Willoughby City Council v Blanc Black Projects Pty Limited

Background

1. Although the appeal concerns only one aspect of the Commissioner's decision, given the manner in which Council has presented the appeal, raising six separate and somewhat overlapping, grounds of appeal, an understanding of the background facts and the statutory context in which the decision of the Commissioner was made is appropriate.
2. Blanc Black lodged a development application with Council on 9 April 2021 seeking development consent to demolish two existing dwelling houses and erect a four-storey residential flat building comprising 12 apartments at 58-60 Eastern Valley Way, Northbridge ('site'). Although at the time of the application and the decision under appeal the site was zoned "R3 Medium Density Residential" under the Willoughby Local Environmental Plan 2012 ('WLEP'), prior to the making of the WLEP on 31 January 2013, the site was zoned "2(a) - Residential "A"" under the Willoughby Local Environmental Plan 1995 pursuant to which residential flat buildings were not permitted. At the time of the application, the site was also within "Area 3" of the Special Provisions Area Map in the WLEP which (per cl 6.8(2) of the WLEP) directs the consent authority to take certain matters in relation to the provision of affordable housing into consideration in granting development consent.
3. On 11 June 2021, Blanc Black commenced a Class 1 appeal against Council's deemed refusal of the development application, and the appeal was heard by the Commissioner on 1 and 2 December 2021 and 22 February 2022.
4. On the first day of the hearing before the Commissioner, Council filed its without prejudice draft conditions of consent which included a proposed condition formulated as follows: "27 Affordable Housing Monetary Contribution The applicant shall make a monetary contribution for the purpose of providing Affordable Housing that is calculated at 4% of the accountable total floor area of the development to Council. In calculating the monetary contribution reference is to be made to the market value of dwellings of a similar size and taken from the most recent median sales price of such dwellings for the Willoughby local government area as documented in the Rent and Sales Report NSW published by Housing NSW or, if another document has been approved for that purpose by the Director-General, that document. Prior to payment of the contribution evidence shall be submitted to Council's Director of Planning & Infrastructure demonstrating how the contribution has been calculated in accordance with the above requirement. The contribution is to be paid prior to release of the construction certificate." ('Condition 27')
5. As Blanc Black opposed the imposition of Condition 27, the Commissioner allowed the parties to marshal evidence in respect of the proposed condition. Council's evidence supporting the imposition of Condition 27 was given by its town planner, Mark Bolduan, and Blanc Black's evidence was given by its town planner, Stephen Gouge. Mr Bolduan and Mr Gouge each prepared an expert report and gave oral evidence.
6. On 17 March 2022, the Commissioner handed down judgment upholding the appeal and granting consent for the demolition of existing buildings and the construction of a new residential flat building comprising 11 apartments over basement carparking at the site, subject to conditions which did not include Condition 27: Blanc Black Projects Pty Limited v Willoughby City Council [2022] NSWLEC 1135.
7. Blanc Black commenced these proceedings pursuant to s 56A of the Court Act on 13 April 2022.

Legislative provisions

1. As Council's six grounds of appeal primarily concern the interpretation and application of legislative provisions concerning the imposition of affordable housing conditions, it is appropriate to record the relevant provisions which have been the focus of the Commissioner's decision and the detailed submissions made by the parties, being ss 4.17 and 7.32 (formerly s 94F) of the Environmental Planning and Assessment Act 1979 (NSW) ('EP&A Act'); cl 10 and Sch 2 of State Environmental Planning Policy No 70 - Affordable Housing (Revised Schemes) ('SEPP 70'); and, cl 6.8 of the Willoughby Local Environmental Plan 1995 ('WLEP').
2. Sections 4.17 and 7.32 of the EP&A Act relevantly provided: 4.17 Imposition of conditions (1) Conditions - generally A condition of development consent may be imposed if - … (h) it is authorised to be imposed under section 4.16(3) or (5), subsections (5)-(9) of this section or section 7.11, 7.12, 7.24 or 7.32. … 7.32 Conditions requiring land or contributions for affordable housing (1) This section applies with respect to a development application for consent to carry out development within an area if a State environmental planning policy identifies that there is a need for affordable housing within the area and: (a) the consent authority is satisfied that the proposed development will or is likely to reduce the availability of affordable housing within the area, or (b) the consent authority is satisfied that the proposed development will create a need for affordable housing within the area, or (c) the proposed development is allowed only because of the initial zoning of a site, or the rezoning of a site, or (d) the regulations provide for this section to apply to the application. (2) Subject to subsection (3), the consent authority may grant consent to a development application to which this section applies subject to a condition requiring: (a) the dedication of part of the land, or other land of the applicant, free of cost to be used for the purpose of providing affordable housing, or (b) the payment of a monetary contribution to be used for the purpose of providing affordable housing, or both. (3) A condition may be imposed under this section only if: (a) the condition complies with all relevant requirements made by a State environmental planning policy with respect to the imposition of conditions under this section, and (b) the condition is authorised to be imposed by a local environmental plan, and is in accordance with a scheme for dedications or contributions set out in or adopted by such a plan, and (c) the condition requires a reasonable dedication or contribution, having regard to the following: (i) the extent of the need in the area for affordable housing, (ii) the scale of the proposed development, (iii) any other dedication or contribution required to be made by the applicant under this section or section 7.11. …

