Willoughby City Council v Dasco Design and Construction P/L & Anor.

LEGAL REPRESENTATIVES: RESPONDENT: Mr D Wilson, Barrister SOLICITORS Alexander and Associates

(Note - Respondent's Solicitors filed Notice of ceasing to Act on 4 October 2000)

JUDGMENT: IN THE LAND AND Matter No . 40094 of 2000 ENVIRONMENT COURT OF Coram : Bignold J. NEW SOUTH WALES 13 December 2000

By its amended class 4 application filed in Court on 9 August 2000 (as further amended on 30 August 2000) the Council claims declaratory and injunctive (prohibitory and mandatory) relief against the Respondents in respect of the carrying out by the Respondents in alleged breach of the Environmental Planning and Assessment Act 1979 (the EP&A Act) of development comprising a dwelling-house (the development) on land known as No 65 Sunnyside Crescent, Castlecrag (the development site). The First Respondent is the builder of the development and the second Respondent (a property developer and builder) is the joint owner of the development site.

Ultimately, but unexpectedly, the only issue that has emerged from the hearing and that requires adjudication, concerns the exercise of the Court's discretion to restrain or remedy a breach of the EP&A Act - vide s 124. The circumstances of how the issues raised by the case ultimately came down to this single question will need to be examined because they involved a radical change in the Respondents' defence to the Council's claims. However, it is appropriate to note at the outset that ultimately the Respondents did not put in issue the relevant breaches of the EP&A Act, as alleged by the Council's amended class 4 application (as further amended in the course of the hearing).

Rather, it was submitted on behalf of the Respondents that in the exercise of its wide discretion, the Court would decline to grant any of the relief claimed on the grounds (i) that the breaches did not involve adverse environmental effects; and (ii) that the Respondents, in carrying out the unlawful works, were genuinely mistaken as to whether the Council had on 29 May 2000 approved their modification application which they had made pursuant to EP&A Act, s 96 in respect of the development consent that had been granted by the Council for the development, or as an alternative to the declining of injunctive relief altogether, Court would adjourn the proceedings to enable the Respondents to prosecute their modification application. (As will presently be shown, the majority of the admittedly unlawful works relate to works the subject of the s 96 modification application., being works that were carried out after 29 May 2000).

The Council's competing case is that the Court would exercise its discretion by granting the declaratory and injunctive relief claimed in the proceedings to restrain and to remedy the admitted breaches of the EP&A Act and that the Court would decline to grant any adjournment of the proceedings to enable the Respondents to prosecute their pending modification application because of the fact that before the commencement of hearing of the proceedings, the Respondents had deliberately chosen to litigate the proceedings to their conclusion by declining the Council's invitation that had been made to lodge an application pursuant to the EP&A Act, s 149A for a building certificate in respect of unlawful building work that had already been carried out, together with a fresh modification application pursuant to the EP&A Act, s 96 (in substitution to the existing application) in respect of building work that had yet to be undertaken.

Before adjudicating upon these competing cases, as to how the Court should exercise its judicial discretion, it is necessary to examine the background to this litigation and the litigation history (as those matters are revealed by the evidence) because of their bearing upon the exercise of the Court's discretion to grant or to withhold the injunctive relief claimed by the Council and resisted by the Respondents.

On 14 December 1998 the Council granted development consent to the first Respondents' development application for the erection of a new two storey dwelling house and swimming pool at premises known as No 65 Sunnyside Crescent, Castlecrag (the Development Consent), that consent having been granted subject to a number of conditions.

On 5 March 1999, the Council granted a Construction Certificate pursuant to the EP&A Act - s 81A(2), s 81A(4) and s 109C(1)(b) - in respect of works described in plans specified in the Certificate (the Construction Certificate).

The first Respondent commenced work on the development in April 1999.

