Verde Terra Pty Ltd v Central Coast Council; Central Coast Council v... [2022] NSWLEC 49 | Case summary

The VT Proceedings

It was ultimately agreed, upon the suggestion of the Court, that in lieu of an order dismissing prayer 2 for relief in its further amended summons in the VT proceedings, an amendment to order (1) at [551] to insert the words "and otherwise dismisses the further amended summons" would suffice to ensure that a right of appeal arose in the VT parties' favour pursuant to s 58 of the Land and Environment Court Act 1979 ("the LEC Act").
Section 58(1) of the LEC Act provides as follows: 58 Class 4 proceedings - appeals (1) Where a party to proceedings in Class 4 of the Court's jurisdiction is dissatisfied with an order or decision (including an interlocutory order or decision) of the Court, the party may appeal to the Supreme Court against the order or decision.
The VT parties argued that unamended, order (1) did not give rise to any right of appeal against the refusal of the Court to make the declaration sought in prayer 2 in their further amended summons.
While the Council did not accept this submission, it did not oppose, if its application for a negative declaration was not acceded to, the making of an order either formally dismissing prayer 2 or amending order (1) in the manner agreed to above. It was the Council's submission that the word "decision" in s 58 of the LEC Act was sufficiently wide to encompass the Court's refusal to grant the relief sought by the VT parties in the prayer for relief in order to enliven a right of appeal.
I am inclined to accept the Council's assertion. On any view of the judgment, the Court decided not to grant the relief that the VT parties sought in that prayer. However, and without deciding the issue, out of abundant caution, the Court will amend order (1) in the manner suggested by it and not opposed by the parties.
The logical corollary of this conclusion is that the Court declines to make the negative declaration sought by the Council.
The Court accepts, contrary to the contention by the VT parties, that it is not precluded from making the declaration merely because no such relief was sought by the Council in its cross-summons (Farrell v Mulroney [1978] 1 NSWLR 221 at 224). To do so will facilitate the overriding purpose contained in s 56 of the Civil Procedure Act 2005 ("the CPA") and is consistent with the power contained in r 36.1 of the Uniform Civil Procedure Rules 2005 ("UCPR").
Rule 36.1 of the UCPR confers the following discretionary power on the Court: 36.1 General relief At any stage of proceedings, the court may give such judgment, or make such order, as the nature of the case requires, whether or not a claim for relief extending to that judgment or order is included in any originating process or notice of motion.
The Court also accepts that such a declaration would fall within the ambit of the liberty to restore granted by order (4) (at [551]).
However, in the form proposed by the Council the declaration is defective insofar as it does not reflect what the Court determined. This is because, first, the proposed declaration is based upon the current form of the Environmental Planning and Assessment Regulation 2021 (cl 48 of Sch 3) and not the version of the Regulation the subject of Verde Terra (No 9) (cl 35 of Sch 3 of the Environmental Planning and Assessment Regulation 2000).
Second, it is not clear to the Court why, in the absence of a negative declaration, the finding giving rise to the refusal of the Court to grant the relief sought in prayer 2 would not bind third parties, rather than simply create an issue estoppel between only the parties to the proceedings. The refusal was not based on discretionary factors but on findings of law.
Having said this, it must be acknowledged that the authorities conflict. The decision in Coles v Wood [1981] 1 NSWLR 723 suggests that the making of an order dismissing a prayer for declaratory relief without more does not finally determine the rights of the parties and constitutes a res judicata (at 727 per Hutley JA). By contrast, the later authority of A Hudson Pty Ltd v Legal & General Life of Australia Ltd (1985) 1 NSWLR 701 suggests the contrary view (at 710 and 712 per Kirby P, 716 per Mahoney JA and 717-718 per Priestly JA), and is more harmonious with the reasoning in Blair v Curran [1939] HCA 23; (1939) 62 CLR 464 (at 531-532 per Dixon J).
Again, given the Council's acquiescence to the amendment proposed by the Court to prayer 1, it is strictly not necessary to determine the controversy. I note in this regard that the question was not fully argued before the Court and that the remarks by Sackville AJA in The Movie Network Channels Pty Ltd v Optus Vision Pty Ltd [2010] NSWCA 111 relied upon by both parties do not take the matter much further (see at [156]-[160], especially at [160] which is seemingly consistent with A Hudson). It is noted that in The Movie Network the Court of Appeal dismissed the appeal without making a negative declaration.
It is not clear how, as the Council argued, especially given the findings of law made in Verde Terra (No 9) on this issue, failing to make the negative declaration will give rise to a multiplicity of proceedings on this issue, and therefore, subvert the overriding purpose in s 56 of the CPA or the mandate to determine the proceedings completely and finally pursuant to s 22 of the LEC Act. The latter provision states that: 22 Determination of matter completely and finally The Court shall, in every matter before the Court, grant either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by that party in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters may be avoided.
There was no evidence before the Court that the failure to make the negative declaration sought by the Council would result in yet more litigation in respect of the subject development on the land.
In my view, binding issue estoppels will arise from the Court's dismissal of prayer 2 (by the device of dismissing the remainder of the further amended summons in the VT proceedings) and it is unnecessary to make the amendment sought by the Council.

