Seawizz Holdings Pty Ltd v Liverpool City Council

JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 10673 of 2002

27 November 2003 Seawizz Holdings Pty Ltd (ACN 079 735 201) Applicant v Liverpool City Council Respondent Judgment

1 The applicant appeals in part against the decision of Commissioner G.T. Brown ("the Commissioner") made on 21 August 2003 pursuant to s 56A of the Land and Environment Court Act 1979. The Commissioner granted consent subject to conditions ("the consent") to the applicant's proposed development of thirty-seven townhouses on land known as lot 904 in deposited plan 1019394, Coffs Harbour Avenue (also known as Nineteenth Avenue), Hoxton Park ("the land"). 2 The land is located within the Liverpool City Council local government area. Liverpool City Council ("the council") has adopted a plan known as the Liverpool Contributions Plan 2001 ("the Plan") pursuant to s 94 of the Environmental Planning and Assessment Act 1979 ("the EP&A Act"). Condition 41 of the consent ("Condition 41") requires the applicant to make a contribution payment of $1,023,567 under the Plan. The applicant claims that the correct contribution amounts to $620,359 and that this amount should be substituted as the correct calculation. The Commissioner's decision

3 The council's draft conditions of consent provided for a contributions payment pursuant to the Plan in the amount of $1,068,435 ("draft Condition 41"). Below this figure the following is stated:-

Contributions, with the exception of those for the Whitlam Centre extensions and Liverpool Central Library will be adjusted at the time of payment.

Draft Condition 41 states that the capital works, administration, professional and legal fees components of the contributions payment will be adjusted quarterly in line with the Consumer Price Index using the following formula:- Contribution At Time Of Payment = C x C P I 2 C P I 1

where: C = Original contributions as shown on the consent C P I 2 = Latest "Consumer Price Index: All Groups Index Number" for Sydney available from the Australian Bureau of Statistics C P I 1 = "Consumer Price Index: All Groups Index Number" for Sydney available at the time of calculating C, ie the amounts shown on the development consent.

Draft Condition 41 further provides that the value of the land component of the contributions payment will be adjusted quarterly to reflect the latest average land value estimate in accordance with the formula as follows:- Contribution At Time Of Payment = L x L 2 L 1

where: L = the original contributions as shown on the consent L 2 = Average estimated land acquisition cost per square metre at the time of payment L 1 = Average estimated land acquisition cost per square metre at the time of development consent

4 Before the Commissioner the parties disputed the indexing of the land component of the contribution payment. The Commissioner recited the specific issue he was required to resolve in par 4 of his decision as being:-

Whether council is able to rely on clause 32 of the Environmental Planning and Assessment Regulation 2000 (NSW) to update the Land Index component of the contribution plan. In particular, whether the council's Land Index is a "readily accessible index" within the meaning of clause 32. 5 The relevant subclause is cl 32(3)(b) of the Environmental Planning and Assessment Regulation 2000 ("the Regulation") which provides:- 32(3) A council may make the following kinds of amendments to a contributions plan without the need to prepare a new contributions plan: (b) changes to rates set out in the plan to reflect quarterly or annual variations to readily accessible index figures adopted by the plan (such as a Consumer Price Index),

6 The Commissioner considered the evidence of Mr Barry Millwood for the council and Mr Tony McNamara for the applicant. The Commissioner then set out his findings observing in par 9 of his decision that the subject condition of dispute was similarly worded to section 2.8 of the Plan. Section 2.8 of the Plan is entitled "Payment of Contributions" and begins with the following paragraph:- 2.8 Payment of Contributions

Council will require, as a condition of development consent, the payment of a monetary contribution for the provision of facilities specified in this plan from development which it considers will help generate the need for those facilities. This plan applies to development applications determined after the plan came into force. Maps showing catchments in this plan indicate the area from which contributions will be levied in accordance with this plan. 7 The relevant part of section 2.8 of the Plan is entitled "Adjustment of Contributions" and provides:- Adjustment of Contributions Contributions, with the exception of those for the Whitlam Centre extensions and Liverpool Central Library will be adjusted at the time of payment.