Mr Christopher Guy, the Council's Building Surveyor, first inspected the development site (following the commencement of work on the development) in May 1999. He gave instructions for the builder to comply with the conditions of the development consent. Thereafter, from time to time, Mr Guy inspected the development site and made observations of the works in progress on the development. On a number of occasions he called the Respondents' attention to the need to comply with the development consent. On some occasions draft Orders under the EP&A Act s 121B were issued to either the first Respondent or the second Respondent directing that certain works be done in order to comply with the approved plans (ie those specified in the Development Consent and in the Construction Certificate).

Over the course of the ensuing months the Respondents made a number of modification applications under the EP&A Act s 96 in respect of works that had been or were proposed to be undertaken which deviated from the approved plans.

In particular, on 16 February 2000 the first Respondent lodged with the Council a modification application pursuant to the EP&A Act s 96, which application (together with two earlier modification applications that had not been determined by the Council) was the subject of a report prepared by Mr Guy that was submitted to the Council's Meeting of 22 May 2000.

In that Report, Mr Guy described the modifications in the following terms: · A spa to be incorporated into the swimming pool RL45.79. · Reconfiguration of the north eastern windows and external walls of the Meals Rooms on RL46.13. · Provision of a window in the southern wall of the Rumpus Room RL46.13. · Relocation of a Bar Servery in the Meals Room on RL46.13. · Altering the size of the southern window of the WC on RL47.8. · Deletion of the rear northern door and associated stairway for the garage on RL48.1. · Reconfiguration of the northern doorway between the lounge and dining rooms on RL49.3. · Provision of a window in the southern wall of the Lounge Room on RL49.3. · Altering the size of the southern windows of Bed 2 on RL50.8. · Deletion of the pergola on the northern lower rear roof RL52.3. · Alter the roof covering of the central light well over the stairs from reinforced concrete to glass.

Mr Guy's Report contains the following statement of the "history of the development":

Development Consent 1998/0434 was issued on 14 December 1998 for the construction of the two storey brick dwelling and reinforced concrete swimming pool and a Construction Certificate subsequently issued on 8 March, 1999.

A number of departures from the issued approval have been the subject of site directions, notices of intent and orders by Council to the owners Mr & Mrs Bechara, these include: · Mechanical excavation hammer too heavy. · Ineffective sediment and erosion control fencing. · Order issued to remove unauthorised brick wall lower ground floor. · Provide temporary fence around pool excavation. · Submit Certificates covering various stages of construction. · Erect builders sign. · Comply with various window and well configurations shown on approved plan. · Remove formwork for stairway to roof level. · Demolish brickwork that is higher than the approved light well. · Provide pergola in roof. · Erect a fence around the property to restrict access. · Stop work on the installation of the air conditioning system. · Submit a DA for the air conditioning system. · Advised renderers to remove cement render from inside of light well brickwork. Amendments have been submitted by the applicant in the following order: 20 September, 1999 Requesting changes to windows and entrance door light

5 November, 1999 Add spa, delete stair at rear of garage, glass roof top light well withdrawn.

16 February, 2000 Pool fence, spa, stair deleted glass roof to light well withdrawn

The plans submitted to Council for these changes were considered inadequate with respect to detail and were found to have inaccuracies.

This latest set of plans now under consideration by Council combine all these proposed variations into a more acceptable submission.

The modification proposals were publicly notified and the Council received a number of objections from residents living nearby the development site.

Mr Guy's Report contains a brief description of the content of the public objections and of his assessment of the proposal in the light of those objections. He recommended that approval be granted to the modification proposal subject to specified conditions.

The Council considered Mr Guy's Report at its Meeting held on 22 May 2000 but did not adopt his recommendation. Instead the Council resolved that the "matter stand deferred pending inspection by Council's Sailors Bay Ward Councillors Inspection Committee".

The following day the second Respondents were advised of the Council's resolution and were advised that the inspection would occur on site on Monday 29 May 2000 at 7.45 am.

The second Respondents were advised that the Council's Inspection Committee had delegated authority to determine the application on site, but should the Committee not so determine the application the recommendation of the Committee would be considered by the Council at the meeting following the inspection.

