Universal 1919 Pty Ltd v 122 Pitt Street Pty Ltd

The Facts

1. Universal has enjoyed "exclusive possession" of the subject premises, under registered leases from successive owners of the building, and has conducted the hotel business there, since 1 June 2004. The hotel business was known as the Vault Hotel/Bar until late 2016.
2. The current "1821" hotel/restaurant business occupies the Ground floor, Basement, and Mezzanine levels of the premises.
3. 122 Pitt apparently bought the premises, and has leased them to Universal, since August 2006 (Tp5, L10), with the current registered lease being for the term from 1 June 2014 until 31 May 2024 (Exhibit A2), at which date Universal appears to accept that the "flag" will have to be "made good" (Tp2, LL30-32).
4. Kospetas is a very experienced hotelier and restauranteur, and deposes to extensive experience with heritage issues and premises.
5. From the material before the Court, it would appear that Universal and 122 Pitt have had a colourful commercial and litigious relationship in recent years.
6. 122 Pitt sent Universal a breach of lease notice as early as 9 August 2012 (Kospetas pars 28 to 30 at CB fol 46), and has made applications to the Supreme Court adverse to Universal's possession of the subject premises.
7. It is fair to say that their poor relationship, to which Kospetas deposes (e.g. at pars 55, 56, 68 to 71, 78 to 83, 96, and 97) has not assisted the resolution of the subject matter of these proceedings, but Kospetas also deposes to Universal's position on the tenancy differences (at pars 84 to 92).
8. The Vault hotel ceased trading in December 2015, for about twelve months, to facilitate the extensive new "1821" fit-out, which included the "flag" (Kospetas par 44).
9. Relevantly, Kospetas deposes in respect of the "flag" itself (pars 75 to 77, at CB fol 51): 75. I consider the Greek flag to be art work and I did not believe I needed approval from the Council or the Heritage Office for the flag. 76. When I organised the work for the flag it was discovered during the demolition work that the Southern Wall had been damaged by previous works to the Building before the Applicant took over. It was also discovered that the Southern Wall was covered by cement render. The whole of the Southern Wall is covered by cement render and as far as I am aware there is no heritage significance with maintaining the cement render finish on that wall. 77. At the end of the Lease the Greek flag will be patched up with cement render and painted.

Heritage Issues

1. The subject building has been the subject of a Permanent Conservation Order ("PCO") since May 1988 (CB fol 349), and is now listed as both a State, and a Local, Heritage item, in, respectively, the State Heritage Register (from 1999), and the Sydney Local Environmental Plan 2012 ("SLEP" - Exhibit A1).
2. I accept the Council's contentions that such listings cover both the exterior and interior of the whole building, and that there are no exclusions from the protection they afford (Tp12, LL25 to 33).
3. Clause 5.10 of the SLEP includes the following relevant provisions (some emphasis added): Heritage conservation ... (1) Objectives The objectives of this clause are as follows: (a) to conserve the environmental heritage of the City of Sydney, (b) to conserve the heritage significance of heritage items and heritage conservation areas, including associated fabric, settings and views, (c) to conserve archaeological sites, (d) to conserve Aboriginal objects and Aboriginal places of heritage significance. (2) Requirement for consent Development consent is required for any of the following: (a) demolishing or moving any of the following or altering the exterior of any of the following (including, in the case of a building, making changes to its detail, fabric, finish or appearance): (i) a heritage item, (ii) an Aboriginal object, (iii) a building, work, relic or tree within a heritage conservation area, ... (3) When consent not required However, development consent under this clause is not required if: (a) the applicant has notified the consent authority of the proposed development and the consent authority has advised the applicant in writing before any work is carried out that it is satisfied that the proposed development: (i) is of a minor nature or is for the maintenance of the heritage item, Aboriginal object, Aboriginal place of heritage significance or archaeological site or a building, work, relic, tree or place within the heritage conservation area, and (ii) would not adversely affect the heritage significance of the heritage item, Aboriginal object, Aboriginal place, archaeological site or heritage conservation area, or ... (4) Effect of proposed development on heritage significance The consent authority must, before granting consent under this clause in respect of a heritage item or heritage conservation area, consider the effect of the proposed development on the heritage significance of the item or area concerned. This subclause applies regardless of whether a heritage management document is prepared under subclause (5) or a heritage conservation management plan is submitted under subclause (6). ...
4. The Heritage Database of the Office of Environment and Heritage (CB tab 6(i)) contains the following information (as at "07/08/2018", at fols 345-348): Statement of Significance: The Sydney Club & Million House, formerly the Commercial Bank, is a five storey building comprising a lower three storeys of Victorian Mannerist style which has been sensitively extended. Its proximity to the financial centre of Martin Place and as an adaptation of a former nineteenth century banking premises, this building is historically significant for its demonstration of the role played by clubs like the Millions Club in the political power-broking of the city. The building is aesthetically significant for its well resolved detailing to both its interior and exterior, and is particularly noted for its use of rusticated panels and decorative voussoirs as well as its granite columned entry. The building is significant for its contribution as a landmark building to the Pitt Street streetscape and as an example of club facilities within the City of Sydney. The building is socially significant for the longevity of its occupation by the Millions Club, now the Sydney Club, and for its ability to evoke through its Rowe Street club entrance and coffee shop the former character of this lane. Historical Notes or Provenance: Pitt Street is the oldest named street in Australia. ... From of 1871-1885 the City Bank Hotel was located on this site ... The Commercial Bank of Australia negotiated the purchase of the leasehold of the City Bank Hotel in 1884. ... The new bank premises consisted of a spacious basement storey, ground, first and second floors. The portions facing Pitt and Rowe Streets were constructed of the best Pyrmont Stone of a light cream colour, wrought and polished. All other external and internal walls were built in massive brickwork. The building was completed and occupied from early 1887. The whole of ground and basement floor was used as business premises of the bank. The upper floor were (sic) leased to a firm of solicitors and various other organisations. ... In 1919 the building was renovated and modernised, including major refitting to the ground floor banking chamber and the installation of a lift. ... ... The name Millions Club was no longer appropriate as it once had been so it was changed to The Sydney Club in 1963. The Royal Prince Alfred Yacht Club joined with the Sydney Club in 1972 after the Yacht Club's premises were purchased by the MLC redevelopment. ... ... Physical Description: The Sydney club is a five storey masonry building located in the corner of Pitt and Rowe Street in the central business district of Sydney. The original building was designed by George Allen Mansfield in 1886, in the Victorian Mannerist Style. In 1929 the upper two levels were added by Morrow and Gorden in a sympathetic style. A mezzanine floor has been inserted between the original ground and first floor levels to create seven shops on the ground level and a showroom at the mezzanine level ... The Building is constructed of load-bearing masonry walls with some internal timber and steel structural elements. The west and north elevation exhibit a stylish hierarchy of columns and window treatments. The street level facades have been compromised by the introduction of recent shop frontage. The floor is timber and has carpel over it. The roof is flat with a series of plant and service room located over the eastern section. The roof is surrounded by parapet walls. Box gutters are located along the north and south walls. An awning has been added to the building in 1929. Although some original fabric at the basement and ground floor level has been lost as a result of alterations, elements of the main construction phases are evident throughout the building. The building exhibits high level of decoration such as cornices, attached columns, string courses and imitation stone courses
5. On 20 August 2015, architect Zoltan Kovacs provided "a brief heritage impact assessment of proposed works at the Vault Bar" (CB tab 6(c), at fols 188-192), in which he included the following (at fol 189): Statement of Significance The Statement of Significance is quoted from the Inventory Sheet of the heritage item on the NSW State Heritage Register (Database number: 2423843): The Sydney Club & Million House, formerly the Commercial Bank, is a five storey building comprising a lower three storeys of Victorian Italianate style which has been sensitively extended. Its proximity to the financial centre of Martin Place and as an adaptation of a former nineteenth century banking premises, this building is historically significant for its demonstration of the role played by clubs like the Millions Club in the political power-broking of the city. The building is aesthetically significant for its well resolved detailing to both its interior and exterior, and is particularly noted for its use of rusticated panels and decorative voussoirs as well as its granite columned entry. The building is significant for its contribution as a landmark building to the Pitt Street streetscape and as on example of club facilities within the City of Sydney. The building is socially significant for the longevity of its occupation by the Millions Club, now the Sydney Club, and for its ability to evoke through its Rowe Street club entrance and coffee shop the former character of this lane. (See also Council's 2010 DA Assessment Report, to similar effect, at CB tab 6, fol 157.)