Capital Works Capital works, Administration, Professional and Legal Fees components will be adjusted quarterly in line with the Consumer Price Index (all groups index number for Sydney) using the following formula:

Contribution At Time Of Payment = C x C P I 2 C P I 1

where: C = Original contributions as shown on the consent C P I 2 = Latest "Consumer Price Index: All Groups Index Number" for Sydney available from the Australian Bureau of Statistics C P I 1 = "Consumer Price Index: All Groups Index Number" for Sydney available at the time of calculating C, ie the amounts shown on the development consent.

Land The land component will be adjusted quarterly in line with the latest average land value estimated published by Council. The average land value estimates will be reviewed on a quarterly basis and determined by averaging the cost of prime residential land acquisitions per square metres over the previous quarter.

Contribution At Time Of Payment = L x L 2 L 1

where: L = the original contributions as shown on the consent L 2 = Average estimated land acquisition cost per square metre at the time of payment L 1 = Average estimated land acquisition cost per square metre at the time of development consent 8 The Commissioner made the following findings in par 12:- Clause 32 does not require the adoption of an existing identifiable index but only that it "reflect quarterly or annual variations …. adopted by the plan (such as a Consumer Price Index)". Section 94 places an obligation on the council to provide additional public services and public amenities in a reasonable time (s 94(6)) and in a particular way (s 94(7)). It is incumbent on the council to properly and accurately reflect the cost of providing the additional public services and public amenities as set out in the contribution plan. As these costs can occur over a length of time, the integrity of the contribution plan relies on the accurate monitoring of those costs so the contributions are sufficient for the acquisition of the identified additional public services and public amenities. In this case, the council has determined that the land cost should be determined separately from the capital costs because it was found that they increased at different rates. In my view, this is a responsible approach and minimises the potential for shortfalls in the contribution plan. Clearly, the emphasis on cost assessment should be on the cost of the land within the contribution plan area. While other indices may be more convenient, the costs that are more likely to reflect the true cost of acquisition must be preferred. I agree that the approach adopted in cl 2.8 of the contribution plan is an acceptable one and represents an appropriate mechanism to adjust the contribution for variations in land cost. 9 To quantify the contributions required for the applicant's proposed development, the Court was informed that the Commissioner applied amounts contained in section 1.9 of the Plan as the base contribution and indexed those amounts from the September 2001 quarter, being the date at which such contributions were calculated. Section 1 of the Plan identifies the locations for which contributions are to be levied in the Liverpool local government area. Section 1.9 of the Plan applies to localities known as Hoxton Park, Carnes Hill and Prestons. Accordingly he derived the amount of $1,023,567 as stated in Condition 41.