Decision under review

1. An understanding of the Commissioner's reasoning in relation to his refusal to impose Condition 27 provides context to my consideration of the grounds of appeal.
2. At [56]-[120], the Commissioner dealt carefully with each of the "merit issues in dispute" raised in Council's statement of facts and contentions in relation to the proposed development, including, building height; overdevelopment; urban design; flooding; and planning precedent, in a manner that does not require consideration. The Commissioner then dealt with what he aptly described as the "major dispute" between the parties, being, the inclusion of Condition 27 at [122]-[171].
3. At [128]-[138], the Commissioner recorded the legislative provisions relevant to the imposition of a condition relating to affordable housing, being, s 7.32 of the EP&A Act; cl 10 and Sch 2 SEPP 70; and cl 6.8 of the WLEP and, at [139]-[148], summarised the expert evidence of Mr Bolduan and Mr Gouge in relation to Condition 27.
4. Relevantly, the Commissioner noted Mr Bolduan's evidence that, although the proposed development would have no impact on the existing mix of housing stock, it would have an impact on the future mix of housing stock because, without a monetary contribution, the funds otherwise available to Council to provide affordable housing would be reduced. The Commissioner then noted Mr Gouge's evidence that while there is an identified need for affordable housing in the Willoughby local government area, that need already exists and does not relate to, and has no apparent nexus with, the proposed development in circumstances where the proposed development will replace two existing dwelling houses with 11 new apartments which will only result in a negligible change in the existing mix of residential housing in the Willoughby local government area.
5. The Commissioner then considered the application of the relevant provisions and rejected Council's submission that the inclusion of a condition requiring Blanc Black to pay a monetary contribution for the provision of affordable housing was lawful and reasonable in the circumstances of the case.
6. The Commissioner found, first, that s 7.32 of the EP&A Act (hereinafter, 's 7.32') applied to Blanc Black's proposal by reason of the proposed development only being allowed because of the rezoning of the site under the WLEP (in satisfaction of s 7.32(1)(c)). The Commissioner then considered the prerequisites for the imposition of an affordable housing condition contained in s 7.32(3).

Grounds of appeal

1. In its summons, Blanc Black pleads that the Commissioner "erred in law" on the following six grounds: "1 The Commissioner erred in finding (at Judgement [171]) that proposed condition 27 was not authorised by clause 6.8 of the Willoughby Local Environmental Plan 2012 (WLEP) and could not be lawfully imposed. 2 The Commissioner erred in finding (at Judgment [170], and see also Judgment [160]-[161]) that for proposed condition 27 to be lawfully imposed, it was necessary for the Proposed Development to have a "material" or "discernible" impact on the existing mix and/or likely future mix of residential housing stock in the Willoughby local government area. 3 The Commissioner erred in finding (at Judgment [170]) that for proposed condition 27 to fairly and reasonably relate to the Proposed Development (in accordance with the second Newbury test), it was necessary for the Proposed Development to have a "material" or "discernible" impact on the existing mix and/or likely future mix of residential housing stock in the Willoughby local government area. 4 The Commissioner erred in finding (at Judgment [170], and see also Judgment [161]) that the Council failed to adduce evidence which: a. described (or "clearly" described) the existing mix or likely future mix of residential housing stock in the Willoughby local government area; and b. demonstrated the impact which the Proposed Development would have on the existing mix or likely future mix of residential housing stock in the Willoughby local government area. 5 In finding that proposed condition 27 could not or should not be imposed because the Proposed Development would not have any "material impact" on the existing mix or likely future mix of affordable and other housing in the Willoughby local government area (at Judgment [170]-[171] and see also [162]-[169]), the Commissioner misconstrued and/or misapplied each of: a. Section 7.32(3) of the Environmental Planning and Assessment Act 1979; b. Clause 6.8(2) and (3) of the WLEP; and c. Clause 10 of State Environment Planning Policy No 70 - Affordable Housing (Revised Schemes) (SEPP 70) and Schedule 1, Principle 1 of SEPP 70. 6 The Commissioner's decision not to impose proposed condition 27 was legally unreasonable in circumstances where: a. there was an identified need for affordable housing in Willoughby by operation of clause 9 of SEPP 70 and clause 6.8(1) of the WLEP; b. the Applicant had failed to amend its development application to exclude the offer to pay an affordable housing contribution set out at pages 21 and 22 of its Statement of Environmental Effects calculated as 4% of the gross floor area of the Proposed Development; c. the Commissioner proceeded on the erroneous basis that there was an evidentiary burden on the Council to "clearly describe" the current or future mix of affordable housing in Willoughby (at Judgment [161]); and d. there was evidence before the Commissioner, which he was not entitled to ignore, to enable the Commissioner to consider the impact the Proposed Development would have on the existing mix and likely future mix of residential housing stock in Willoughby for the purposes of clause 6.8(2)(b) of the WLEP."

Relevant principles in s 56A appeals

1. The Court's jurisdiction in an appeal under s 56A of the Court Act is confined to addressing challenges to a commissioner's decision on questions of law. Although elusive, the distinction between what constitutes a question of fact and a question of law is aided by well-established principles (see eg, Hope v Bathurst City Council (1980) 144 CLR 1; [1980] HCA 16) to which I will refer as relevant later in this judgment.
2. However, it is not sufficient to merely establish that the decision under appeal discloses an error of law; rather, an error will only vitiate a decision if it materially affects the decision, in the sense of being a factor upon which the decision depends: Guideline Drafting & Design v Marrickville Municipal Council (1988) 64 LGRA 275 at 280.
3. Despite the above, I remain conscious that it is undesirable in an appeal confined to a question of law to subject a commissioner's decision to a "fine-tooth comb" analysis in search for errors of law that will justify an appeal: Brimbella Pty Ltd v Mosman Municipal Council (1985) 79 LGERA 367 at 368; Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 291; [1996] HCA 6.

Introduction

1. Grounds 1, 2, 3 and 5 raise a number of interrelated issues. The primary issue relates to the precise relationship between s 7.32 and cl 6.8, and in particular, whether cll 6.8(2) and 6.8(3) impose jurisdictional preconditions (by virtue of s 7.32(3)(b)) such that an affordable housing condition has to be "authorised" by the WLEP in order to be lawfully imposed under s 7.32; and whether cl 6.8(2) imposes any requirements in relation to the inclusion of conditions when that provision is stated to be concerned with the granting of development consents.
2. The second issue relates to whether cl 6.8(2)(b) requires, as a form of jurisdictional precondition to the imposition of an affordable housing condition, satisfaction that the proposed development will have a "discernible" or "material" impact on the existing mix and likely future mix of residential housing stock in the Willoughby local government area; or whether the existence of any "discernible" or "material" impact is a relevant consideration.
3. An incidental issue arises as to whether cl 6.8(2) ends the inquiry as to the appropriateness of imposing an affordable housing condition, or whether s 7.32(3) imposes additional matters to be considered before imposing a condition. If the latter proposition prevails, it is necessary to further consider whether the Commissioner failed to consider the matters set out in s 7.32(3) by merely focusing on whether the proposed development would have a "material effect" on the existing mix or likely future mix of affordable and other housing in the Willoughby local government area.
4. The third issue relates to whether the Newbury test governs the imposition of an affordable housing condition in s 7.32 and if so, whether it was applied correctly by the Commissioner.
5. In addition to the interrelated issues raised in Grounds 1, 2, 3 and 5 and described above, Ground 4 addresses whether cl 6.8(2)(b) required, as a precondition to imposing Condition 27, the provision of evidence (as to impact), and whether the Commissioner found that there was "no evidence" or was merely unconvinced by the evidence before him.
6. Finally, Ground 6 raises whether the Commissioner's decision not to impose Condition 27 was legally unreasonable.