Development decisions

1. Under the SLEP, the subject site is zoned "B8 Metropolitan Centre", and Council granted consent for relevant refurbishment works on 7 October 2010 ("DC" no D/2009/2185).
2. Those works were carried out between December 2015 and 8 December 2016 ([19] above).
3. Watson, as Principal Certifying Authority for the fit-out works, had issued, inter alia, a Final Occupation Certificate (No 15/1029/02) on 8 December 2016, in respect of those works (Exhibit R1). That Certificate specifically excluded "Removal of the render on the Southern wall", but the later one, dated 6 January 2019 (CB fol 342), by a different Watson company, did not.
4. What remains of the present proceedings concerns DCO No 10, issued by Council on 22 June 2018, to 122 Pitt, but not to Universal.
5. DCO No 10 concerns allegedly unauthorised works carried out within the hotel premises, notably the "etching", into the masonry on the internal southern wall of the ground floor, of a 5m x 8m representation of the Greek flag (achieved by, allegedly, "removal of render on the ... wall to expose brickwork so as to produce an outline in the shape of [the] flag").
6. The subject DCO was given as a "general order", pursuant to Div 9.3 of, and Pt 1 of Sch 5 to, the EPA Act.
7. The relevant item in the schedule provides (emphasis added): Column 1 Column 2 Column 3 To do what? When? To whom? ... Restore Works Order • The owner of the premises 10 To restore premises to the condition in which they were before unlawful building or other works occurred An unauthorised building has been the subject of a Demolish Works Order or unauthorised works have been carried out. • Any person entitled to act on a planning approval or acting in contravention of a planning approval • In relation to work unlawfully carried out that was the deposit of material in a public place, the person responsible for unlawfully depositing material in a public place