10 The applicant claims that the Commissioner erred in law in his application of the Plan. Alternatively the applicant says the Commissioner did not deal with its submission that section 2.8 of the Plan only provides for increases after the date of consent. Further in the alternative the applicant alleges that the Commissioner failed to consider the applicant's submission that the council did not have power under cl 32(3)(b) of the Regulation to apply an "index" as submitted by the council in circumstances where the council's "index" had not been "adopted by the Plan" in accordance with cl 32(3)(b) of the Regulation. Alternatively it is submitted the Commissioner erred in law in failing to take into account a relevant matter, namely that the council's "index" had not been "adopted by the Plan" in accordance with cl 32(3)(b) of the Regulation. 11 The applicant did not pursue its claim that the Commissioner erred in finding that cl 32(3)(b) of the Regulation permitted the council to adjust the land component of the contributions using average land value estimates as an identifiable index. The applicant also did not press its allegation that the Commissioner incorrectly found that the index relied upon by the council complied with cl 32(3)(b) of the Regulation in that it was "readily accessible". 12 The applicant submits that the power to make a contribution plan pursuant to s 94B of the EP&A Act is to be exercised "subject to and in accordance with the regulations". Pursuant to cl 32(3)(b) of the Regulation, a council may amend a contributions plan to change rates set out in the plan only "to reflect quarterly or annual variations to readily accessible index figures adopted by the plan". The applicant submits that section 2.8 of the Plan only provides for the adjustment of contributions between the date of consent and the date of payment to prevent the erosion of the monetary value of the original contributions "as shown on the consent". 13 The applicant submits that the indexation should not be adjusted from the September 2001 quarter. Instead contributions should be indexed only between the date of the grant of consent and the date of payment. It relies upon the words contained in section 2.8 which provides for adjustment of contributions "at the time of payment". 14 The applicant also submits that the Plan does not specify rates which answer the description of cl 32(3)(b) of the Regulation. There are no rates set out in the Plan for which there are "index figures adopted by the plan", other than the "Adjustment of Contributions" which has no application to the present issue. Consequently, the applicant submits that there was no basis for the Commissioner to use the amounts set out in the contributions table in Pt 1.9 of the Plan as indexed. Council's submissions 15 The council submits that the Commissioner's decision was not based upon section 2.8 of the Plan but rather a finding that cl 32(3)(b) of the Regulation authorised an adjustment to the contribution rates set out in the Plan. The council says that the Commissioner made it clear that he was dealing with the application of cl 32(3)(b) of the Regulation by setting out such issue in full in par 4 of his decision. The Commissioner stated in his decision that he was asked to resolve the issue whether the council is able to rely on cl 32(3)(b) of the Regulation to update the land index component of the contribution payment. 16 The council submits that in par 12 of his decision the Commissioner concluded that the Plan did adopt an identifiable index pursuant to cl 32(3)(b) of the Regulation. The council says that section 2.8 of the Plan was referred to in this context as such section contained the identifiable index. Accordingly the Commissioner correctly determined that cl 32(3)(b) of the Regulation was satisfied because the readily accessible index was adopted by section 2.8 of the Plan. Such indices provided an objective benchmark to amend the contribution rates to reflect quarterly or annual variations to the indices. The council submits that merely because section 2.8 of the Plan dealt with contribution adjustments at the time of payment does not mean that the relevant indices were not adopted by the Plan. 17 The council submits that the basis of the Commissioner's finding was that the council had correctly amended the contribution rates set out in section 1.9 of the Plan by virtue of cl 32(3)(b) of the Regulation. The council says it is clear from the Commissioner's decision that the references to section 2.8 were made to support his primary finding that cl 32(3)(b) of the Regulation indicated that the council had correctly amended the contribution rates. 18 In the alternative the council submits that on proper construction of the Plan it makes provision for the calculation of the contribution in the manner determined by the Commissioner. The council states that section 1 of the Plan identifies the contribution rates as at the September 2001 quarter, and by reference to an index at the bottom of each table anticipates the contributions being adjusted. Additionally the Plan refers to the adjustment of contributions and not simply the adjustment of the payment of the contributions, and the Plan also provides for the land component to be adjusted quarterly. 19 The council submits that the applicant's submission would lead to the result that the only adjustment would occur between the date when the council grants development consent and the time when actual payment is made. This period may be negligible, and would not reflect the purpose for which adjustments are authorised, namely to reflect the current costs of public services.

Findings 20 Section 94 of the EP&A Act authorises the adoption of a contributions plan by a consent authority. Section 94 is the source of power enabling a consent authority to impose a monetary contribution for public amenities and services: see Fitch v Shoalhaven City Council (1987) 67 LGRA 165 at p 170 per Stein J. There is no issue that the Plan was a contributions plan approved under s 94B of the EP&A Act.

21 Section 1.9 of the Plan sets out contribution rates for the Hoxton Park, Carnes Park and Prestons and states:- The above rates are as at the Sep 2001 Quarter CPI. The works index is 135.4. The land index is 1. 22 Section 2.8 of the Plan contains the administrative details relating to the payment of contributions. Such section provides for adjustments to contributions at the time of payment according to the formulae, as set out in par 7 above. 23 Section 2.9 of the Plan is entitled "Monitoring and Review" and provides:-

The contribution rates and works schedule for this plan has been formulated using information available at the present time. A number of variables will be monitored to facilitate the review process. Some of these are listed below: s density of residential development s potential development remaining s projected development rate s assumed occupancy rates s anticipated population s construction costs s land costs