The Council's letter also advised the second Respondents that the Council's Policy was that a representative of the owner/applicant would be afforded the opportunity to address the Committee as would a representative of the objectors.

The Council Committee's on-site inspection was carried out on 29 May 2000 as arranged. The second Respondent attended the site inspection as did Mr Daniel Nicholas, an engineer/builder, representing the first Respondent. Minutes of the meeting were prepared by Mr Shrubb, the owner of No 61 Sunnyside Crescent who had attended the inspection together with the owners of No 63 Sunnyside Crescent (Mr and Mrs Levett), the owner of No 67 Sunnyside Crescent (Mr Stevenson), the owner of No 14 Sunnyside Crescent (Ms Nolan) and the owner of No 59 Sunnyside Crescent (Mrs Diamond). A copy of the minutes was circulated by Mr Shrubb to all persons who had attended on the site inspection.

As will be noted later in these reasons, both Respondents believed from what transpired at the inspection that the Council's Inspection Committee had on 29 May 2000 approved the modification application. However, it is now accepted that that belief was mistaken and erroneous and that in point of fact the Inspection Committee on that occasion had only resolved to recommend to the Council that the modification application be approved.

As will presently be shown, from the time proceedings first came before the Court on 30 June 2000 until the second day of the hearing (on 30 August 2000) the Respondents' defence had been that the Council had approved the modification application by virtue of the exercise of delegated authority by the Inspection Committee on 29 May 2000.

However, this defence was entirely abandoned by the Respondents on the second day of the hearing when the affidavit sworn on 18 August 2000 by Councillor McCurrich, who had chaired the Committee Meeting on 29 May 2000, was read in the Council's case.

On 13 June 2000, the Council considered the report of the Sailors Bay Ward Councillors Inspection Committee recommending that the Respondents' modification application be approved subject to conditions. However, the resolution passed by the Council was that the matter be deferred.

On 21 June 2000, Mr Guy attended the development site and observed that certain works, the subject of the pending s 96 modification application, had been commenced.

On 23 June 2000, Mr Guy returned to the development site and observed that works, the subject of the pending s 96 modification, were proceeding.

On this latter occasion, he spoke to the second Respondent and the following conversation took place:

GUY: You do not have approval to carry out works which are in your section 96 application. It has not been approved yet. As a result you do not have consent and I direct you to stop work.

A few days later, the Council commenced the present proceedings.

On 27 June 2000 the Council commenced the present class 4 proceedings claiming declaratory and injunctive relief against the Respondents. On the same day it filed a Notice of Motion returnable on 30 June 2000 claiming an interlocutory injunction restraining the Respondents "forthwith from carrying out…..any further development on the property until the Rectification Works have been completed". The Motion defined "Rectification Works" in terms of 16 specific works, being the same list of works in terms of which the class 4 proceedings claimed a permanent mandatory injunction.

Upon the nominated return day, the parties appeared by Counsel before the Duty Judge, Talbot J who accepted the Respondents' undertaking "not to carry out any works" at the development site up to and including 4 pm on 4 July 2000, (the Undertaking) to which day he adjourned the Council's Motion for interlocutory injunction.

On that adjourned day, the parties appeared before me as Duty Judge when I continued the Undertaking until 4 pm 12 July 2000, to which date I adjourned the Council's Motion for interlocutory relief in order to await any developments that might occur in the Council's consideration of the Respondents' s 96 modification application, which had been deferred at the Council's meeting held on 13 June 2000.

When the matter came before me on 12 July 2000 and I was informed that the Council had not determined the Respondents' modification application, the Respondents did not renew their Undertaking. Rather, their Counsel stated that the Respondents wished to complete the development (which was at that point virtually complete, so far as concerned all exterior works) and that the Respondents would strongly defend the Council's claims to relief on the ground that the Council had already approved the Respondents' modification application which covered most of the "Rectification Works" that were recited in the Council's class 4 application and Notice of Motion being the subject of claims to both interim and permanent mandatory relief.

