " unreasonableness is the appropriate criterion under s94(8) / 94(12). Frevcourt Pty Ltd v Wingecarribee Shire Council (1992) 80 LGERA 75 at 79; Trehy & Ingold v Gosford City Council (1995) 87 LGERA 262 at 272-273; Security Storage v Leichhardt Municipal Council (1996) 93 LGERA 176 at 185-187; GHD Pty Limited v Pristine Waters Council [2001] NSWLEC 186 at paragraph 13.

Although the Court on a s97 appeal additionally has the same functions as a council - s94(12) "allows a wider discretion". Trehy & Ingold v Gosford City Council (1995) 87 LGERA 262 at 275-276. That proposition comports with the ordinary meaning conveyed by the text of the provision. It is a meaning which should be given effect to. Cooper Brookes (Wollongong) Pty Ltd v The Commissioner of Taxation (1981) 147 CLR 297 at 304-305; Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 421. The Respondent's preferred construction is tantamount to reading words into the provision which are simply not present and for which there is no clear necessity. Western Australia v. Commonwealth (1975) 134 CLR 201 at 251; Ivanhoe Coal Pty Ltd v TransGrid (2000) 107 LGERA 53 at 56; Vamanda Pty Ltd v Townsville City Council Murrayfield Pty Ltd v Townsville City Council (1983) 51 LGRA 20 at 24; Dorney v Commissioner of Taxation [1980] 1 NSWLR 404 at 420.

Even if the word "unreasonable" was capable of being regarded as ambiguous, any ambiguity should be resolved in favour of a liberal approach to the Court's power under s94(12). Cole v Director-General of Department of Youth and Community Services (1986) 7 NSWLR 541 at 543-544.

The application of the " Wednesbury " principle to s94(12) finds no support in either the context or subject matter of the provision. It merely begs the question to suggest that the power reposed in council with respect to the approval and administration of a contributions plan is such that it "cannot be effectively reviewed" by the Court. Paragraph 33 of the Cross-Appellant's Submissions on Cross-Appeal. The Respondent purports to derive support for this proposition from the dictum of Gibbs J in Buck v Bavone (1975) 135 CLR 110 at 118-119. His Honour was there commenting upon the difficulties of judicial review in respect of decisions involving policy, opinion or taste. It is not an authority which sheds any light on the proper construction of the specific grant of power in s94(12). Equally, the other authorities cited by the Respondent which merely refer to Gibbs J's remarks: Minister for Immigration & Ethnic Affairs v Teo (1995) 57 FCR 194 at 199; Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 275-276; Australian Heritage Commission v Mount Isa Mines Limited (1997) 187 CLR 297 at 303.

The Respondent's contentions in this regard are fundamentally at odds with the legislative context in which s94(8) was inserted. The Environmental Planning and Assessment (Contributions Plans) Amendment Bill 1991 No. 64 Refer Second Reading Speech of the Honourable RJ Webster, page 4840 of New South Wales Legislative Council Hansard , 19 November 1991, an extract from which is reproduced at paragraph 36 of the Appellant's Submissions. was directed to the mischief arising from lack of council accountability. It would be incongruous if Parliament simply intended that s94(12) restate a potential ground of relief which was already available (i.e., judicial review of the validity of a condition). Further, there is no express or implied indication that s94 conditions, where imposed in accordance with a contributions plan of council's own making, were to be shielded from effective merits review by the Court."

Overall Conclusion 47 While the court is not a "consent authority" for the purposes of the Act, its powers and the deemed consequences of their exercise give the decision of the court the effect that it would have had were it made by a consent authority. This is with the additional scope conferred by s94(12) to disallow or amend unreasonable conditions, though they be determined in accordance with a contributions plan. There is no basis in policy or in the words of statute for compelling developers to make contributions pursuant to unreasonable conditions merely because mandated or permitted by a contributions plan. Nor is there any basis in thereby leaving developers to the dubious prospects of later restitution; that is allowing a remedy only after it can be shown that the contribution in reality exceeded what the council actually spent and needed to spend on amenities as a result of the development. 48 Contributions plans are not in that regard to be elevated to some form of delegated legislation. They do not thereby render immune a condition mandated or authorised by the contributions plan when such condition, objectively considered, is shown to be unreasonable. 49 The scope of review is not to a Wednesbury standard but simply requires reasonableness to be tested according to its ordinary connotation.

ORDERS 50 There is no basis for remitting the Commissioner's determination for re-hearing, as I conclude that the Commissioner's determination involved no error of law or misconstruction of s94(12). 51 In my opinion the appeal should be allowed with costs and the cross-appeal dismissed with costs and I would so order. I would also propose that the respondent pay the appellant's costs on the appeal in the court below pursuant to s56A of the Court Act. 52 YOUNG CJ in Eq: I agree with Santow JA. *********

Last Modified: 10/01/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

CITATION : Rose Consulting Group v Baulkham Hills Shire Council [2003] NSWCA 266 HEARING DATE(S) : 29 July 2003 JUDGMENT DATE : 19 September 2003

CATCHWORDS : LAND AND ENVIRONMENT - Reasonableness of conditions imposed under a contributions plan - Right of review by court - Standard of reasonableness - s94(12) of the Environmental Planning and Assessment Act 1979 LEGISLATION CITED : Land and Environment Court Act s17(d); s56A; s39; s83; s96 Environmental Planning and Assessment Act 1979 (NSW) s94; s94B; s97 Concrite Pty Ltd v South Sydney City Council (1998) 101 LGERA 170 Ervin Manrer and Partners v Strathfield Council (No. 2) (2001) 115 LGERA 259 Janlz Constructions Pty Ltd v Randwick Municipal Council [1976] 2 NSWLR 427 McDougall v Warringah Shire Council (1993) 30 NSWLR 258 CASES CITED : Nalor Pty Ltd v Bankstown City Council [1980] 2 NSWLR 630 Security Storage v Leichhardt Municipal Council [1997] 93 LGERA 176 Stockland (Constructors) Pty Limited v Baulkham Hills Shire Council [1996] NSWLEC 185 Trehy & Ingold v Gosford City Council (1995) 87 LGERA 262 ULV Pty Ltd v Scott (1990) 69 LGRA 212 PARTIES : ROSE CONSULTING GROUP (Appellant/ Cross-Respondent) BAULKHAM HILLS SHIRE COUNCIL (Respondent/ Cross-Appellant) FILE NUMBER(S) : CA 40618/02 COUNSEL : Noel Hemmings, QC (Appellant/Cross-Respondent) B J Preston, SC/ A M Pickles (Respondent/ Cross-Appellant) SOLICITORS : Marsdens Law Group (Appellant/ Cross-Respondent) Coleman & Greig (Respondent/ Cross-Appellant)

(1998) 101 LGERA 170

(2001) 115 LGERA 259

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