Contributions will be adjusted in accordance with section 2.7 [sic] (indexing and land value updates). However, where major shifts are observed in the above variables Council may review this plan at any time. It is acknowledged by the parties that the reference to "section 2.7" should be a reference to section 2.8 of the Plan. 24 Section 2.9 of the Plan shows that council intended that contributions were to be adjusted without the need to amend the Plan unless "major shifts are observed in" the variables listed in section 2.9. The contributions are to be adjusted in accordance with section 2.8, and the Court infers that the relevant part of section 2.8 is the formulae for adjustment of contributions. This finding is consistent with section 1.9 of the Plan which clearly defines the contribution rates to be as at the September 2001 quarter. It is apparent that such contribution rates were provided as a base from which to calculate the current value of contributions. 25 The formulae in section 2.8 of the Plan are provided for the purpose of adjusting contributions pursuant to section 2.9 of the Plan. They are not limited to the purpose of ascertaining the adjustment between date of consent and date of payment. Rather they are simple formulae used to adjust a base or original figure ("C" or "L") by a change in an index ("C P I2/ C P I1" or "L2/ L1"). It is unfortunate that the Plan does not restate the formulae in section 2.9 and alter the description of the variables so that "C" and "L" are clearly identified as being the original or base contribution rates. 26 The Court accepts the council's submission that the inclusion of the formulae or index in section 2.8 of the Plan does not lead to the conclusion that it is not adopted by the Plan. The Court also concurs with the Commissioner's finding that the relevant index for the purposes of cl 32(3)(b) of the Regulation is provided by the formulae in section 2.8 of the Plan, which is utilised by section 2.9 of the Plan. Accordingly the Commissioner did not err in finding that "approach adopted in cl 2.8 of the contribution plan is an acceptable one and represents an appropriate mechanism to adjust the contributions for variations in land cost." 27 The Court's finding is consistent with the council's current practices in adjusting the land component of contributions payment. The Liverpool Leader dated 23 July 2003 was attached to Mr Millwood's statement of evidence and states as follows:- Liverpool Contributions Plan 2001 Update of Land Component of Developer Contributions

[Section [sic] 32 of the Environmental Planning and Assessment Regulation 2000] Notice is hereby given that the land component of developer contributions has been revised for facilities in the following areas. The land component of developer contributions as shown in Liverpool Contributions Plan 2001 is increased by the factor shown next to the relevant facilities. The factors are estimated by dividing the latest average land value by original land value (for prime residential land) in accordance with section 2.7 of Liverpool Contributions Plan 2001.

Hoxton Park, Carnes Hill and Prestons Residential Release Areas - Local Facilities 2.3

Southern Hoxton Park Aerodrome Release Area - Local Facilities 1.8

Prestons Industrial Release Area - Local Facilities 2.3

Houston Park Stage 2 Release Areas - District Facilities 2.3

The amended contribution rate applies from 23 July 2003. Copies of amended contribution rates will be available from Council's Administration Building and Customer Service Centre. Dividing the latest average land value by original land value is essentially "L 2/ /L 1 ", being part of the formula to adjust the land component of the contributions payment.

28 Accordingly cl 32(3)(b) of the Regulation is satisfied. The council is permitted to change the contribution rates set out in section 1.9 of the Plan "to reflect quarterly or annual variations" in the Consumer Price Index and the average land value, being the relevant "readily accessible" indices "adopted by the plan". 29 The Court has been referred to two decisions in which questions concerning the payment of contributions required by contribution plans formulated pursuant to s 94 of the EP&A Act: see Stockland (Constructors) Pty Limited v Baulkham Hills Shire Council (Pearlman J, Land and Environment Court, 10 July 1996, unreported); and Mirvac Homes (NSW) Pty Ltd v Baulkham Hills Shire Council (2000) 110 LGERA 100. Neither of the decisions assist the Court because they were determined prior to the enactment of the Regulation and therefore cl 32(3)(b). The Court has also been referred to the decision of the New South Wales Court of Appeal in Rose Consulting Group v Baulkham Hills Shire Council [2003] NSWCA 266, but the decision is not relevant to the issue raised in this appeal. 30 No error of law has been demonstrated in the judgment of Commissioner Brown. Orders 31 The Court orders that:-

1. The appeal be dismissed;
2. Exhibits be returned;

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.