When I enquired of the Council whether, in the light of the Respondents' declared position, the Council would seek an interlocutory injunction by offering the usual undertaking as to damages, I was informed that no such undertaking would be offered, and in the light of that fact, the other known circumstances of the case, I stated that an interlocutory injunction would not be appropriate.

Thereupon, the Council informed me that it totally rejected the Respondents' assertion that the Council had granted approval to the Respondents' modification application, and that the case limited to an adjudication on that issue could be presented urgently and briefly. It was in these circumstances that I gave leave for the parties to obtain an urgent hearing date of the Council's claims to permanent relief. (As it transpired, the hearing occupied three days, namely 9, 30 and 31 August 2000, only the first of which involved the disputed issue of whether the Council had approved of the Respondents' s 96 modification application, as alleged by the Respondents.)

It is now necessary to refer to some significant matters that occurred in the period between the commencement of the proceedings on 27 June 2000 and the commencement of the hearing on 9 August 2000, their significance becoming heightened on the second hearing day when the Respondents entirely abandoned their defence that the Council had approved their s 96 modification application.

On 4 July 2000, the Council's Solicitors wrote to the Respondents' Solicitors in the following terms:

We are instructed to request that your clients urgently lodge an application for a building certificate (including all documents necessary to enable Council to consider and determine the application), and to delete from the section 96 modification application all works already constructed.

As you will appreciate, the Council has no power to grant a retrospective approval. In circumstances where the works subject of the section 96 application have now largely been completed, we can see no utility in the Council continuing to process that application insofar as it relates to works already constructed. However, if a building certificate application is lodged addressing the works already completed, the Council does have the power to deal with that application. Therefore, to enable the Council to properly deal with the substance of this matter, we ask that your client urgently lodge a building certificate application addressing the works already constructed and delete those works from section 96 application.

On 5 July 2000 ,the Council's Solicitors wrote to the Respondents' Solicitors in the following terms:

We are instructed to propose the following course of action in an attempt to dispose of these proceedings in the most effective manner namely, the discontinuance of the proceedings on the basis of agreed undertakings to the Court as follows: 1. The respondents will lodge an application for a building certificate, within 14 days from 12 July 2000, along with all documents necessary to enable Council to properly consider and determine the application; 2. If the building certificate application is approved, the matter has been dealt with and the further undertakings are irrelevant. If, however, the building certificate application is not approved by Council then the respondents will appeal the decision of Council within 7 days of receiving it or, in the event of a deemed refusal (after 40 days from lodgment), the applicant will appeal within 7 days of the deemed refusal date; 3. The respondents will seek expedition of the hearing on the determination of the building certificate application and the Council will consent thereto; 4. If a building certificate is refused in whole or part by the Court, the respondents will demolish the works the subject of the application or not incorporated within the building certificate (if granted in part only) and will complete the development in accordance with the Consent and Construction Certificate within 40 days of the date of the Court's judgment; 5. The respondents will not carry out, cause, or suffer to be carried out any further development not in accordance with the Consent and Construction Certificate; and 6. Costs be reserved.

In the alternative to undertaking 4 above, the Council would also be prepared to consider a regime whereby, if the respondents will not give that undertaking (to demolish if they fail to obtain the building certificate), these proceedings are not discontinued but (subject to the balance of the undertakings) are adjourned (with the Notice of Motion to be withdrawn) to be fixed for a final hearing concurrent with the building certificate hearing (ie that both matters would be heard before a Judge of the Court).

We would be grateful if you could provide us with your instructions on the proposals contained in this letter as a matter of urgency and note that we propose to tender this letter in evidence if the matter cannot be resolved prior to the next hearing date.

On 7 July 2000 , the Respondents' Solicitors responded to these two letters in the following terms:

We refer to your letters dated 4 and 5 July 2000. We are surprised by your letter and proposal given the present circumstances and the proceedings presently pending before the Court and the Council meeting to take place on Monday 10 July 2000. In the circumstances our clients do not consent to the proposal set out in your letters under reply. If advice has been provided to the Council in relation to this matter, please provide us with a copy of that advice or your reasons for your proposals to enable us to give the matter further consideration.

