Darke J, Neighbourhood Association DP, Community Association DP, Mr J
Source
Original judgment source is linked above.
Judgment (2 paragraphs)
[1]
Judgment - EX TEMPORE
These proceedings concern the land contained in Deposited Plan 270468. The land is located in the vicinity of Nelson Bay, and forms part of the development known as the Lagoons Estate. Deposited Plan 270468, which was registered on 1 February 2006, effected a subdivision of land pursuant to a community plan within the meaning of the Community Land Development Act 1989 (NSW) ("the Act"). A community development contract was registered with the community plan subdivision. It is a development contract within the meaning of the Act.
The development contract provides for a proposed staged development of the land in accordance with a development consent granted by order of the Land and Environment Court on 3 December 2021. That consent has been the subject of modifications in 2005 and 2013. The consent, as originally made and as modified, required the construction of what is described as a wick drainage system.
The plaintiffs are the owners of Lot 114 in Deposited Plan 270468 ("Lot 114"). Lot 114 was intended to be developed as part of Stage 3 of the development. That has not occurred. Lot 114 remains vacant land. Only Stages 1 and 2 of the development were carried out. Construction of those Stages was completed by about 2007.
The plaintiffs commenced these proceedings seeking relief under s 70 of the Act, in particular an order providing for Lot 114 to be severed from the community scheme. The defendants in the proceedings are the Registrar-General, as required by s 71 of the Act, the Community Association for Deposited Plan 270468, and the Port Stephens Council which is the relevant consent authority.
The plaintiffs' application was initially resisted by the Community Association. However, the position has now been reached where the Court is asked to make orders with the consent of all parties to effect a severance of Lot 114 from the community scheme.
As the proposed orders would be made pursuant to s 70 of the Act, the Court must be relevantly satisfied of the matters referred to in s 70(1). The plaintiffs invoke both ss 70(1)(a) and 70(1)(b) which respectively refer to the Court being satisfied:
1. that the completion of the staged scheme has become impracticable; and
2. that the continuation of the scheme has become impracticable.
A deal of evidence was adduced in the form of a Court book containing affidavits and various other documents. Two further documents in the nature of land instruments were also tendered and admitted into evidence. The Court has received and considered written submissions from each of the parties other than the Registrar-General and has heard further submissions in Court this morning. Mr Prent, Solicitor for the Registrar-General, has indicated that the Registrar-General consents to the orders and has appeared today as a matter of courtesy to assist the Court. The Court is grateful for his attendance.
The claimed impracticality arises from the manner in which the development has proceeded so far, in particular in relation to the construction of the wick drainage system, which occurred during Stages 1 and 2 of the development. It appears that the drainage system actually constructed departs very considerably from that which was required under the conditions of the development consent. The conditions require the system to have at least 1600 wicks, whereas the system constructed had fewer than 560 wicks. This gives rise to considerable doubt about whether the system in place would be adequate to cope with flows of water that would be expected if the development was taken to completion.
It should be added that the manner in which the system has been constructed means that the system is generally inaccessible. Much of the system is located beneath structures, including houses, that have been built as part of the development. Alteration of the system so as to make it compliant with the consent appears to be impossible.
In the face of these problems the plaintiffs sought to have the consent modified so as to effectively bring it into line with the drainage system that had actually been constructed. This application was refused by the Council in July 2014. An appeal to the Land and Environment Court was dismissed on 30 September 2015.
The central question is whether the completion or the continuation of the scheme has become impracticable. The definition of community scheme in the Act means that the scheme includes the proposals in the development contract (which includes development of the land in accordance with the development consent as modified from time to time) and also the rights conferred and obligations imposed under the Community Land Management Act 1989 (NSW) in relation to persons having interests in community development lots. That includes the obligation imposed upon the original proprietor by s 15 and Schedule 2 to that Act that the land will be developed in accordance with the development contract and the development consent (see Neighbourhood Association DP 285249 v Watson [2008] NSWSC 876 at [454]).
Clearly the proposals contained in the development contract have not been carried out, and the obligation to which I have just referred has not been satisfied in relation to the wick drainage system. Moreover, the manner in which the development has been carried out means that it is not practically feasible to physically rectify the problem. In this situation it is not possible for Stage 3 of the development to be undertaken in a way that complies with the conditions of the consent. I accept the evidence given by the plaintiffs' solicitor, Mr Vitnell, to that effect.
It therefore seems to me that the scheme so understood is not presently being carried out, and there is no realistic prospect that it will be carried out in the future. In my view, because of the way the development has been constructed the completion of the staged scheme and also the continuation of the scheme has become impractical. Adopting the words used by Palmer J in Community Association DP270212 v Registrar-General [2004] NSWSC 961 at [19], a situation has arisen where the scheme as constituted cannot continue as a matter of practicality. It can no longer be carried out as such.
In coming to that conclusion I recognise that community schemes within the meaning of the Act, and in particular community schemes that envisage development in stages, can be expected to undergo changes over time. They are not static concepts. Consideration of questions whether the completion or continuation of a scheme has become impractical must accommodate that reality. However, as already mentioned, the plaintiffs here made an attempt to modify the development consent so as to allow the development to proceed further notwithstanding the significant departures from the development consent that had occurred in relation to the wick drainage system, but this attempt ultimately failed.
Accordingly, this is not a case of a relatively minor departure from a scheme that is able to be overcome by a modification of the scheme itself. In such a case the carrying on of the scheme as modified could be regarded as a continuation of the scheme such that s 70(1)(b) would not be satisfied. Here, the departure from the scheme cannot be regarded as minor, and the decision of the Land and Environment Court demonstrates that there is no practical likelihood of the scheme being modified to overcome the departure.
In these circumstances, even accepting that the notion of the scheme is not a static one, I consider that as a matter of practicality the scheme cannot continue. I am therefore satisfied both that completion of the scheme and continuation of the scheme has become impracticable within the meaning of s 70(1) of the Act. The Court thus has the power to make orders varying or terminating the scheme, and orders varying the development contract.
The plaintiffs have submitted a form of proposed consent orders. The form of orders is attached to their written submissions. I raised a number of queries during the course of the hearing in relation to the form of orders, and these queries have, to my mind, been satisfactorily answered by Mr Eastman of counsel. I note further that no other party has raised any difficulty with the form of the orders proposed.
There seems to be no reason why the Court should not exercise the power that it has under s 70 of the Act to make orders as proposed. Subject to one very minor matter, which I will raise in a moment, the orders seem to me to be appropriate. I will however give the parties liberty to apply in case any issues arise in the course of effecting the severance of Lot 114 from the community scheme.
[2]
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Decision last updated: 25 June 2021