The Decision in Meriton
43Given the centrality of the judgment in Meriton not only to the second and third grounds of appeal, but also grounds 6 and 7, it is necessary to analyse the decision in some detail.
44Meriton concerned a challenge to the imposition of a condition to a development consent granted to Meriton Apartments Pty Ltd ("the company") in 2008, which required the company to pay over $5,000,000 in monetary contributions towards the cost of providing identified public amenities and services. The quantum was calculated pursuant to the City of Sydney Section 94 Contributions Plan 2006 ("the Contributions Plan"). The company consequently applied to the relevant council to modify the condition by reducing the amount of contributions payable by almost $500,000. This was refused and the company brought Class 1 proceedings in the Court. The appeal was heard by Moore SC, who allowed the appeal in part insofar as he discounted the company's claim for a reduction in its payable contribution. An appeal against the decision to a judge of the Court was dismissed. The company subsequently appealed to the Court of Appeal.
45It was accepted before the Court of Appeal that the Contributions Plan was only intended to require a s 94 contribution in relation to the demand for public amenities and services generated by the net increase in the population of a particular site.
46Paragraph 2.15 of the Contributions Plan dealt with what constitutes an existing level of demand, for which credit was to be given, for the purpose of calculating development contributions. The Contributions Plan provided that credit for the population of past development would be determined to exist for the purpose of granting credit only for the population that had vacated the site of redevelopment as a result of changing economic trends since the most recent census on which the Contributions Plan was based, in that case the 2001 Census (at [14]):
14. Thus, par 2.15 of the Contributions Plan which was headed "Policy for Existing Development" stated:
"These provisions describe the approach for determining the [net] increase in demand for the purposes of levying only the [net] additional population. There has been considerable debate in recent years as to what constitutes an existing level of demand (which is entitled to due credit) for the purpose of calculating development contributions."
47The operation of the limitation was explained in the Contributions Plan as follows (at [15]):
15 The paragraph then dealt with the situation, relevant to the present case, where a particular development site was vacant at the time that development consent was granted but had been populated historically. Thus, the Contributions Plan provided that credit for the population of past development would be determined to exist for the purpose of granting a credit only, relevantly,
"[f]or the population that has vacated the site for the purposes of redevelopment and/or as a result of changing the economic trends since the most recent census on which the Contributions Plan is based. For the purposes of this plan, that means the 2001 Census."
48Clause 4.16 of the Contributions Plan was concerned with "Workforce Occupancy Rates" and provided that actual worker numbers, both historic and proposed, were to be used for calculating the net contribution applicable to any development proposal.
49The site formed part of a much larger area and had a variety of industrial uses since the 19th century. From the late 1950s the site was used for the manufacture of automobiles. The Senior Commissioner accepted that the automotive manufacturing workforce on the larger site peaked at around 7,000 workers in 1964 (at [21]). In 1975 the Commonwealth acquired the site for use as a naval stores depot. In 1996 it was acquired by the State's property developer, LandCom, and subsequently transferred to the Roads and Traffic Authority. Then in 2002 the State disposed of it by private sale to a developer, who in turn sold it to the company. As at 2002 it had been vacant for a number of years, including as at the date of the 2001 Census (at [22]-[23]).
50The Court of Appeal summarised the decision and reasons of the Senior Commissioner as follows (at [24]-[27]):
24 The Senior Commissioner (at [16]) accepted that the Contributions Plan made provision for the circumstances under which a credit might be granted for past occupation of the Site, whether for residential or industrial purposes, when assessing the monetary contributions to be levied on a new development. This credit was designed to reflect the extent to which the past population would have created a demand for public amenities and further services. It ensured that the contributions levied on new development merely compensated the Council for the cost of meeting the increased demand for public amenities and services generated by the anticipated population of the new development.