Findings on the construction of s 7.32 of the EP&A Act and cl 6.8 of the WLEP

1. As a resolution of the matters raised in Grounds 1, 2, 3 and 5 turns on the construction to be given to each of s 7.32, cl 6.8 (and cl 10 (and Sch 2) of SEPP 70), it is appropriate to briefly record the principles applicable to statutory construction, and thereafter, to avoid adding unduly to these reasons, to make some observations and findings on the construction of each of these provisions which will be relied upon in my later consideration of the discrete grounds.
2. The starting point for the ascertainment of the meaning of a statutory provision is the text itself, although at the same time, regard may be had to the context in which it appears (understood in the widest sense) and the objectives it was designed to promote: SZTAL v Minister for Immigration and Border Protection; SZTGM v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 at [14]; 4nature Incorporated v Centennial Springvale Pty Ltd (2017) 95 NSWLR 361; [2017] NSWCA 191 ('4nature') at [51]. The prevailing approach to interpretation emphasises that the purpose underpinning an instrument, guides the preferred meaning to be given to the words being construed: Sydney Seaplanes Pty Ltd v Page (2021) 106 NSWLR 1; [2021] NSWCA 204 at [31]. That purpose is to be inferred from the statutory text and its structure.
3. Nevertheless, the natural and ordinary meaning of the words employed in a statute is also to be considered and given effect: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 ('Project Blue Sky') at [78].
4. The WLEP and SEPP 70 are environmental planning instruments and are therefore to be construed in accordance with the general principles of statutory interpretation. As such, the relevant provisions in the WLEP and SEPP 70 must be considered in the context of those instruments and a construction which promotes their respective purpose is to be preferred: s 33 of the Interpretation Act 1987 (NSW) ('Interpretation Act') (which applies to environmental planning instruments by operation of s 5(6) of that Act).
5. Allowance must be given to the fact that environmental planning instruments are generally drafted to achieve practical concerns such that infelicitous phrasing may be more readily excused and may justify giving "rather less weight to precise textual considerations": Tovir Investments Pty Ltd v Waverley Council [2014] NSWCA 379 at [54]-[55]. Be that as it may, I remain conscious that there is no specific principle requiring "laxity or flexibility" in construing such instruments generally, and that practical considerations do not permit rewriting to meet what the Court may think is a practical outcome: 4nature at [45], [106]-[107].

Ground 1: Did the Commissioner err in finding that Condition 27 was not authorised by cl 6.8 of the WLEP and could therefore not be imposed under s 7.32(2)?

Council's submissions

1. Council submits that the Commissioner misconstrued and misapplied both s 7.32 and cl 6.8 and the relationship between those provisions, in particular, by wrongly treating cl 6.8 as the source of his power to impose an affordable condition when this power was in fact conferred by s 7.32.
2. Council accepts that the Commissioner correctly found that there was a "need" for affordable housing in the area within which the proposed development is located and that the proposed development was allowed on the site (only) because of its rezoning under the WLEP (satisfying s 7.32(1)(c)), such that the power to consider the imposition of an affordable housing condition under s 7.32 was enlivened.
3. However, noting the Commissioner's reliance on cl 6.8(2) not being satisfied in his finding that Condition 27 could not be imposed, Council submits that the jurisdictional preconditions to the power to impose affordable housing conditions are set out in s 7.32 and that the Commissioner erred in law when he construed cl 6.8(2) as imposing additional preconditions to the power to impose an affordable housing contribution.
4. In this regard, Council emphasises that cl 6.8(2) is expressly directed to apply to the determination of development consent applications. As such, properly understood, cl 6.8(2) operates as a jurisdictional constraint on the power to grant development consent by requiring consideration of matters related to affordable housing, but it does not regulate the process by which affordable housing conditions are to be considered or imposed. While s 7.32(3)(b) requires that a proposed condition be authorised by the applicable local environmental plan, Council submits that cl 6.8(2) was not relevant to that consideration as it did not impose any requirements in relation to the actual imposition of affordable housing conditions. On this basis, and in circumstances where subcll 6.8(1), (3) and (4) were satisfied, Council submits that, contrary to the Commissioner's finding, the jurisdictional precondition contained in s 7.32(3)(b) was satisfied.
5. Council further submits that the Commissioner's incorrect focus on cl 6.8(2) resulted in an oversight of s 7.32(3)(c) which imposed additional jurisdictional preconditions to the imposition of an affordable housing condition and ought to have been expressly considered, and that the Commissioner's failure to do so constituted a further legal error in the Commissioner's decision. In this regard, Council emphasises in its submissions in reply that ample evidence was provided to allow the Commissioner to consider each of these matters.