1. Part 6 of Div 9.3 deals with the process for giving DCOs, and includes cl 6, which provides: Natural justice requirements (cf previous s 121D) (1) Before giving a development control order, a relevant enforcement authority must comply with clauses 2, 8 and 9 and Part 7 of this Schedule. (2) Subclause (1) does not apply to the following development control orders: (a) a general order (under item 2, Part 1 of this Schedule) ...
2. In respect of the references in cl 6(1), set out above, I note that cl 2 refers to homelessness, but cls 8 and 9 are relevant to the present case: 8 Notice to be given of proposed order to person who will be subject to order (cf previous s 121H (1)-(3)) (1) Before giving a development control order, a relevant enforcement authority must give notice to the person to whom the proposed order is directed of the following: (a) the intention to give the order, (b) the terms of the proposed order, (c) the period proposed to be specified as the period within which the order is to be complied with, (d) that the person to whom the order is proposed to be given may make representations to the relevant enforcement authority as to why the order should not be given or as to the terms of or period for compliance with the order. (2) The notice may provide that the representations are to be made to the relevant enforcement authority or a nominated person on a nominated date, being a date that is reasonable in the circumstances of the case. In the case of a council this may be to a specified committee of the council on a specified meeting date or to a specified employee of the council on or before a specified date. 9 Notice to be given to other persons and bodies of proposed order (cf previous s 121H (4)-(5)) (1) Notice to other consent authorities If a council proposes to give a development control order in relation to development for which another person is the consent authority, the council must give the other person notice of its intention to give the order. (2) Notice to principal certifier If a council proposes to give a development control order in relation to building work or subdivision work for which the council is not the certifier, the council must give the principal certifier notice of its intention to give the order.
3. Part 7 of the Division provides: Representations concerning proposed orders 13 Making of representations (cf previous s 121I) (1) A person who is given notice under clause 8 of the intention to give a development control order may make representations concerning the proposed order in accordance with the notice. (2) For the purpose of making the representations, the person may be represented by an Australian legal practitioner or agent. 14 Hearing and consideration of representations (cf previous s 121J) The relevant enforcement authority that intends to give the development control order or the nominated person is required to hear and to consider any representations made under this Part. 15 Procedure after hearing and consideration of representations (cf previous s 121K) (1) After hearing and considering any representations made concerning the proposed development control order, the relevant enforcement authority or the nominated person may determine: (a) to give an order in accordance with the proposed order, or (b) to give an order in accordance with modifications made to the proposed order, or (c) not to give an order. (2) If the determination is to give a development control order in accordance with modifications made to the proposed order, the relevant enforcement authority is not required to give notice under this Part of the proposed order as so modified.
4. DCO No 10 (CB tab 3 fols 38-40) includes the following (but the "images" to which the extract refers are not reproduced here): Circumstances: Unauthorised Works have been carried out namely the removal of wall plaster on the southern wall of the Premises for the installation of a large Greek flag (detailed on the two images below): ... Terms: To restore the southern wall of the Premises to the condition it was in prior to the Unauthorised Works being carried out by reinstating the render to match the existing render. Reasons: 1. That Unauthorised Works have been erected without planning approval contrary to s 4.2 of the [Environmental Planning and Assessment Act 1979 ("EPA Act")]. 2. The Unauthorised Building Works are not exempt development under the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008. 3. No planning approval has been sought nor given to construct the Unauthorised Works, which is required in accordance with Section 57(1) of the Heritage Act 1977 and Clause 5.10(2)(a) and (b) of the [SLEP]. 4. The Unauthorised Building Works removes the significant internal finish, are unsympathetic in design, detracts from the understanding of the space as a former banking chamber, and detracts from its historic character that was reinstated as part of the Heritage Floor Space award.
5. DCO No 10 was appealed, on 17 July 2018, by 122 Pitt, in Class 1 of this Court's jurisdiction, pursuant to s 8.18 of the EPA Act.
6. However, those Class 1 proceedings have been stayed, by consent, pursuant to orders made by Robson J on 2 July 2018, pending the outcome of these Class 4 proceedings.
7. Universal has not sought to be joined in that Class 1 appeal.