25 The Senior Commissioner (at [19]) stated that there were two issues before him. The first was whether a credit should be granted for past industrial commercial occupation of the Site in light of the provision in the Contributions Plan (to which I referred at par [15] above) which provided that if the Site had no population counted as part of the 2001 Census, then no part of any former population could be taken into account for the purpose of securing a credit under the Plan.
26 The second issue was the extent to which a credit should be granted as a matter of discretion if he was otherwise satisfied that there was some appropriate basis upon which to grant at least some credit. The Senior Commissioner acknowledged (at [21]) that it was common ground between the parties that he was not obliged to follow the precise terms of the Contributions Plan: Rose Consulting Group v Baulkham Hills Shire Council [2003] NSWCA 266; (2003) 58 NSWLR 159 at [35].
27 As to the first issue, the Senior Commissioner determined that it was not appropriate given the history of the Site to adopt the cut-off date for being populated as being that at 2001 as reflected in the 2001 Census. Furthermore, he determined (at [56]) that it was appropriate to have regard to what might have been the workforce demands for public amenities and services in 1964 at the peak of the manufacturing workforce on the Site. He stated (at [57]) that the assumed workforce for the Site based on a peak manufacturing workforce for the larger area in 1964 was 7,000 workers, should be determined by a simple arithmetic approach based on the area of the Site as a proportion of the area of the larger site. On this basis he adopted a workforce calculation of 229 workers.
51The company took issue only with the Senior Commissioner's determination of the second issue and it was this issue that formed the basis of the appeal before the trial judge and on appeal (at [29]):
29 It is the second issue determined by the Senior Commissioner that gives rise to the present appeal. The Senior Commissioner (at [60]) observed that the mathematical calculation referred to was not a complete answer in all the circumstances to the determination of the appropriate credit. The Senior Commissioner maintained, correctly, that he had a discretion that enabled him to take account of other relevant matters in considering whether the prima facie credit amount should be adopted or discounted.
52It was alleged by the company that Moore SC erred by taking into account a legally irrelevant matter when he discounted the credit calculated on the number of workers at the site on the basis of whether rates had been paid for the land in the past (at [51]):
51 Importantly, there was nothing in the Contributions Plan which expressly or impliedly suggested that the credit provisions in respect of past populations, and the amount of the credit to be determined as a consequence, was in any way dependent upon or related to whether a prior owner had paid rates. Such a factor was simply extraneous to the credit exercise to which the Contributions Plan referred. If this be so, then it was appropriate to infer that the scope and purpose of the relevant statutory provisions in the present case should be construed so as to exclude such an extraneous consideration which had no relationship or nexus to the demand for public amenities and services generated by the past population of the relevant land.
53The Court of Appeal accepted the company's contentions. It concluded that, properly construed, ss 94 and 94B did not provide any basis for linking the rateability of the relevant land to the net demand for public amenities and public services generated by the development (at [56]). So much so was recognised in the Contribution Plan. Neither that Plan nor any Practice Notes issued by the relevant department suggested that the rateability of the land was a factor that could or should be taken into account in determining workforce occupancy rates or the credit or allowance which a council was required to make for existing development when determining the net demand generated by new development for public service or amenities (at [57]). While a developer was entitled to a credit for the demand created by the existing population, however determined, the demand was not dependent upon whether the landowner in question, who created the demand, paid rates or not (at [58]).
54The Court of Appeal went on to state the "simple point" as being (at [59], emphasis added):
59 ... that the relevant provisions of the statute are concerned with the net demand for public amenities and services generated by the development in question. Although the relevant exercise requires a determination of the existing demand for such services in order to reach the net demand, the former is based purely on the actual or deemed resident or workforce population of the relevant land at the time of the development application for it is only the future population that generates the demand in respect of which a monetary contribution can be required. That determination cannot be dependant upon whether the demand of the historical population was ever met by the council or, if it was, out of what source of revenue.
55The Court of Appeal noted the inherent difficulties of requiring historical inquiries to be made, "often lost in the mists of time", which in any event would not assist the enquirer in determining the issue posed by s 94(1), namely, identifying the net demand for public amenities and services generated by the development in question based on the existing demand for such services, having regard to the actual or deemed resident workforce population at the time of the development application (at [60]).