The Council Proceedings

The Council seeks orders (not declarations as the VT parties erroneously stated) in the form of those hypothesised at [549(a)-(e)] of Verde Terra (No 9) on the basis that: 1. first, they properly reflect the Court's reasons at [493] and [515], where, after full argument, the Court found that the variations purportedly made to EPL 11395 were invalid because the power contained in s 50(2) of the Protection of the Environment Operations Act 1997 ("POEOA") had not been enlivened at the time that the variations were determined by the EPA. It should be recalled that in the Council proceedings, the Council sought orders setting aside variations by the EPA to EPL 11395 between May 2009 and November 2011 on the basis that the EPA had purported to authorise the carrying out of "controlled development" within the meaning of s 50(2) of the POEOA for which development consent had not been granted. Accordingly, the Council submitted that the making of the orders fell within the terms of the liberty to restore as they were consistent with the reasons of the Court in Verde Terra (No 9); 2. second, the making of the orders conforms with the obligation imposed upon the Court by s 22 of the LEC Act and r 36.1 of the UCPR, and was consistent with the principle referred to in Tomlinson v Ramsay Food Processing Pty Ltd [2015] HCA 28; (2015) 256 CLR 507 (at [20]), a provision which was overlooked when the Council made its concession that if the Court were to reject the VT parties' contention that the variations made to EPL 11395 had the effect of modifying the 1998 consent by the operation of conditions 1 and 2 of that approval, it was not necessary for the Court to determine the Council proceedings. During the amendment application the Council stated that it had been "wrong" to make this concession (T12:28); and 3. third, there is utility in making the orders because there are extant Class 1 proceedings in which the VT parties are appealing against the EPA's refusal to grant an application to vary EPL 11395 to permit the development proposed by the 2018 DA.
In summary, the Council submitted that to make the orders proposed would quell any potential future controversy about the current terms of EPL 11395 against which any proposed EPL variation would fall to be determined and would avoid possible re-litigation of the same issue.
In reply, the VT parties submitted that the orders should not be made because: 1. first, they would not properly reflect the Court's reasons which were premised upon the Council's concession that the relief sought in the Council proceedings was being sought on a contingency basis only, and that this basis had remained dormant. Therefore the orders transgressed the liberty to restore; 2. second, to do so would be unfair and a breach of procedural fairness because they had not been given an opportunity to comment upon the making of the orders; and 3. third, they would be inutile because the Council had not sought to challenge the current version of EPL 11395 either at all or as varied on 3 May 2012.
Turning to the last reason first, the VT parties cited several authorities that stand for the general proposition that a court will decline to grant declaratory relief if the declaration does not serve any legitimate purpose or would lack utility. However, and to reiterate, the Council does not seek such relief; it seeks orders that the impugned variations be set aside consequent upon the Court's contingent finding of their invalidity.
It is correct to submit, as the VT parties do, that there is no challenge to the validity of EPL 11395 or to the variation determined by the EPA on 3 May 2012. But this is not the end of the matter. As the Council contends, there would be notional utility in making the orders (assuming the barriers below could be overcome) on the basis that EPL 11395 would remain but with the offending conditions severed from it.
However, I agree with the VT parties that to make the orders advanced by the Council at this late stage of the proceedings could result in unfairness and ought not, in light of the repeated assurances by the Council that the Council proceedings only required determination in the event that it was unsuccessful in the manner described above in the VT proceedings, be countenanced.
While there was undoubtedly argument put both orally and in written form by all parties with respect to the Council proceedings, it is a reasonable observation that the ventilation of the issues in those proceedings was not as comprehensive or as developed as the arguments put in the VT proceedings. While not cursory, their presentation was nevertheless truncated by both principal parties undoubtedly because of the concession made by the Council. This is directly reflected in the length of the reasons provided by the Court in disposing of the Council proceedings. In short, the Court relied upon the concession made by the Council and only dealt with the substantive issues raised by the Council proceedings out of abundant caution in case the earlier reasoning of the Court was subsequently established to be erroneous (at [494] and [495]).
I therefore agree with the VT parties that the orders sought by the Council in the Council proceedings exceed the liberty to restore granted by the Court inasmuch as they do not truly reflect the contingent reasons of the Court (again, see at [494] and [495]).