On 10 July 2000 , the Council considered a report of its Environmental Services Director in the matter and passed the following resolution as recorded in the Council's Minutes: -

To report on the progress of the application concerning 65 Sunnyside Crescent, Castlecrag and recommend the matter be deferred pending the applicant making an application for a building certificate.

That: A. The matter be deferred pending: 1. Lodgment and notification of a building certificate application for works already undertaken without Council consent, and 2. Amendment and renotification of a Section 96 application for works requiring Council consent and which have not been commenced. B. Council note the commencement of the prosecution proceedings in respect of the building works carried out at the premises without Council approval.

It was against the foregoing background, and in particular the Respondents' refusal of the regime for settlement of the proceedings that had been proposed by the Council immediately following the mention of the Council's Notice of Motion for interlocutory relief before me on 4 July 2000, that the case came on for hearing on 9 August 2000, when I was informed by Counsel for the Respondents that the issues for determination by the Court were as follows: 1. Whether the Council had approved the Respondents' s 96 modification application, at the meeting on 29 May 2000 of the Council's Inspection Committee. 2. Whether the works that had been carried out were covered by the s 96 modification application (and approval); 3. Whether, upon the completion of the development, the Respondents might obtain, if necessary, a building certificate under the EP&A Act s149A to s 149G (inclusive).

It was in these circumstances that the Court agreed to the parties' joint request that it determine, as a preliminary matter, the disputed question whether the Council had granted approval to the Respondents' s 96 modification application, this being the principal issue in dispute between the parties.

The first day of hearing was directed to receiving evidence on this single issue, the Council relying upon four affidavits sworn by Mr Guy and one affidavit sworn by Mr Shrubb and the Respondents relying upon the affidavits of Mr Nicholas, Mr Bechara, Mr Abdullah and Mr Borges.

After three of the deponents, Mr Guy, Mr Nicholas and Mr Bechara, were cross-examined, the hearing was adjourned to dates to be fixed (These dates were 30 and 31 August 2000).

When the hearing resumed on 30 August 2000, the Council read the affidavit of Councillor McCurrich which had been sworn and served during adjournment. The affidavit was read without objection from the Respondents and the deponent was not cross-examined.

Immediately following the reception of Councillor McCurrich's evidence, Counsel for the Respondents, informed the Court that the Respondents entirely accepted his evidence and no longer pressed for a finding that their s 96 modification application had been granted approval at the site inspection conducted by the Council's Inspection Committee on 29 May 2000. Counsel for the Respondents thereupon stated that the only remaining issue was the manner in which the Court should exercise its judicial discretion to grant or to withhold the relief claimed by the Council in respect of the now conceded breaches by the Respondents of the EP&A Act.

Counsel for the Respondents revived the possibility of the Respondents seeking a building certificate under the EP&A Act (s 149A to s 149G) upon the completion of the development and the possibility of adjourning the proceedings to enable the Respondents to pursue their s 96 modification application still pending before the Council. However, it was conceded that before the latter possibility could be seriously entertained, the Court would be asked to determine the question which was in dispute between the parties as to whether it was legally possible to grant approval to a modification application in circumstances (such as in the present case) where the works, the subject of that application, had already been carried out.

Again the Council expressed its strongest opposition to any suggestion of adjourning the proceedings in the light of the history of the case and of the Respondents' conduct therein especially in declining the Council's suggested settlement of the case upon the basis that the Respondents would seek to regularise their position. The Council submitted that it was not necessary for the Court to determine the question whether modification approval could be granted retrospectively because that question was not strictly raised in the present case. In any event, the Council submitted that the question was the subject of existing authority in the Court, namely the decision of Sheahan J in Herbert v Warringah Council (1997) 98 LGERA 270 which had expressly held that a modification application could not be approved in respect of building work already undertaken.