Blanc Black's submissions

1. Blanc Black submits that the Commissioner understood that his power to impose an affordable housing condition arose from s 7.32 and rejects Council's contentions that he erred in his construction and application of the provisions relating to the imposition of affordable housing conditions.
2. In relation to the Commissioner's material reliance on the absence of evidence regarding the matters in cl 6.8(2)(b) in rejecting the imposition of Condition 27, Blanc Black submits that the power to impose an affordable housing condition is conferred by both s 7.32 and cl 6.8. While accepting that s 4.17(1)(h) of the EP&A Act provides that a condition may be imposed upon a development consent if authorised by s 7.32, Blanc Black emphasises that s 7.32(3)(b) in turn provides that, to be imposed, a condition must be further "authorised" to be imposed by a local environmental plan (and in accordance with a scheme adopted by such a plan). As such, Blanc Black submits that cl 6.8(2) operates as a jurisdictional constraint and the Commissioner was correct to conclude that, unless he had evidence to address cll 6.8(2)(b) and 6.8(2)(c), he could not impose the condition.
3. In relation to the Commissioner's application of cl 6.8(2), Blanc Black records the Commissioner's finding that for a proposed condition to be imposed, it must fairly and reasonably relate to the proposed development, which would in turn require a finding that the development will have a material impact on the existing mix and likely future mix of residential housing stock in the Willoughby local government area. Blanc Black further notes the Commissioner's finding that the fact that a development proposal is permitted by the making of the WLEP is not in and of itself sufficient evidence that it will result in a material impact of the kind required to justify the imposition of a condition.
4. In support of the Commissioner's conclusions in relation to cl 6.8(2), Blanc Black submits that in circumstances where there was no evidence that could support a conclusion that Condition 27 constituted a "reasonable contribution", the power to impose the proposed condition was not enlivened because s 7.32(3) could not be "addressed". Although s 7.32(3)(a) was satisfied (as the Commissioner found at [155]), ss 7.32(3)(b) and 7.32(3)(c) were not satisfied on the evidence provided.

Finding on Ground 1

1. For the reasons that follow, in my view, the Commissioner erred in finding that for the imposition of Condition 27 to be "authorised" pursuant to s 7.32(3)(b), it was necessary for Council to prove, and for the Commissioner to be satisfied, that the proposed development "will have a material impact on the existing and likely future mix of residential housing stock in the Willoughby local government area". Consequently, I find that the Commissioner's reasoning to that effect and resulting conclusion at [171] that Condition 27 was not authorised by the WLEP constituted an error of law. As will be seen, my findings above in relation to the construction of, and interaction between, s 7.32 and cl 6.8 affect my consideration of this ground and a number of the other grounds of appeal.
2. At the outset, and by reference to my construction of the statutory scheme relating to the imposition of affordable housing conditions at [39]-[54], I find that the Commissioner's power was constrained by both s 7.32 and cl 6.8 (by operation of s 7.32(3)(b)) to the extent that either of these provisions set out preconditions to the imposition of affordable housing conditions. However, I do not consider cl 6.8(2) to fall within this category of jurisdictional preconditions in circumstances where the provision is expressly directed to the task of determining development applications. Indeed, cl 6.8(2) states that "[d]evelopment consent must not be granted …" by contrast with, for example, the words in s 7.32(3) that "[a] condition may be imposed under this section only if …". The Commissioner's reliance on cl 6.8(2) was therefore misplaced and, to the extent that it grounded his findings that Condition 27 could not be imposed, it constituted an error of law that was material to his decision not to impose Condition 27.
3. In addition, I consider Condition 27 to be authorised by cl 6.8 in circumstances where it fell within the range of affordable housing conditions that could be imposed: cll 6.8(3) and 6.8(4). On this basis, I accept Council's submission that s 7.32(3)(b) was in fact satisfied, and I find that the Commissioner's conclusion to the contrary at [171] constituted an error of law which resulted from his misconstruction of cl 6.8.
4. I also accept Council's submission that the Commissioner failed to consider the matters set out in s 7.32(3)(c), and that this constituted an additional error of law. As noted above, I consider that s 7.32(3)(c) imposes mandatory matters for consideration by a consent authority when imposing an affordable housing condition. Failure to comply with this mandate therefore results in a want of power to impose (or refuse to impose) a condition.

Ground 2: Was it necessary for the proposed development to have a "material" or "discernible" impact on the existing mix or likely future mix of residential housing stock in the Willoughby local government area?

Council's submissions

1. While effectively repackaging its earlier submissions in relation to Ground 1, Council submits that the Commissioner's reasoning wrongly treats cl 6.8(2) as requiring satisfaction by a consent authority that a proposed development will have a "material" or "discernible" impact on the existing mix or likely future mix of residential housing stock in the Willoughby local government area before imposing a condition under s 7.32. This construction constitutes an error of law in circumstances where cl 6.8(2) only concerned matters to consider in determining a development application; and where the statutory language of the clause did not include the terms "material" or "discernible" and was clear and unambiguous on its face.
2. In relation to the Commissioner's alleged misconstruction of s 7.32(3)(c), Council submits that the provision simply requires the consent authority to consider whether the proposed condition "requires a reasonable dedication or contribution" having regard to the extent of the need, the scale of the proposed development, and any other dedication or contribution required to be made. These are mandatory matters for consideration which the Commissioner failed to take into account when he focused on assessing whether the proposed development would have a "material" or "discernible" impact.
3. As for cl 6.8(2), Council submits that, although requiring, when determining a development application for residential accommodation on land in "Area 3", consideration of "the impact of the development…", the provision does not require an opinion as to whether such impact would be "material" or "discernible". Further, the clause does not require the consent authority to be positively satisfied (by evidence) that the proposed development will have such an impact in order to have jurisdiction to impose a condition, but merely requires the matter to be taken into consideration.
4. Council further submits that it is, in any event, not clear what is meant by "material" or "discernible" and that these terms are inherently unclear, vague and imprecise.
5. Council then notes that the Commissioner based his finding about the proposed development's lack of material or discernible impact on a conclusion that it "will not remove any existing affordable housing and only add an additional nine 'other' units". In this regard, Council submits that the reasoning upon which this conclusion relies should be rejected as it would result in a consent authority being unable to "lawfully" impose an affordable housing condition without proving, for example, that a proposed development involved the removal of existing affordable housing, which would undermine the very purpose of affordable housing schemes (being to increase the stock of affordable housing).