The Pleadings

1. The present Applicant's Further Amended Summons ("FAS"), filed on 12 March 2019, pursuant to leave granted by Moore J, seeks the following relief: 1 In relation to Development Control Order No 3, dated 22 June 2018 (DCO No 3) Development Control Order No 10, dated 22 June 2018 (DCO No 10) issued by the Second Respondent on the First Respondent pursuant to s9.34(1)(a) of the [EPA Act]. ... b. a declaration that the DCO No 10 is invalid and of no effect; c. an order staying DCO No 3 and DCO No 10 until further order; d. an order restraining the First Respondent from undertaking any works or exercising any powers of entry to the premises in purported compliance with DCO No 3 and/or DCO No 10; e. an order restraining the Second Respondent from taking any steps to enforce DCO No 3 and/or DCO No 10 as against the First Respondent or the Applicant; f. an order restraining the Second Respondent from exercising its powers under Schedule 5 of the [EPA Act] to enter the premises and carry out works itself pursuant to DCO No 3 and/or DCO No 10; ... 2 An order that the Respondents pay the Applicant's costs of these proceedings. 3 Such further or other orders as the Court sees fit.
2. The FAS provides the following "Details of Decisions"; 1 The decision maker was the Second Respondent, in its capacity as a relevant enforcement authority under s9.35 of the [EPA Act]. 2 The decisions by the Second Respondent to be reviewed are: ... (b) the issue of a "Restore Works Order'' being Development Control Order No 10, dated 22 June 2018 (DCO No 10) to the First Respondent, purportedly pursuant to s9.34(1)(a) and the table to Part 1 of Schedule 5 of the [EPA Act]; 3 The Applicant seeks relief with respect to the whole of DCO No 10, pursuant to sections 9.45 and 9.46 of the [EPA Act]. ...
3. The FAS pleaded three grounds for relief: 1. Failure to afford the Applicant procedural fairness. 2. The removal of render for the installation of the Greek Flag is not "development" under the EPA Act, so DCO No 10 is invalid. 3. Wednesbury unreasonableness - the decision to issue DCO No 10 is "so unreasonable that no reasonable 'relevant enforcement authority' would have issued it".
4. Among its detailed particulars, the FAS pleaded the following (emphasis mine): 5 Pursuant to Part 5 and Part 6 of Schedule 5 of the [EPA Act] a council is required to give notice of a proposed order to the person who will be subject to the proposed order. Compliance by the council with, relevantly clause 8, and Part 7 is taken to have been observance of the rules of procedural fairness: clause 7. The council must form an opinion prior to the issue of the notice of a proposed order as to what they want the order to achieve (To do what? in Column 1), in the circumstances that exist at the time (When? Column 2) and to whom the proposed order should be directed (To whom? Column 3) to achieve or remedy the state of affairs that exists under Column 2 in relation to buildings and land within its local government area. 6 Pursuant to Part 7 of Schedule 5 (clauses 13, 14 and 15) of the [EPA Act] a council is required to give the person the opportunity to make submissions about the proposed order, hear and take into consideration any representations made before making a decision whether to issue the proposed order and what terms the proposed order will contain. It is open to a council after hearing representations to give a different order, to a different person and on different terms. Unless it is an emergency which excuses the procedural fairness statutory provisions, the council would be required to re-initiated (sic) the notification process if it decided to issue the proposed order to a different person. 7 The works and things required to be done to the subject premises in compliance with DCO No 10 will have an irreversible impact on the Applicant's licensed premises and restaurant such as to work a practical injustice to the Applicant. ... 28 The removal of render for the installation of the Greek Flag on the southern wall was not 'development' as that term is understood and defined under the [EPA Act]; 29 The installation of the Greek Flag accordingly did not require development consent nor did it fall within any of the definitions of exempt and complying development under the [EPA Act]; 30 The render removed from the wall to create the Greek Flag is not original material, but is cement based and cannot be described as an item of internal heritage significance; ... 30B. The internal walls of the ground floor of the subject premises, in particular the southern wall, are not itemised in the heritage listing of the building under Schedule 5 of the [SLEP] and clause 5.10(2) of the [SLEP] does not apply; 31 The installation of the Greek Flag was accordingly not 'unauthorised building works' and the Second Respondent had no power to issue the DCO No 10 under the [EPA Act]; 32 By reason of the matters set out at paragraphs 28 to 31 the DCO No 10 is invalid and of no effect. 33 Further and in the alternative; (i) The Second Respondent and the NSW Heritage Council knew or ought to have known that as part of the fit out for the proposed Greek restaurant and bar at the subject premises a decorative installation with a Greek theme was proposed for the southern wall; (ii) The Second Respondent and the NSW Heritage Council have known about the Greek Flag installation since 2016 and have taken no steps for its removal or reinstatement of the southern wall; (iii) The removal of the render to create the Greek Flag on the southern wall can be reinstated to match the existing render and as part of the tenant's fit out works is required to be removed by the Applicant at the end of the lease, this being the exact Terms of the DCO No 10 served on the landlord, the First Respondent; (iv) There is no urgency for the carrying out of the Terms of DCO No 10 by the First Respondent or any person; (v) The Second Respondent knew or ought to have known, that the carrying out of the Terms of the DCO No 10 would require the closure of the Applicant's business for a period of time which would work a significant injustice to the Applicant; (vi) The Applicant currently has exclusive possession of the subject premises where the southern wall is located and the First Respondent sought an order of the Supreme Court to obtain interim possession to carry out the Terms of the DCO No 10.

The Notice of Motion

1. On 4 March 2019, Universal filed a Notice of Motion ("NOM") which basically sought leave (1) to file the FAS, and also (2) for the Applicant and Council to file, and rely upon, expert heritage evidence.
2. As already noted, on 8 March 2019, Moore J granted leave to the Applicant to file the FAS, but adjourned the expert evidence component of the NOM to the first day of the hearing.
3. Filed with the NOM, as Annexure "B" to a supporting affidavit sworn by the nominated expert, James Phillips, was a "Statement of Reasons" ("SOR") by the Council in respect of its decision to issue DCP Nos 3 and 10 (the SOR is dated 7 December 2018, and can also be found at CB fols 22 to 25. DCO No 3 is no longer in issue, as Council accepts that it has been satisfied).
4. In its reply submissions, dated 25 March 2019 (at par 16), the Applicant noted that it did not press the NOM in respect of expert evidence, and, next morning, Council sought its dismissal, and an order for costs in respect of it. I reserved the question of the Council's costs on the NOM (Tp2, LL16-17).

Points of Defence

1. The Council's Amended Points of Defence, filed on 25 March 2019, relevantly included the following: Ground 1 - Failure to afford the Applicant procedural fairness 5. The Council admits that Part 5 of Schedule 5 of the [EPA Act] provides that a relevant enforcement authority that complies with clauses 2, 8 and 9 as well as Part 7 of Schedule 5 is taken to have observed the rules of procedural fairness. The Council has complied with these provisions and is taken to have observed the rules of procedural fairness. 6. ln response to paragraph 6, the Council admits that Part 7 of Schedule 5 of the [EPA Act] provides a procedure for the receiving and consideration of representations from the person who is given notice under Clause 8 of Schedule 5 of the [EPA Act]. The Council admits that it would have to comply with the provisions of the [EPA Act] if a development control order was sought to be served upon any person. The Council has complied with the requirements of the [EPA Act] in relation to the development control orders that are the subject of these proceedings. ... Ground 3 - DCO No 10 - the Greek flag 21. The Council denies paragraphs 28 to 30 and paragraphs 31 to 33 inclusive. As to paragraphs 30A and 30B, the Second Respondent denies that it owes the duty alleged and relies upon the State and Local heritage listings and statements of heritage significance of the subject premises and upon the Conservation Management Plan of December, 1998. Further, the grounds set out in paragraphs 30A and 30B of the Summons require the Court to engage in an assessment of the heritage value of elements of the subject premises, which would amount to an impermissible merits review.