In response to the submissions from the Council, the Respondents indicated their preparedness to complete the hearing by making their submissions on the outstanding issue of the exercise of the Court's discretion. In so proceeding, it is to be noted that the Respondents called no further evidence beyond the evidence that they had earlier adduced on the issue originally in dispute (which did not continue beyond the first hearing day) concerning the question whether the Council had approved of the s 96 modification application.

However, the Council adduced further evidence on the outstanding issue of the Court's discretion, namely, two affidavits of Mr Angelo Donni, the Council's Special Projects Officer - Environmental Services Division, and the affidavits of five residents living nearby the development site, namely Mr Shrubb, Mr Hastings, Mrs Arnold, Mr Stevenson and Mrs Levett. Of these deponents, only Mrs Arnold was cross-examined. This evidence is relevant as to the environmental consequences of the unlawful works (especially as perceived by neighbouring residents who apprehended that they would suffer consequent prejudice in terms of privacy invasion). It is also relevant, to put it mildly, to what can only be described as extremely anti-social and aggressive conduct of the Respondents, in response to the expression to both the Council and to the Respondents of legitimate neighbour perceptions and concerns that the building works were not being carried out in accordance with the approved plans.

D. THE EXERCISE OF THE COURT'S DISCRETION TO GRANT OR WITHHOLD INJUNCTIVE RELIEF

The true nature of the very wide discretion conferred upon the Court by the EP&A Act, s 124 and the factors that generally are relevant to the exercise of that discretion, are well settled by established authority - see particularly the two 1987 judgments of the Court of Appeal in Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335 and ACR Trading Pty Ltd v Fat-Sel Pty Ltd (1987) 11 NSWLR 67. Further elaboration is not required.

Although the Council's claims to injunctive relief originally included a prohibitory injunction to restrain the Respondents from carrying out further development upon the development site "until the Rectification Works have been completed", it would appear that by this point of time the Respondents have now completed the erection of the dwelling-house.

Accordingly, the relevant claim to injunctive relief is the Council's claim for a mandatory injunction requiring the Respondents to carry out the Rectification Works within 28 days.

As I have earlier indicated, the Rectification Works are fully detailed in the amended class 4 application (as further amended in the course of the hearing on 30 August 2000) and stipulate the required rectification to works that have been carried out, in deviation from the approved plans (these being the unlawful works).

The unlawful works, which have not been ultimately contested by the Respondents either (i) as to their nature and extent or (ii) as to being unlawfully carried out, are particularised in the amended class 4 application as follows (the paragraphs in alphabetical sequence that have been omitted refer to works in respect of which relief is no longer required): - (a) the roof surrounding the lightwell over the stairs has been constructed higher than shown on the approved plan under the Consent; (c) the width of the western window of bedroom 2 located on the upper first floor level exceeds 900mm in width contrary to the approved plans under the Consent (d) the width of the window in the w.c. located on the upper ground floor exceeds 900mm in width, contrary to the Consent; (e) a 2.1 x 1.9m pergola in the roof above the lower first floor level balcony has not been constructed in accordance with the Consent; (f) columns and walls in the approved configuration and location between the lounge/dining rooms on the lower first floor level have not been provided in accordance with the Consent; (h) a rear door to the garage and its associated stairway and landing has not been provided in accordance with the Consent; (j) two strip footings, one 5.8m x 35 cm and the other approximately 3.3.m x 35cm have been installed on the eastern side of the ground floor meals room next to the laundry fence without approval; (k) cabling and conduits associated with air conditioning in the roof area have been installed without approval; (l) a bar on the ground floor has been constructed without approval; (m) southern windows in the rumpus and lounge rooms on the ground and first floor have been installed contrary to the Consent; (o) construction for spa has taken place without approval; (q) a window has been installed in the eastern wall of the meals room contrary to the Consent; (r) steps into the pool have been constructed without approval; (s) a sliding glass door has been installed in the northern wall of the rumpus room contrary to the Consent; and (t) a brick wall parallel to the western boundary and at a right angle to the centre of the spa pool has been constructed without approval.