Blanc Black's submissions

1. Blanc Black submits that cl 6.8(2) in fact imposes a jurisdictional precondition requiring a consent authority to take into consideration whether a proposed development will have an "impact" on the existing mix and likely future mix of residential housing stock in the Willoughby local government area when granting development consent. Blanc Black does not address Council's submission that the operation of the provision is limited to the determination of development applications.
2. In relation to Council's submission that the terms "material" or "discernible" were inappropriately read into the statutory language of cl 6.8(2), Blanc Black submits that the Commissioner properly considered "impact" to mean "more than no impact" and that this was accurately and appropriately captured by his use of the terms "material" and "discernible". Further, insofar as "material" or "discernible" merely qualify the quality of being "measurable", it could not be said that these words were inherently unclear or that the Commissioner erred in his formulation of the test under cl 6.8(2).
3. While not directly relevant to the second ground of appeal, Blanc Black rejects Council's submission that the Commissioner failed to consider s 7.32(3)(c) and submits that, with s 7.32 requiring a condition to be "reasonable", the Commissioner had to find a reasonable nexus between the condition and the proposed development. In this regard, Blanc Black points to the Commissioner's conclusions at [166] that the evidence left him unable to conclude that a contribution would be reasonable in the circumstances of the proposed development.

Finding on Ground 2

1. Insofar as the parties raised again in their submissions on Ground 2 the issue of whether cl 6.8(2) constituted a jurisdictional precondition to the imposition of affordable housing conditions under s 7.32, and conscious that this appeal rests upon overlapping grounds, I repeat my findings at [76] and reject the proposition that the Commissioner was bound to be satisfied, in accordance with cl 6.8(2), that the development would have any impact upon the present or future mix of housing in Willoughby before a condition could be imposed.
2. While consideration of the Commissioner's construction of cl 6.8(2)(b) (by reading into the provision the words "material" and "discernible" as qualifying "impact") raised in Ground 2, is rendered somewhat futile by my findings on Ground 1 (dismissing consideration of cl 6.8(2) as informing the inquiry of whether or not to impose an affordable housing condition), I nevertheless make the following comments for the sake of completeness.
3. It is well established that words should not be read into an instrument in the absence of a clear necessity to do so: Project Blue Sky. Departure from the literal interpretation of a provision may however be permissible if necessary to give effect to the evident purpose of an instrument. Any such departure therefore requires satisfaction that the provision fails to give effect to the purpose of the statute (properly understood, in light of the instrument read as a whole) and certainty as to the substance of the provision, Parliament would have had the draftsman's attention drawn to the alleged omission: Minister for Immigration and Citizenship v SZJGV; Minister for Immigration and Citizenship v SZJXO (2009) 238 CLR 642; [2009] HCA 40 at [9].
4. Clause 6.8(2)(b) relevantly provides: (2) Development consent must not be granted to the erection of residential accommodation on land identified as "Area 3" or "Area 9" on the Special Provisions Area Map unless the consent authority has taken the following into consideration - … (b) impact the development would have on the existing mix and likely future mix of residential housing stock in Willoughby, …
5. I consider the express words used in that provision to be clear and appropriate to give effect to the aim of the WLEP, being to facilitate the provision of adaptable and affordable housing, insofar as it ensures that the imposition of an affordable housing condition will be considered by a consent authority in granting consent to a development proposal. Thus, this is not a case where there was an omission in the language of the instrument that needed to be remedied by the addition of extraneous terms.

Ground 3: Did the Commissioner err in assessing Condition 27 by reference to the second Newbury test and finding that, for Condition 27 to fairly and reasonably relate to the proposed development, it must have a "material" or "discernible" impact on the existing mix or likely future mix of residential housing stock in the Willoughby local government area?

Council's submissions

1. Council submits that the Newbury tests do not apply to the imposition of affordable housing conditions under s 7.32. As much is revealed from Parliament's insertion of ss 94F and 94G (now ss 7.32 and 7.33) into the EP&A Act to overturn any judicial application of the Newbury test to assess the validity of a condition of consent requiring land or contributions for affordable housing following the decision in Meriton Apartments Pty Ltd v Minister for Urban Affairs and Planning [2000] NSWLEC 20; (2000) 107 LGERA 363 ('Meriton').
2. Council further submits that s 7.32(3)(c) expressly sets out the matters to which a consent authority must have regard to in deciding whether to impose an affordable housing condition and relevantly does not include a requirement that a condition "fairly and reasonably relate to" a proposed development. It was therefore not appropriate for the Commissioner to apply the Newbury tests despite the express language of s 7.32(3)(c).
3. In the alternative, Council contends that the Commissioner's misconstruction of s 7.32 and cl 6.8 led him to make erroneous findings upon which he subsequently grounded his analysis of the Newbury tests. This resulted in a misapplication of the Newbury tests and in the Commissioner making a legal error by concluding that Condition 27 contravened the second limb of that test.
4. In relation to the second limb of Newbury and the Commissioner's finding that Condition 27 did not "reasonably and fairly relate" to the proposed development, Council notes, first, that an affordable housing condition can take the form of either a dedication of part of the development's gross floor area for the purpose of affordable housing, or an equivalent monetary contribution. Council then submits that a condition requiring dedication of land the subject of a development application prima facie "fairly and reasonably" relates to that development, and therefore that the statutory alternative to that type of condition must likewise be taken to "fairly and reasonably relate" to a development application.
5. Further addressing the second limb of Newbury, Council contends that in circumstances where Blanc Black benefitted from a rezoning of the site which permitted the construction of the proposed 11-apartment development, a dedication of part of the development free of costs would have been "fairly and reasonably" related to the development. On this basis and bearing in mind that such dedication is but an alternative to a monetary contribution, Council submits that the monetary contribution contemplated by Condition 27 must also be taken to satisfy the second limb of Newbury.

Blanc Black's submissions

1. Blanc Black submits that the decision of the High Court in Temwood at [57] supports the Commissioner's finding that a condition of planning consent must meet both the statutory test and the three-fold test in Newbury and that, in any event, s 7.32 expressly enacts the requirement of reasonableness (as does the second and third tests in Newbury).
2. As such, Blanc Black submits that the Commissioner did not fall into appealable error in applying the Newbury tests in circumstances where he described the evidence adduced as "unfortunate" (at [161]) and noted that Condition 27 appeared to contravene the second limb of Newbury as the proposed development was not shown to have a "material impact on the mix of affordable and other housing in the Council's area" (at [161]) such that a condition could therefore not reasonably be required (at [166]).
3. Blanc Black further contends that the Commissioner did not fall into error by failing to consider the imposition of a condition requiring a monetary contribution as an alternative to one requiring dedication. In the circumstances, Blanc Black submits that the Commissioner was simply unable to support a condition requiring Blanc Black to dedicate part of the gross floor area for affordable housing any more than it was empowered to impose a condition requiring a monetary contribution.