56The Court concluded by stating that ss 94 and 94B neither expressly nor impliedly related to the manner in which the council provided public amenities and services to meet the needs of past populations. Rather, the provisions were concerned with ensuring that the present developer was not required to meet needs that were not generated by the development in respect of which consent was sought (at [61]).
57Because there was "no contest with respect to" (at [65]) the finding by the Senior Commissioner that the relevant historical workforce was not nil as contended for by the council, but was 229 based on a peak manufacturing workforce of 7,000 workers in 1964, or any other aspect of his reasoning, the Court of Appeal did not remit the matter for reconsideration and determined for itself the credit to be allocated to the company for past workforce contributions.
58Returning to the present appeal, Connelly argued before the Commissioner that a credit arose from the consideration of "peak workforce" or occupancy by the council using the land as administration offices. In particular, it submitted that the council did not correctly assess, and thus apply, the net parking increase generated by the earlier 1996 development consent when compared to the council use, as required by the decision in Meriton.
59Turning to the second ground of appeal, Connelly submitted that the Commissioner answered a question of law incorrectly, namely, whether for the purposes of s 94(1) the net demand for public amenities and services generated by Connelly's proposed development did not necessitate consideration of the council's previous use of the council buildings for its Chambers and Administration Centre. Connelly contended that this was because of a misapplication of the decision in Meriton.
60Connelly submitted that Meriton is authority for the proposition that a condition imposing a contribution pursuant to s 94 can only be made on a net basis having established historically what the "net" situation with respect to the provision of, or increase in, the demand for public amenities and public services is or might have been. In its application to the appeal before the Commissioner, Connelly argued that the Court was required to take into account the workforce population of the land at the time that the use of the land for the purpose of council chambers had ceased in order to determine the net demand for public amenities and services generated by the 2007 development approved by the consent.
61The Commissioner rejected the submission in the following terms (at [53]-[54]):
53 I do not accept the applicant's submission that Meriton is authority for the proposition that the Council or the Court in an appeal is required, in respect of imposing a monetary contribution under s 94 of the Act, to determine or give a credit for the peak workforce that may have occupied the site a point of time. I agree with the Council's submissions that the Court of Appeal in Meriton merely accepted that the Senior Commissioner determined that a credit should be granted for past industrial use on the facts of that case and that it was not appropriate to adopt in that case the cut off date for being populated as being that reflected in the 2001 census. I accept as the Council submits that the Court of Appeal did not deal with the question of how far back, if at all a Court should go in relation to determining the maximum population of a site.
54 I do not accept that there is any general principle that requires the Council or the Court in determining a monetary contribution to give a credit for the peak contribution or workforce that occupied a site at some date in the past.
62Having regard to the ratio decidendi in Meriton (at [56]), there can be no criticism of the Commissioner's conclusion in this regard. The case stands as authority for no more than the irrelevancy of the rateability approach adopted by Moore SC as a matter of construction of ss 94 and 94B of the EPAA (at [55] and [62]).
63The Court of Appeal in Meriton did not deal with the question of how far back in time, if at all, a council or the Court should travel in order to determine the peak workforce that may have occupied the site the subject of the development application. The Court merely accepted that the Senior Commissioner determined that a credit should be given for the past industrial occupation of the site and that it was his opinion that it was not appropriate to adopt the population as at the 2001 census date.
64In Meriton Apartments Pty Ltd v Council of the City of Sydney [2009] NSWLEC 1336, Moore SC said this in relation to the retrospectivity required to calculate peak workforce (at [54] - [56]):
54 Consideration of the appropriate extent of any retrospectivity, in my view, is obviously only a question of fact and degree. Brown C considered that 15 years was a reasonable period of retrospectivity as earlier noted. I also note, parenthetically, that he did not express any view as to whether or not that would act as a limit as he was neither asked to do so or compelled to do so by the facts in those proceedings. I certainly do not consider that 15 years is some arbitrary limit that I need observe.