The Applicant's Submissions

1. The Applicant submits that it should be at liberty to choose and implement, by decoration, a theme for its premises - it is a business decision, not a planning matter (within the purview of Council - Tp4, L17).
2. The Council should have given the DCO to the Applicant, who submits (Tp30, LL25-32) in this regard: The aim is to seek to remedy breaches of the Act. One would ordinarily expect that the person who is best able to carry out the works, to remedy to breaches of the act, is the person who should be served with any orders, and the person who, it's alleged, carried out the unlawful works. The landlord didn't do the fit out. Council knew that. That's consistent with enforcement under planning and environment pollution legislation. The person who has carried out the works is the one who should be ordered to remove them, or make them lawful.
3. The Applicant accused Council of carrying out "the landlord's agenda" (Tp4, L40, and p5, LL16-17), and accused the landlord of "bullying" Council (Tp27, L40). It even sought at one stage to suggest that Council may have in some way falsified Exhibit R2 (Tpp54, 55, and 67).

(1) Denial of Procedural Fairness

1. By not giving the order to the Applicant, the Council denied "the person who is best able to do the works" the opportunity to make representations or submissions to the Council (Tp29, LL1-12). Indeed, the Applicant invited Council directly to give it the order, and Council declined (Tp34, LL25-33).
2. In its written submissions (at 11), the Applicant gave the following reasons, "all in the knowledge of the Council at the time the Orders [3 and 10] were issued", for giving them to the Applicant, instead of the owner (footnotes omitted): (i) The Applicant has exclusive possession of the premises under a registered lease from the First Respondent that expires in May 2024; (ii) The Applicant is the person with control of the premises; (iii) The premises are open 7 days per week; (iv) The doing of the work required under the Orders necessitates closing the food and beverage premises for a period of time such as to cause business disruption - the Applicant was entitled to be heard on at least the period for compliance with the Orders; (v) The Applicant through its servants and agents was the applicant for development consent and has carried out all the work the subject of the fit-out under the consent including demolition of the previous fit-out that was part of the integrated development consent approved by council and the Heritage Council; (vi) The Applicant is the person with knowledge of the location of services and the like inside the premises; (vii) The Applicant engaged the Principal Certifying Authority (SWP) to implement the building work under the consent and perform the certification role not the landlord; (viii) The Applicant owns and operates other licensed premises in the local government area and has an excellent compliance record; (ix) The Applicant has co-operated at all times with council, including with an earlier Notice of Intention to issue an Order; (x) The premises have not been abandoned such that the owner is the only person the council is able to contact to seek compliance with the Act; (xi) The council could have validly issued the Order to both the landlord and the Applicant: clause 39, Schedule 5 EPA Act.
3. The Applicant further submits (at 13 to 15 - some emphasis added): 13. The fact that the First Respondent sought to apply for interim possession from the Supreme Court to carry out the work in compliance with the development control orders demonstrates that the First Respondent was not necessarily the best person to serve with the Order. In submissions to the Notice of Intention to issue an Order, the First Respondent pointed these difficulties out to Council but the only consideration this appears to have been given by Council was to extend the time for compliance. 14. Just because an Order No 10 can be issued to the owner of the premises does not assist the Council. The 'person entitled to act on a development consent' is also listed in column 3 of the Table and Council has a discretion under s9.34(1) & s9.35(1) to decide to whom the Order should issue. The purpose of Development Control Orders is to achieve compliance with the EPA Act and that purpose has been frustrated in this instance by the Council serving the DCO No 10 on the First Respondent. 15. In summary, the council's exercise of power under s9.34(1) to issue the DCO No 10 to the First Respondent miscarried because of a failure to comply with the common law presumption of implied procedural fairness with respect to the occupier of the premises the subject of the Order and the person entitled to act on the development consent in respect of those premises. The principles are explained in the migration cases decided by the High Court ...

(2) DCO 10 invalid

1. The Applicant rejects (subs 22) the four reasons quoted in the Order (see [36] above) as "incorrect on the following bases: (i) Not 'development' and planning approval not required (ii) clause 5.10(2) LEP does not apply (iii) no breach of s57(1) Heritage Act 1977 (iv) material removed was not a heritage item, or could be described as significant internal finish', or was 'plaster' but was cement render"
2. The submissions continue (23): The Council's Reasons appear to proceed on the basis that the removal of the render is a separate Work that requires approval and such approval has not been given. The Applicant's position is that as a stand alone element it would not require planning approval because it is not 'development'.
3. The Applicant then sets out (24-25) the statutory definitions of "development", "building", and "work", and submits (26) that "structure" should be given its ordinary meaning. The Applicant relies on the following remarks of Mahoney JA in Mulcahy v Blue Mountains City Council (1993) 81 LGERA 302, at 307-308: In principle, the purposive approach to construction of, eg, "structure" or "erect" would proceed in a manner such as the following. The court would determine the purposes which the legislature sought to achieve by prescribing that no structure may be erected without council approval. I shall assume, by way of over-simplification, that that purpose was the safety and stability of the structure. The court would then adopt from among the possible meanings of "structure" and "erect" that meaning which would give effect to that purpose. It would not give to the terms a meaning which had no relevance to the achievement of that purpose. Accordingly, if the setting up inside a house of a set of bookshelves or the construction of cupboards could have no relevance to the safety of what was involved, such things would be held not to be within the meaning of such terms.
4. His Honour's reasoning was recently quoted with approval (subs 27) by Basten JA in Hakea Holdings Pty Ltd v Louisiana Holdings Pty Ltd [2018] NSWCA 240, at [93] and 97].