Finding on Ground 3

1. Relying on my construction of s 7.32(3)(c) at [53]-[54] and [60]-[61] of this judgment, I do not find that the Commissioner's consideration of the Newbury test of validity (and in particular, the second limb) is redolent of legal error. While I accept that the express requirements of a statute must prevail over common law principles, and to that extent that a consent authority is to consider first and foremost the matters set out in s 7.32(3)(c), I consider the language of that provision to be permissive and to allow for consideration of additional matters which a consent authority may find relevant. As such, I find that the Commissioner had the discretion to consider whether the proposed condition complied with the Newbury tests as a matter incidental to his consideration of s 7.32(3)(c).
2. In making this finding, I have considered Council's submissions that consideration of the Newbury tests impermissibly reintroduces the reasoning adopted by this Court in Meriton and allegedly overturned by the enactment of ss 94F and 94G (now ss 7.32 and 7.33).
3. For context, Meriton concerned a challenge to the validity of provisions in a local environmental plan and a related development control plan which implemented an 'affordable housing' scheme. The scheme was held to be invalid on the bases, inter alia, that the provisions challenged sought to confer a power to impose conditions of consent to address affordable housing needs which circumvented the existing sources of power in the EP&A Act; and that the provisions empowered a consent authority to require a contribution to be applied to affordable housing the need for which did not necessarily arise from the consequences of a particular development to which the conditions would apply.
4. In what can be characterised as a legislative response to Cowdroy J's comment in Meriton that "new legislation will be required if it is sought to maintain a scheme for affordable housing", the Parliament passed the Environmental Planning and Assessment Amendment (Affordable Housing) Act 2000 (NSW) ('Amendment Act') enacting ss 94F and 94G which retrospectively validated the existing affordable housing schemes established by local councils in their local environmental plans prior to the amendment. The "Explanatory note" for the Environmental Planning and Assessment Amendment (Affordable Housing) Bill 2000 (NSW), relevantly clarified the purpose and context of the enactment of ss 94F and 94G as follows: The principal object of this Bill is to amend the Environmental Planning and Assessment Act 1979 so as to authorise expressly: (a) the granting of development consents under that Act that require, in certain circumstances, the dedication of land and the making of monetary contributions to be used for the purpose of providing affordable housing, and (b) the making of environmental planning instruments with respect to the retention of affordable housing. … South Sydney Local Environmental Plan 1998 (Amendment No 2) - Green Square was declared to be wholly invalid by the Land and Environment Court on 18 February 2000. That local environmental plan contained (among other amendments to the 1998 plan) amendments establishing a scheme for the imposition of conditions on certain development consents to require the dedication of land or the making of monetary contributions to be used for the purpose of providing affordable housing in the Green Square locality (the Green Square scheme). The decision in the case concerned (Meriton Apartments Pty Ltd v Minister for Urban Affairs and Planning & Or [2000] NSWLEC 20) is the subject of an appeal to the New South Wales Court of Appeal. The Bill proposes to remake and validate the local environmental plan described above, with minor amendments, as South Sydney Local Environmental Plan 1998 (Amendment No 6) - Green Square and to validate a development control plan approved for, and any consents already granted under, the Green Square scheme. …

Ground 4: Did the Commissioner err in finding that Council failed to adduce relevant evidence?

Council's submissions

1. Council submits that the Commissioner erred in finding at [160]-[161] and [170] that Council had not adduced any evidence that described the impact of Blanc Black's development proposal on the existing mix or likely future mix of affordable and other housing stock in the Willoughby local government area. Council submits that this "no evidence" finding was critical to the Commissioner's conclusion in relation to Condition 27, and therefore gives rise to a question of law. The Commissioner's legal error in this regard is twofold: first, he incorrectly assumed that cl 6.8 imposed a positive obligation on Council, as a jurisdictional precondition to the lawful imposition of an affordable housing condition, to adduce such evidence; and second, he made a "no evidence" finding in circumstances where evidence had in fact been adduced to address the matters in cl 6.8 (and s 7.32(3)).
2. Relying on its submission that cl 6.8 does not operate as a jurisdictional constraint on the power to impose an affordable housing condition, Council contends that cl 6.8 could not be read as imposing a positive obligation on Council to adduce evidence in the absence of which an affordable housing condition could not be considered.
3. As for the Commissioner's "no evidence" finding, Council submits that it had in fact adduced evidence in relation to the current supply and demand for affordable housing and Council's affordable rental housing targets. In light of this evidence, Council submits that the Commissioner was able to make findings in relation to the identified existing and future need for affordable housing in Willoughby, Council's commitment to increase the stock of affordable housing by the addition of approximatively 10 affordable housing units per year, and Blanc Black's failure to dedicate floor space for the provision of affordable housing notwithstanding the site's location in an area expressly designated by Council to contribute to affordable housing needs. On this basis, the Commissioner's finding that more evidence was required to find that Condition 27 represented a "reasonable contribution" and could be imposed, was not open and constituted legal error.

Blanc Black's submissions

1. Despite its submission that Council "failed to adduce any evidence" on matters required to be considered by the Commissioner under s 7.32(3)(c) and cl 6.8(2)(b), Blanc Black clarified in oral submissions that evidence in relation to the current demand for affordable housing in the Willoughby local government area, and Council's targets in that regard, had been provided.
2. Blanc Black also clarified its position that the Commissioner's decision did not give rise to a "no evidence" point. Rather, it is apparent on plain reading of the Commissioner's decision that he considered the evidence provided as insufficient to allow a "proper, genuine and realistic consideration [of] cl 6.8(2)(b) and therefore (c)" or "to make any conclusions in s 7.32(3)(b) of the Act" (that the condition was authorised to be imposed by a local environmental plan). As such, Blanc Black submits that the situation is better described as one where "there is evidence but it doesn't persuade the decision maker of something": Tcpt, 30 November 2022, p 27(3)-(5).