55 However, the broad concept of retrospective consideration has been adopted by Brown C, I consider that I should, consistent with Segal v Waverley and the way this matter has been argued, consider what would be an appropriate cut-off date in light of the history of occupation of this site. It is possible that, in some future proceedings, it may be necessary to consider whether some absolute cut-off should be imposed. How far back, if at all, will need to be determined on the facts and circumstances of any particular site.
56 I do not propose to consider any potential absolute time limit in these proceedings as I am satisfied that the period of time involved here, in the history of modern industrialised Australia, should not be disregarded. In this instance, I am satisfied that the ramping-up of Australia's secondary industry - the major industrialisation which took place on the site - in the context of the post-Second World War emphasis on the continuing transformation of the Australian economy from an economy significantly dependent on primary produce to having an independent manufacturing base (a context where the establishment industries such as that of the British Motor Corporation was encouraged by national government secondary industry policy) is a significant matter that is relevant to be considered. In this context, with respect to this site, I do not consider it unreasonable to go back further than Brown C was asked to go for the sites he considered. I have determined that it is appropriate to have regard to what might have been the workforce demands for public services and facilities in 1964 at the peak of the manufacturing workforce on the site.
65There is, therefore, no general principle contained in either decision that mandated the council or the Court to give credit for the peak population or workforce that occupied a site at some previous point in time in determining a monetary contribution. This is, as the Senior Commissioner correctly stated, in my view, a matter to be determined "on the facts and circumstances of any particular site" (at [55]).
66If anything, the decision of the Court of Appeal in Meriton suggests that the historical factual enquiry demanded by s 94(1) is no more than an examination of the actual or deemed workforce "at the time of the development application"(at [59]). This is because "it is only the future population that generates the demand in respect of which a monetary contribution can be required" (at [59]). It is at least arguable, therefore, that it is only necessary to look to the actual population of the relevant land at the time of the development application if the land is being used for a particular purpose at that time, and if the land is not being used for any purpose, then it is necessary to look at the future deemed population. In short, there should be no determination of the historical workforce of the land the subject of any development application.
67Applying the reasoning in Meriton this is exactly what the Commissioner did. As she said (at [56] and [57]):
[56] As a matter of law I do not need to go back to the council use of the site. Having regard to the facts and evidence before me I think it is appropriate to consider the present use of the site pursuant to the 1996 consent for the purpose of determining the population of the relevant land and the existing demand for public amenities and services in order to assess any net increase from the 2007 consent.
[57] I accept as the council submits that in determining the net demand, on the evidence before me, a credit for the demand generated by the existing 90-bed hostel and 4 shops would be allowed. To go back further in this case would be unreasonable.
68This is consistent with her earlier reasoning wherein, mindful of the reductions in and removal of the contributions imposed on Connelly by the council, she considered whether the reductions to the contributions resulted in "a reasonable s 94 condition...or whether condition 26 should be amended in the terms sought by" Connelly (or at all) and noted that (at [39]):
[39] In making that decision I am not required to apply the provisions of CP 2005 or impose a condition that is in accordance with CP2005 if I am of the opinion to do so is unreasonable. However, my discretion under s 94B of the EPA &Act is not unfettered. I must adhere to the subject matter, scope and purpose of the imposition of the condition requiring the payment of a monetary contribution under s 94 (1) of the EPA &Act. That means that I must have regard to the "net demand for public amenities and services generated by the development in question: per Tobias Meriton at [56] and [58].
69On any reading of the Commissioner's judgment it was entirely consistent with the decision in Meriton. That case did not, as a matter of law or fact, require the Commissioner to go back further than the use of the site as at the 1996 consent for determining the population of the relevant land and the existing demand for public amenities and services. Nor did it necessitate a determination of whether it would be reasonable in the circumstances of this case (which, it may be inferred, the Commissioner found that it was not) irrespective of, for example, evidence before her as to a shortfall of at least 21 parking spaces when the council used the building, or evidence purporting to demonstrate that Connelly's proposed use of the building generated a lower net demand for car parking when compared to the council's use of the property.