(3) Wednesbury Unreasonableness

1. What were really the Applicant's written submissions in chief on this ground are to be found in its Submissions in Reply document, filed on 25 March 2019.
2. The relevant principles of Wednesbury are well established, and need not be restated here (see reply subs pars 2 to 7).
3. The Applicant submitted (reply subs 8 to 11 - footnotes omitted): 8. Council has not provided any plausible explanation supported by evidence of the decision to issue the DCO No 10 to the landlord and not the Applicant, apart from the fact that it is the owner of the premises, just one of the classes of persons who the statute provides can be the recipient of a DCO No 10. The other person being the Applicant, a 'person entitled to act on a development consent'. 9. It is artificial and incorrect for the Council to suggest that there was no relevant development consent at the time the Greek flag was installed. The work removing the previous fit out which included demolishing the stairs on the southern wall and making good that wall and floor was all part of the consent D/2009/2185 and CCs for the fit out. To accept Council's argument would mean that the re-rendering of the southern wall and reinstatement of the floor to make good where building elements were removed as part of the demolition was not done pursuant to the consent D/2009/2185. 10. The evidence that is before the Court that casts some light on the decision-making process prior to the issue of the DCO No 10 by the building surveyor, MD Karim is the email from his superior Mr Steve Bedano to the council's solicitor, Mr Thomas Ward. The responsibility to make the decision falls to the building surveyor, not Council's in house solicitor. Mr Bedano wants to know what the representations mean and what should he do. However the reply to Mr Bedano's questions about the representations from the landlord's solicitor was not produced by Council under a Notice to Produce in these proceedings. 11. The Court therefore is in the dark as to the reasons the council still decided to issue the DCO No 10 to the landlord when it's solicitor had said "We are not presently able to carry out the works to rectify the matters set out in the Notices".
4. The Applicant acknowledged (par 13) that "what has never been doubted in this case [is] that the landlord was accorded procedural fairness", and then submitted (15) that: ... in the absence of any plausible explanation to issue the DCO No 10 to the person who was not in a position to remedy the alleged breach of the EPA Act, no reasonable "enforcement authority" would have taken that course.