Finding on Ground 4

1. For the reasons that follow, I do not consider that Ground 4 of Council's summons raises any error on a question of law as is necessary to sustain any appeal under s 56A(1) of the Court Act.
2. First, I do not accept Council's submission that the Commissioner misconstrued cl 6.8 as imposing a positive obligation on Council to adduce evidence describing "the impact the development would have on the existing mix and likely future mix of residential housing stock in Willoughby" as a jurisdictional precondition to the imposition of a condition under s 7.32. While the Commissioner correctly identified cl 6.8 as a jurisdictional precondition to the exercise of his power to impose affordable housing conditions by virtue of s 7.32(3)(b), I do not consider that he treated s 6.8(2)(b) (or s 7.32(3)(c)) as imposing a positive obligation to adduce evidence in relation to the matters prescribed for consideration under those provisions. Rather, insofar as both provisions concern the particular circumstances of a given development proposal and the affordable housing context in which it would take place, his consideration of these matters was necessarily predicated upon, and limited to, the evidence put forward by the parties.
3. Secondly, I do not consider that the Commissioner's findings at [160] that "there is no evidence before the Court that the Proposed Development will have any discernible impact on the mix of affordable and other housing …" (and related finding phrased in similar wording at [170]) constituted an error of law. I do not accept that the Commissioner proceeded on the basis that Council had failed to adduce relevant evidence. Rather, it is clear, on a contextual reading of the Commissioner's findings at [160] and [170] that the evidence before him did not satisfy him that the circumstances in cl 6.8(2)(b) and s 7.32(3)(c) were met. I consider a conclusion, such as the Commissioner's, that evidence adduced is unconvincing to stand in sharp contrast with a finding of no evidence.
4. I further note that underpinning Council's submissions in reply in relation to Ground 4 is an incidental concern that, in making his alleged finding of "no evidence", the Commissioner made a further error of law by failing to consider whether Condition 27 provided for a reasonable contribution having regard to the extent of the need for affordable housing in the Willoughby local government area. To the extent that this submission raises an alleged failure to consider the mandatory matters set out in s 7.32(3)(c), I rely on my findings at [80] and do not address it further in my consideration of Ground 4.

Ground 5: Did the Commissioner err in finding that the proposed development would have no material impact on the existing mix or likely future mix of affordable and other housing in the Willoughby local government area?

Council's submissions

1. Council repeats its earlier submissions that the Commissioner misconstrued and misapplied s 7.32(3) by considering the question of "material impact" (on the existing mix or likely future mix of affordable and other housing) instead of having regard to the matters in s 7.32(3), and in particular, the matters in s 7.32(3)(c) which he was bound to consider.
2. Council again submits that the Commissioner also misconstrued cll 6.8(2) and 6.8(3) as imposing jurisdictional preconditions on a consent authority's power to impose an affordable housing condition; and, further, that the Commissioner's reasoning misconstrued and misapplied SEPP 70 as a result of his erroneous construction of cl 6.8 (by finding that cl 6.8 did not "authorise" the imposition of an affordable housing condition because the development would not have a "material impact") thereby failing to comply with the command in cl 10 (and Sch 2, Principle 1) of SEPP 70 that, where there were any circumstances "described" in s 7.32(1)(a) to (d), an affordable housing condition "should be imposed". As this was a mandatory matter, the Commissioner's failure to address it constituted an error of law.

Blanc Black's submissions

1. On the basis of this ground effectively replicating Council's earlier submissions, Blanc Black correspondingly repeats its earlier responses and submits that the Commissioner's reasoning that the proposed development would not have a "material impact" (or more than "no impact") on the existing mix or likely future mix of affordable and other housing in the Willoughby local government area was logical and does not constitute an error on a question of law.

Finding on Ground 5

1. In circumstances where Council reiterated its contention raised in Grounds 1 and 2 that the Commissioner misconstrued both s 7.32(3) and cl 6.8(2) in finding that Condition 27 could not be imposed in the absence of a "material impact" on the existing mix or likely future mix of affordable housing, I rely on my findings at [75] and [96].
2. Council's further and novel contention in Ground 5, as I understand it, in essence raises non-compliance with the mandate contained in cl 10 (and Sch 2 of SEPP 70) as an issue following from the Commissioner's misconstruction of cl 6.8 and s 7.32.
3. For clarity, I note that cl 10 of SEPP 70 is relevant insofar as s 7.32(3)(a) requires, as a precondition to the exercise of the power to impose a condition, that the proposed condition complies with the requirements made by an applicable state environmental planning policy with respect to the imposition of an affordable housing condition. I accept Council's submission that, by operation of s 7.32(3)(a), the Commissioner was required to turn his mind to SEPP 70.
4. Clause 10 of SEPP 70 states that a consent authority is to have regard to the affordable housing principles set out in Sch 2 to the instrument before imposing a condition under (now) s 7.32 of the EP&A Act. Relevantly, as noted above, Principle 1 of Sch 2 provides: Where any of the circumstances described in section s 7.32(1) (a), (b), (c) or (d) of the Act occur, and a state environmental planning policy or local environmental plan authorises an affordable housing condition to be imposed, such a condition should be imposed so that mixed and balanced communities are created. (Emphasis added.)
5. The other principles listed in Sch 2 of SEPP 70 relate to the management of affordable housing, and thereby inform the content of a proposed condition, rather than the circumstances which must be satisfied before it can be imposed. To that extent, I do not consider these principles further.
6. While not merely permissive, Principle 1 of Sch 2 in essence reiterates the requirement to consider the matters listed in s 7.32(1) and find that at least one of the circumstances occurs.
7. In addition, I note that while supporting the imposition of a condition where any of the circumstances in s 7.32(1) is satisfied, the term "should" connotates advisability, rather than obligation. This is especially so in the present circumstances where cl 10 of SEPP 70 operates in conjunction with s 7.32 which imposes additional mandatory requirements which must be satisfied before a condition can be imposed. I therefore consider that Principle 1 of Sch 2 is to be read as leaving the decision-maker with discretion to consider other statutorily mandated matters, rather than as constituting an automatic trigger for the imposition of a condition if s 7.32(1) is satisfied.

Ground 6: Whether the Commissioner's decision to not impose Condition 27 was legally unreasonable?