Even if the express words of the grant of liberty to restore are ignored, it is arguable that the making of the orders would, in any event, lie outside the conventional scope of liberty to restore (Katter v Melhelm [2015] NSWCA 213; (2015) 90 NSWLR 164 at [81]). As was stated in this Court, "the reservation of liberty to restore provides no foothold for imposing a new order to vary substantially an existing order" (Botany Bay City Council v Skyton Developments (Aust) Pty Ltd (in liq) [2016] NSWLEC 20 at [27] per Preston J, a decision with admittedly very different facts from the present case).
In Tomlinson the Court stated (at [20], footnotes omitted): 20 An exercise of judicial power, it has been held, involves "as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons". The rendering of a final judgment in that way "quells" the controversy between those persons. The rights and obligations in controversy, as between those persons, cease to have an independent existence: they "merge" in that final judgment. That merger has long been treated in Australia as equating to "res judicata" in the strict sense.
Presumably the reliance by the Council on Tomlinson, s 22 of the LEC Act, and r 36.1 of the UCPR, is for the purpose of persuading the Court that the orders should be made to quell all conceivable controversies arising out of the Council proceedings to ensure that no further litigation ensues consequent upon the disposal of those proceedings.
On its face, this submission is attractive. But it overlooks the fact that the Court and the VT parties were repeatedly told by the Council that determination of the issues raised in the Council proceedings were contingent upon the findings made in the VT proceedings. The Council's frank admission that it was "wrong" to make the concession, laudable though it is, does not cure the inherent vice in seeking to resile from it at this late stage.
That vice is the real risk of unfairness to the VT parties who, by their own admission, did not fully engage with the issues raised in the Council proceedings. The VT parties submitted that but for the concession made by the Council, it would have raised the following arguments during the course of the Council proceedings: 1. that the orders lacked utility because there was no challenge to EPL 11395 itself or to the latest variation made on 3 May 2012; and 2. that prejudice would arise if the variations to EPL 11395 were permitted to be set aside because the VT parties could not comply with the 2014 consent orders insofar as those orders required the variations to be obtained under the EPL (see, for example, conditions 4.3 and 4.7 of the 2014 consent orders). Accordingly, the setting aside of the impugned conditions had the potential to expose the VT parties either to contempt charges for failing to comply with the 2014 consent orders and/or a contravention of EPL 11395 (which could give rise to criminal sanctions) if it carried out the work required under those orders absent the necessary permission to do so under the EPL (see, for example, conditions O11.1 and O6.6 to O6.10 of EPL 11395. The setting aside of these conditions would mean that, according to the VT parties, the 2014 consent orders could not be complied with, and moreover, would result in inconsistency between the two instruments).
In support, the VT parties tendered two versions of EPL 11395 and a Licence Summary in respect of the EPL, indicating that the licence had been reviewed on two occasions during the period in which the impugned variations had been granted by the EPA. The VT parties contended that if the conditions the subject of the Council proceedings were set aside, then this could conflict with the reviews of the licence carried out by the EPA, especially in respect of the content and findings of those reviews.
It is true that, as the Council asserted, these arguments could have been raised by the VT parties during the course of the Council proceedings. It is also correct that the 2014 consent orders contemplated amendment of EPL 11395 in order to carry out the works required by those orders (see, for example, condition 4.7 of the 2014 consent orders). In other words, there was always going to be a conflict between what was permitted under EPL 11395 and the terms of the 2014 consent orders, which is why it was envisaged in the 2014 consent orders that EPL 11395 would require variation.
I accept, however, that whatever arguments could have been anticipated and put by them, the VT parties made forensic decisions during the conduct of the Council proceedings based on the Council's concession. Those decisions included not agitating the submissions described above. The strength of those arguments need not be determined in this application other than to observe that they are not fanciful and that if the orders belatedly sought by the Council are now made, the VT parties will have been denied the opportunity of properly ventilating issues that they would otherwise have raised. On any view, this is unfair and ought not be permitted.
For these reasons I decline to exercise my discretion to amend the orders made in the Council proceedings in the manner contended for by the Council.
With the benefit of hindsight, the Court perhaps should have remained silent about the "alternative relief" posited at [549] of Verde Terra (No 9). It did not do so for completeness and in the absence of any submission from the VT parties that the conditions identified by the Council in its further amended summons were not amenable to be set aside in the event that the Court found them to be invalid. But this identifies the gravamen of the complaint presently made by the VT parties, namely, that had it been apprised of an intention by the Court to make these orders, it would have made further submissions in opposition to this course.

Verde Terra Pty Ltd v Central Coast Council; Central Coast Council v Environment Protection Authority

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