The Council's Submissions

1. In his oral submissions Mr Wright said, on Council's behalf: 1. (Tp61, LL16-21): What was proposed in the CC plans is something in the nature of a decorative textile feature or artwork. There is no reference and no basis, on any ordinary reading of the plans or consent, to support a conclusion that there was an approval for this thing carved in the wall. It was plain from what was going on in 2016 that both the Heritage office and the council considered the Greek flag to be unauthorised. 1. (Tp61, LL33-38): The proceedings fall to be determined properly on the statutory construction of the relevant provisions of the Environmental Planning and Assessment Act. The sections which we set out in the submissions and I took your Honour to some of them in opening yesterday but principally in relation to what a council as a relevant enforcement authority is able to do in issuing an order. 1. (Tp61, L48-p62, L3): ... the later sections in pt 5 including 31, 32 and 33 because they are material to the interpretation of how these provisions operate but it was also plain from the correspondence that was sent to the owner in response to its representations that the council took the view, properly in my submission based upon what the Act directs, that the order could only be issued to the owner of the premises. 1. (Tp62, LL32-33): ... [This] is a restore works order in relation to unauthorised works and where there's no consent we say that it is properly and correctly issued to the owner. and 1. (Tp61, LL14-23): ... the legislature contemplated a circumstance where it says you shall direct this form of order to an owner and where the premises are occupied there are then provisions which facilitate the enforcement of the order by ensuring that the council, as the enforcement authority here, or whichever the authority is, can then order the occupier we need access for that purpose. It doesn't suggest at all that there was any intention to reserve some kind of common law procedural fairness right in someone else, someone to whom the order is not directed. As a matter of plain construction in our submission, the legislation is self contained ...
2. Mr Wright noted during his opening (Tp9, LL40-48) that the Applicant's suggestions ([51] above) that Council was acting at the behest of others, and/or for an improper purpose, had not been pleaded, and should be disregarded.
3. On the substantive issues in the case, he refuted (Tp58, L35 to p61, L21) Ms Byrne's submission that Council plans could operate to incorporate the flag into the DC, even though there are references to, firstly, unspecified "artwork", and, later, "decorative textile wall treatment".
4. The "flag" was one of three unauthorized works which were of concern to Council, because they allegedly compromised the heritage significance of the premises (SOR 12c). The render material into which the flag was carved was itself considered to be of heritage significance (SOR 19d).
5. The flag was said (SOR 18b) to be "not sympathetic" to the appearance of the premises, and so detract from the recognition of the ground floor space as a former banking chamber.
6. Council tendered (Exhibit R2) a record of an inspection carried out by its officer Hayden Fox on 25 May 2016, which clearly identifies (at p16 of the exhibit), as unauthorised building work, "A large etching (Greek Flag) into the Southern masonry wall (internal)". Kospetas was present during that inspection.
7. In its written submissions, the Council said, inter alia (some emphasis added - footnotes omitted): 17. It is self-evident from the entry in the State Heritage Register and the listing in the SLEP, that the heritage listings extend to the whole of the building including its exterior and interior. ... 19. The applicant appears to suggest that it is open to it to exclude the wall into which the Greek Flag has been carved from the premises, suggesting that the wall or the plaster or render on it is not part of a building or structure, not a 'work' and is not of heritage value and is therefore apparently excluded from or capable of being excised from the building as a whole. ... 29. There was no relevant development consent for the work creating the Greek Flag. The Council does not understand the applicant to be suggesting otherwise. Hence, the order could only be issued to the "owner of the premises". As there is no relevant development consent, there was no "person entitled to act on a planning approval or acting in contravention of a planning approval" to whom a notice of intention or order could or should be given. 30. In the absence of a relevant development consent, the only person to whom the Order 10 could be given was the owner of the premises. The matters listed at [11] (i) to (x) of the applicant's outline of argument do not alter that position. 31. As to paragraph [11] (xi) of the applicant's outline of argument [see clause in [53] above], clause 39 of schedule 5 to the EPA Act does not alter that position. The clause does not enlarge the class of persons to whom the particular order may be given. It is directed to circumstances where it may be appropriate to issue an order to more than one person. For example, where there is more than one owner or where if it is relevant, there is more than one person who may be entitled to act upon a development consent. The clause simply identifies that the order may be directed to 2 or more persons jointly. This avoids the necessity to issue multiple orders to multiple recipients. The clause in any event confers a discretion on the person giving the order. It is not a statutory indication of a right to be given notice of intention to give an order in any person who could possibly be identified as a person to whom an order might be given. 32. In the same way, clause 38 confers a discretion on the person giving the order to include more than one order in the same instrument if it chooses to do so. ... 41. The statutory scheme clearly intends to exclude any common law right to procedural fairness. 42. The Council is unaware of any authority in which it has been found that failure to serve a copy of a notice of intention of an order to a person to whom it is not intended to be directed amounts to a denial of procedural fairness. No doubt, that is because the scheme, including the procedural fairness regime, identifies the full extent of the right to procedural fairness in respect of a proposed order. ... 47. The plaster or render covering the wall is part of the wall and the southern wall is part of the interior of the building. The question here is not whether the wall or the plaster or render on the wall is of itself, a structural element of the building. It is not a question of the safety and stability of the southern wall. It could not seriously be suggested that the southern wall does not form part of the building or that the building does not meet the definition of "building" in s4.1 of the EPA Act. Nor could it be suggested that a wall within a building is not a "structure" within the ordinary meaning of that word. 48. The whole of the building, including all of its exterior and interior are the subject of each heritage listing. It matters not that the subject southern wall or its finishes are not specifically mentioned in the listing. On the applicant's analysis, every brick, doorway, window, ceiling, cornice, decorative item, door handle or other element normally understood to be part of the interior of a building are not capable of being part of the "structure" if they cannot be said to exist individually for the purpose of the "safety and stability" of the building. 49. Under the definition of "work" in s1.4 of the EPA Act, the "carrying out of a work" includes making alterations to a work. Carving an approximately 5 x 8 metre Greek Flag into the plaster or render of an internal wall of the building is the carrying out of a work.
8. The Council then (50) drew attention to the wording of cl 5.10(2) of the SLEP ([23] above), and submitted (51 to 53 - emphasis added - footnotes omitted): 51. It is difficult to understand how the work the subject of DCO 10 could be described a (sic) anything other than the making of changes to the detail, fabric, finish or appearance of the building. 52. As each listing specifies the whole of the building including interiors, it follows that the whole of the interiors are specified for the purposes of clause 5.10(2)(b) of the SLEP. The applicant's suggestion to the contrary strains the language of the clause and of the listings. If the applicant is correct, every single element and detail of the interiors of the building would need to be specified individually in the listing. If this were the case, any heritage listing would need to be documented at the level of detail only a quantity surveyor could understand. 53. The Greek Flag has been carved into part of the building being a wall that is part of a structure within the building (i.e. the southern wall on the ground floor). It is not of a temporary nature. If as suggested by the applicant, the premises must be reinstated to their former condition, then by parity of reasoning, the entire fit-out carried out pursuant to development consent D/2009/2185 would also be of a temporary nature.
9. Council then submitted (58 to 62 - emphasis added - footnotes omitted): 58. At [34] of the applicant's outline of argument, it suggests that the Greek Flag has the benefit of an approval under s63 of the Heritage Act. There is no such approval. This argument relies upon the same assertion that the southern wall was not specifically mentioned in the heritage listing and it fails for the same reasons. That much is made clear by the correspondence from OEH supporting the giving of DCO 10 and by the approval of the application made under s60 of the Heritage Act in relation to the development identified under DA D/2009/2185. 59. No reason is given in the applicant's outline as to why the word "plaster" and "render" should not have their ordinary meaning or why they cannot both be used in the terms in DCO 10. 60. The Macquarie Dictionary defines "plaster" relevantly as "1. A pasty composition, as of lime, sand, water, and often hair, sued for covering walls, ceilings etc., where it hardens in drying". 61. It defines "render" when used as a verb to mean "14. to cover (brickwork, stone etc.) with a first coat of plaster." 62. The use of both words in DCO 10 convey the meaning of the covering of the brickwork on the southern wall. The Council does not understand the applicant to be suggesting that DCO 10 was rendered uncertain by the use of both of these words.
10. In his oral submissions, Mr Wright added, in respect of the natural justice challenge (Tp62, L43-p63, L1): ... pts 5, 6 and 7 but pt 5 identifies very specifically what the natural justice requirements are and what the relevant enforcement authority must do to comply with them. Subclause 7 is important and I refer to this in the written submissions. ... In my submission that is the clearest possible indication that the regime in the Act is the only regime that an enforcement authority is required to embark upon and if it has, and there is no suggestion in relation to the owner that it has not, then it is taken to have observed the rules of procedural fairness. (See also [63] passage (v) above.)
11. In respect of the invalidity ground, he added (Tp63, LL18-24 and 35-39): The owner makes no complaint about the validity of the order. It's lodged an appeal and it's plain from the correspondence that that was effectively at the behest of the tenant or it's tenant, the current applicant. There is nothing on the face of this order as between the council and the person who received it, which would ground an argument that the order is invalid as between the council and the owner. ... It is open if the owner keeps its appeal on foot and at the moment the orders are stayed by Robson J but it has been open since the time the appeal was commenced which was within a couple of weeks of the order being given to the applicant here to apply to be joined and be heard in the class 1 appeal.
12. In respect of the Wednesbury ground, Mr Wright relied on my judgment in Hortis v Manly Council (1999) 104 LGERA 43; [1999] NSWLEC 151, where I said (at [177]): It is well established that the consent of manifest unreasonableness in administrative law is extremely confined (Attorney General for the State of NSW v Quin (1990) 170 CLR 1 at 36). It is also recognised that "a court should proceed with caution when reviewing an administrative decision on the ground that it does not give proper weight to relevant factors, lest is exceed its supervisory role by reviewing the decision on its merits" ([Minister for Aboriginal Affairs & Anor v Peko-Wallsend Ltd & Ors (1986) 162 CLR 24] at 42 per Mason J).
13. In responding to Ms Byrne's opening, Mr Wright had commented (Tp10, LL1-20): Most of what I have heard from Ms Byrne this morning trespasses very directly and dangerously into the question of merit, and that is one of the matters that we consider arises on the proceedings. ... The statements made by Ms Byrne make clear that what the applicant is trying to do is to put to the Court issues of merit concerning the nature of the work, the opportunity to decorate the premises, the quality of the flag, the theme of the applicant's premises. Those are not matters which have, or could be pleaded, in an application for judicial review. When your Honour gets into the meat of the evidence, and the submissions which the parties make, I submit respectfully that it becomes very apparent that this is a judicial review proceeding, but is in reality little more than a complaint on merits as to whether the applicant can keep its Greek flag.
14. He later submitted (Tp65, L49-p66, L10): With respect to Ms Byrne, the way she has opened her case and presented the evidence, plainly demonstrates that the Wednesbury unreasonableness ground is inviting your Honour to go behind the order and indeed go behind the heritage listing and to embark upon a merit assessment of whether this item was of heritage value or it wasn't, whether it was included in the listing or it wasn't or whether the Greek flag carved into it is or is not something which impacts their existing (sic). Those are matters which are, if they're addressed at all, properly addressed in the appeal. They are not matters which the Court can properly entertain in determining an application for digital review which is a determination as to whether this order, on the date it was given, on 22 June 2018, is valid or it is not.
15. Mr Wright acknowledged (Tp64, LL38-40) Kospetas's evidence "that the [offending] works can be remedied or reversed quite easily". Kospetas deposed (at par 98 of his affidavit at CB fol 55): If required to do the Proposed DCO Works the Applicant can ensure that there will be minimum interruption to the Business by minimising the time with carrying out such works and ensure minimal damage will be done to the heritage fabric of the building. ...