Council's submissions

1. Council submits that the Commissioner's decision not to impose Condition 27 was legally unreasonable considering the following four circumstances: first, where the parties accepted that there was an identified need for affordable housing in the Willoughby local government area by operation of cl 9 of SEPP 70 and cl 6.8(1) (noting that the parties' expert town planners had qualified the need as "significant"); second, where Blanc Black had originally proposed, as part of its development application, the payment of a monetary contribution for the provision of affordable housing in accordance with cl 6.8(3)(b), and had not at any time sought to amend its application or withdraw its proposal to pay the contribution; third, where, as a result of his misconstruction of the applicable provisions, the Commissioner proceeded upon the erroneous basis that Council was obliged to adduce evidence "clearly describ[ing]" the mix of affordable and other housing; and fourth, where there was, in any event, evidence before the Commissioner addressing the impact of the proposed development on affordable housing.
2. Considering these matters, and in circumstances where the Commissioner was empowered pursuant to s 7.32 and cl 6.8 to impose an affordable housing condition (in light of the fact that the site had been rezoned), Council submits that it was unreasonable for the Commissioner to conclude that Condition 27 could not or should not be imposed on the basis that there was no evidence that the proposed development would have any discernible impact on the mix of housing in the Willoughby local government area.
3. Council submits that, considering the four circumstances noted above, the Commissioner's failure to exercise its power to impose an affordable housing condition was unreasonable in a legal sense because it "lack[ed] an evident and intelligent justification" (referring to Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 at [75]-[76]). While noting that the Commissioner's decision need not be irrational, Council submits that unreasonableness is established where an error has been shown in the exercise of discretion such as where a decision-maker acted on a wrong principle or took into consideration an irrelevant matter or in the circumstance where there was no logical connection between the evidence adduced and the inferences drawn.

Blanc Black's submissions

1. While accepting that a decision made in the exercise of a statutory power is unreasonable in a legal sense if it "lacks an evident and intelligent justification", Blanc Black submits that the Commissioner's decision was made consistently with the mandate apparent in this principle.
2. Blanc Black accepts there was an existing need for affordable housing (as per cl 9 of SEPP 70) and that the site was rezoned to R3 Medium Density Residential (and included in "Area 3" of the Special Provisions Area Map), but submits that these matters did not on their own empower the Commissioner pursuant to s 7.32 and cl 6.8 to impose an affordable housing condition and further, that Council's submissions overlook the "merits considerations" in both provisions.
3. Blanc Black also submits that Council's references to Blanc Black's earlier position in the development application (and the statement of environmental effects) indicating an intention to pay a (4%) monetary contribution is of no assistance in the consideration of this appeal as it was proposed as part of an earlier iteration of the proposed development.

Finding on Ground 6

1. While the standard of legal unreasonableness applies across a range of statutory powers, the indicia of legal unreasonableness must be found in the scope, subject and purpose of the particular statutory provisions and is inevitably fact dependent.
2. Given my finding above in relation to Ground 1 (and derivatively, Grounds 2, 3 and 5), my finding on this ground will not be determinative of this appeal. Despite this, given the Commissioner's reasons, and aside from my finding regarding his consideration of the relationship between s 7.32 and cl 6.8, I do not consider that the four discrete matters raised in this ground by Council (noted at [141]), considered together, are indicative of legal unreasonableness. Thus, but for my finding in relation to the interrelationship between the relevant provisions, the Commissioner's decision does not lack "an evident and intelligible justification".
3. Moreover, noting the frequent references in the authorities to "decisional freedom" relating to the areas in which minds may differ, and conscious of the need for certain self-restraint in reviewing decisions on the ground of legal unreasonableness, I am not satisfied that, read as a whole, the Commissioner's reasoning could be properly described as amounting to legal unreasonableness in the sense that, apart from the error I have otherwise found, the decision does not lack "an evident and intelligible justification".
4. Moreover, whilst it is accepted by Blanc Black that there was an identified need for affordable housing, the fact that Blanc Black had at one stage proposed a payment of a monetary contribution, is not a matter that I consider to be relevant, and I do not accept Council's submission that there was evidence before the Commissioner which he "was not entitled to ignore".

Disposal of the appeal

1. The matters to which Ground 1 (and it follows Grounds 2, 3 and 4) of the appeal were directed, were matters fundamental to the Commissioner's decision to refuse to impose Condition 27. As such, that part of the judgment in relation to the imposition of Condition 27, being affected by error on questions of law, should be set aside. The question therefore arises as to whether the matter should be remitted to the Commissioner for determination in accordance with the decision of the Court or instead some other order should be made.
2. Although Council submitted that the Court should exercise its power under s 56A(2)(b) of the Court Act to vary the Commissioner's decision with the effect that Condition 27 be imposed as a condition of consent to Blanc Black's development application, I do not consider this is appropriate.
3. As there are various considerations which could inform the further exercise of the discretion, I note that, save in the case of discretion in relation to costs, the general exercise of discretion to grant a consent or "some other such matter calling for the formulation of an evaluative judgment" should only be exercised in an appeal constrained by provisions such as those in s 56A of the Court Act in "exceptional circumstances": Thaina Town (On Goulburn) Pty Ltd v City of Sydney Council (2007) 71 NSWLR 230; [2007] NSWCA 300 at [108]. I do not find such circumstances exist in the present case.
4. Rather, given my findings that there has been legal error in the matter of determination based upon error in the construction and application of s 7.32 and cl 6.8, I am satisfied that, availing myself of s 56A(2)(a) of the Court Act by remitting the matter to the Commissioner for consideration of the appropriateness of imposing an affordable housing condition to the development consent in light of my determination regarding the appropriate application of the relevant provisions considered in this judgment, is the correct outcome.

Orders

1. The orders I make therefore are as follows: 1. Appeal allowed. 2. Set aside so much of the judgment of the Commissioner as determined that Condition 27 not be imposed. 3. Remit the Class 1 appeal made to this Court so far as it seeks to impose Condition 27, for determination by the Commissioner in accordance with this judgment. 4. Unless an application is made within 21 days of the date of this judgment for an alternate order in relation to costs, Blanc Black Projects Pty Limited is to pay Willoughby City Council's costs of this appeal.

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: 24 May 2023