(It is to be noted that none of the last five mentioned works is covered by either the Development Consent or the s 96 modification application.)

The status of the aforesaid works as "unlawful works" derives from the fact that they are deviations from the approved plans (being the subject matter of the Development Consent and of the Construction Certificate) and as such they are works that have been carried out in breach of the EP&A Act, s 76A(1) which provides as follows:

If an environmental planning instrument provides that specified development may not be carried out except with development consent, a person must not carry the development out on land to which the provision applies unless: (a) such a consent has been obtained and is in force, and (b) such development is carried out in accordance with the consent and the instrument.

Being unlawful works, they relevantly constitute "a breach of the Act" for the purposes of the EP&A Act Pt 6 Div 3 which provides for the civil enforcement of the Act by proceedings taken in this Court.

Accordingly, the Council's claims to mandatory injunction attract the Court's jurisdiction that is conferred by s 124 "to make such order as it thinks fit to remedy in the breach" (subs (1)) and in particular, "to require the demolition or removal of a building" (subs (2)(b)) and "to require reinstatement of the building …..to the condition or state the building was in immediately before the breach was committed" (sub (2)(c)).

As I have already noted, the Respondents do not contest the fact that the unlawful works have been carried out, it seems for the most part, at times soon after 29 May 2000 but before the commencement on 27 June 2000 of the class 4 proceedings.

However, even after the proceedings had been commenced, but before the Respondents gave Undertaking to the Court on 30 June 2000, some further unlawful works were carried out and after the Respondents withdrew their Undertaking to the Court on 12 July 2000, some further unlawful works were carried out during the pendency of the proceedings. It is difficult to more particularly identify the unlawful works that were carried out during the two periods that I have just mentioned, because of the difficulty arising from the fact that works referable to the Development Consent have continued to be carried out at all material times except for the brief period from 30 June to 12 July 2000 when the Respondents' Undertaking not to carry work, was in force.

All these foregoing facts, which have not been contested by the Respondents have been satisfactorily established by the Council's evidence.

However, it should be noted that most of the unlawful works were carried out before the commencement of the present proceedings on 27 June 2000 and most of the unlawful works themselves are covered by the Respondents' s 96 modification application, which remains pending and undetermined by the Council. (I have earlier identified the five specific works that are not so covered). As earlier noted, the reason that the Respondents' s 96 modification application has not been determined by the Council since the commencement of these proceedings is that the Council, acting upon legal advice, has apparently decided that there is no power to grant approval to the application because the works have already been executed. In support of the Council's decision, it should be noted that it perfectly accorded with the state of existing authority in this Court, (although as will hereafter appear that authority has in very recent times been departed from and it will be necessary for me to consider the question in the context of competing authorities in this Court).

The Respondents' only possible basis of justification or excuse for carrying out most of the unlawful works after 29 May 2000 (and before giving the Undertaking to the Court on 30 June 2000) is their evidence that they believed that the Council's Inspection Committee had approved their s 96 modification application on the occasion of the on-site inspection conducted on 29 May 2000. Significantly, I do not know when this mistaken belief came to an end, because following the announcement in Court on 30 August 2000 by their Counsel that the Respondents entirely accepted Councillor McCurrich's affidavit evidence that the Inspection Committee had only recommended approval of the application and in consequence, they had abandoned their defence that their s 96 modification application had been approved on 29 May 2000, neither Mr Bechara not Mr Nicholas gave any further evidence beyond that given on the first day of the hearing when the Court had embarked upon the hearing of the preliminary issue as to whether approval had been granted to the Respondents' s 96 modification application, where their evidence was that they believed that such approval had been granted and in consequence of that belief, had immediately commenced to carry out the works, the subject of the modification application.