Consideration

1. There is much "merits" related material in the Applicant's case - notably that provided by the architect Kovacs ([25] above), and by Town Planner Giovanni Cirillo (e.g. CB tab 5, at fols 59A, 65-67, 181, 190 and 191) - and while some was informative, the issues went deeper than merits.
2. The render on the Southern wall at the time of the installation of the flag was clearly not the original 1887 material (CB tab 5, fol 73), but it was protected, from 1988, by a PCO, and then also by all-embracing heritage listings.
3. Alteration of it was clearly "development", which required, but has been shown not to have, Council's consent.
4. The approval granted contemplated "artwork" on that wall, or some form of "decorative textile wall treatment" (Tp40, L40 and p41, L11).
5. The fact that what occurred was an etching of the wall render, to depict the Greek flag, cannot be accepted as mere "ambiguity in plans", which should be "construed against the Council" (per Ms Byrne at Tp41, LL15-19).
6. The DCO is not invalid on its face, and a challenge based on the principles in Stutchbury v Pittwater Council [1999] NSWLEC 177, and Lederer v Sydney City Council (2001) 119 LGERA 350 has not been made out.
7. While, in its discretion, Council could have chosen to give a DCO to Universal, as the tenant in exclusive possession, and as the entity most closely involved in development works, it was not obliged to do so, but it was required by Item 10 to give the DCO to the owner, and it did so (Tp14, LL10-11).
8. The EPA Act gives the owner avenues it can follow to ensure it obtains access, in order to comply with the DCO's requirements.
9. The statutory requirements to afford procedural fairness are clear, and were satisfied in this case.
10. There is no authority cited by the Applicant, which would require the Court to find any residual common law obligation on Council to afford procedural fairness to anyone, let alone to anyone other than the recipient of the DCO.
11. Ms Byrne's contention (Tp14, LL22-25) that the degree of heritage significance of the premises provides "more reason" for Council to afford Universal procedural fairness has no substance.
12. The giving of the DCO in the circumstances of the relevant works was not, in any sense, unreasonable, let alone so unreasonable that no reasonable authority would give it. The Wednesbury ground also fails.

Conclusion

1. As none of Universal's three grounds of challenge has been made out, the proceedings should be dismissed.
2. The Applicant having been entirely unsuccessful, Council is entitled to an order for its costs of the proceedings.
3. Those costs should include those I reserved on 26 March 2019, in respect of the NOM filed 4 March 2019, which was dismissed by consent.

Orders

1. The Orders of the Court will be: 1. The Applicant's Notice of Motion filed on 4 March 2019 (except as to paragraph 1A, concerning the filing of a Further Amended Summons) is dismissed, by consent. 2. The Applicant's Further Amended Summons, filed on 12 March 2019, is dismissed. 3. The Applicant is to pay the Council's costs of the proceedings, on a party-party basis, as agreed or assessed. 4. The Court Book and all exhibits are 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. Decision last updated: 16 August 2019