70In addition, Connelly complained that the Commissioner did not make any findings, as she was required to do applying Meriton, as to the "net increase" in the demand for public amenities and services generated by Connelly's proposed development "for the purposes of s 94(1)" of the EPAA. I do not accept this submission.
71First, s 94(1) does not speak of "net increase". Second, although there are references to the concept of a "net increase" in Meriton (critically at [59]), the context in which those references were made, namely, the Contributions Plan governing that appeal, has been ignored by Connelly. In the present case, CP 2005 deals with net allowances for existing development in section 3.13 which states as follows:
3.13 Allowances for Existing Development
Contributions will be levied according to the estimated increase in residents, tourists or workers. An amount equivalent to the contribution attributable to any existing (or approved) development on the site of a proposed new development will be allowed for in the calculation of contributions. In assessing the contribution of existing development the following occupancy rates will be used:
Dwelling houses and single vacant allotments - 2.6 persons per dwelling or lot.
Medium density and residential flat development - 1 bedroom dwellings - 1.4 persons per dwelling; 2 bedroom dwellings - 1.7 persons per dwelling; 3 bedroom dwellings - 2.6 persons per dwelling
Tourist development - 1 person per bed
Seniors Living SEPP 5 dwellings - 1 person per 1 bedroom dwelling; 1.5 persons per 2 bedroom dwelling, 2 persons per 3 bedroom dwelling.
Commercial/office space - one employee per 20 square metres of gross floor area.
Industrial space - one employee per 80 square metres of gross floor space.
72This may be contrasted with the terms of the Contributions Plan at issue in Meriton. In Meriton Tobias JA set out the relevant terms of the Contributions Plan (at [14]-[16]) and inserted the term "net" because that was what the Plan required for the purpose of calculating development contributions.
73Third, and in any event, the Commissioner did not fail, as Connelly submitted, to identify a net increase. Rather, after having identified Connelly's arguments (at [20], [24], [25] and [50]-[53]) she eschewed the contention that it was necessary for her to go back to the council use of the site and instead assessed "any net increase from the 2007 consent" by considering the present use of the site pursuant to the 1996 consent (at [56]). This resulted in, "on the evidence before [her]", a credit for the demand generated by the 90 bed hostel and the four shops. Anything further would, in the circumstances of the case, have been in her assessment "unreasonable" (at [57]).
74In reaching this conclusion, I am cognisant of the words at [59] of Meriton that speak of the "actual or deemed resident or workforce population" of the relevant land for the purposes of determining the net demand for public amenities. Connelly submitted that the reference to the term "deemed" in Meriton could only be a reference to the imputed resident or workforce population for the purposes of determining net demand where the actual resident or workforce population at the time of the development application was less than the historic peak workforce or population. I do not agree. In my view, not only would this represent an unwarranted gloss on the words of Tobias JA it ignores the term "actual" and the words "at the time of the development application" in that paragraph.
75In the context of the present appeal, there was an actual workforce population at the time of the development application to which the Commissioner was entitled to have regard to. By contrast, in Meriton it was necessary to have regard to the deemed resident or workforce population because the land was vacant at the relevant time.
76The Commissioner, therefore, has neither misapplied Meriton nor has she asked the wrong question or failed to identify any net increase in demand as claimed. While Connelly may disagree with the factual conclusion reached by the Commissioner (at [57]), this is not an error affording it relief in this appeal. No error in the Commissioner's reasoning in this regard having been demonstrated in the second ground of appeal should be rejected.
77With respect to the third ground of appeal, Connelly argued that the Commissioner's findings at [50]-[57] were inadequately reasoned hence disclosing an error on a question of law.