Whereas I am prepared to give the Respondents the benefit of any doubt, by finding that both Mr Bechara and Mr Nicholas may have laboured under the mistaken belief that the Council's Inspection Committee had approved their s 96 modification application on 29 May 2000, or at least some aspects of it, I also find that that mistaken belief could not have been honestly and reasonably based or founded following Mr Guy's conversation with Mr Bechara on 23 June 2000 that I have earlier recorded, when Mr Guy informed Mr Bechara to cease work because the s 96 modification application had not yet been approved, but the latter refused to comply and continued to carry out those works.

However, alas, by that time some, if not most, of the works had already been undertaken by the Respondents labouring under the mistaken belief that their s 96 modification application had been approved on 29 May 2000.

In support of the Respondents' submission that the Court, in the exercise of its discretion, would decline the mandatory injunction sought by the Council, the Respondents rely upon four factors - (i.) the fact that most of the unlawful works were carried out under the Respondents' mistaken belief that their s 96 modification had been approved by the Council's Inspection Committee held on 29 May 2000; (ii.) the fact that most of the unlawful works are covered by the s 96 modification application; (iii.) the fact that although the Council had not in fact approved the s 96 modification application both Mr Guy and the Council's Inspection Committee had recommended that the Council grant approval to the application; and (iv.) the nature of the unlawful works was such as to not involve any serious environmental consequences.

The Council's competing submissions were to the following effect - (i.) any mistake, if relevantly made by the Respondents, was not a reasonable and honest mistake; (ii.) the full extent of the unlawful works exceeded the works, the subject of the s 96 modification application; (iii.) some of the unlawful works covered by the s 96 modification application continued to be built after 23 June 2000 when Mr Bechara was informed in categorical terms by Mr Guy that the s 96 modification application had not been approved by the Council; (iv.) in carrying out the unlawful works (and more generally, in carrying out the development), the Respondents had acted with singular and blatant disregard for the authority of the Council and for the relevant planning law, and for the legitimate interests of the neighbouring residents (who had raised objections both to the Council and to the Respondents concerning the apparent deviations from the approved plans in the carrying out of the development by the Respondents); (v.) by carrying out the unlawful works that were the subject of the pending and undetermined s 96 modification application, the Respondents had themselves created the situation for which the obtaining of approval of the application was now a legal impossibility; (vi.) it was not the case that the unlawful works involved no adverse environmental consequences because despite the recommendation for the grant of approval to the Respondents' s 96 modification Application by Mr Guy and by the Council's Inspection Committee, the evidence of the neighbouring residents had established that the unlawful works involved an overall privacy invasion (both aural and visual) of neighbouring properties by the Respondents' unlawful works, which evidence was corroborated by the expert opinion evidence of Mr Donni; and (vii.) the Respondents had given no evidence that the Rectification works could not be readily executed or that by requiring them to be done, the Court's relief would impose unreasonable or disproportionate financial or other burdens upon the Respondents.

As I have earlier noted, the Respondents called no evidence concerning the carrying out of the unlawful works other than their evidence concerning their mistaken belief that the Council's Inspection Committee had granted approval to their s 96 modification application on 29 May 2000 and the evidence of Mr Abdullah who had been sub-contracted by the Respondents to install the domestic air-conditioning system to the development.

In particular, the Respondents called no evidence in rebuttal of the evidence of the neighbouring residents corroborated by the expert opinion of Mr Donni of the perceived adverse environmental consequences of the unlawful works - namely privacy invasion (visual and aural) to several neighbouring properties.

In these circumstances, I accept the Council's unchallenged evidence and I am satisfied that the unlawful works do involve the adverse consequences that are deposed to in the Council's evidence. Those consequences are not considered to be highly significant or substantial, but they are not trifling and insignificant. They are of such a nature that would in appropriate circumstances, warrant a mandatory injunction for the carrying out of rectification works.

In this respect, it is further to be noted that the Respondents led no evidence that the mandatory injunction claimed would impose a disproportionate remedy or would otherwise cause the Respondents economic hardship.

I have earlier held that I have given the benefit of the doubt to the Respondents concerning their mistaken belief that the Council's Inspection Committee had on 29 May 2000 granted approval to their s 96 modification application. I put my finding this way because ultimately I do not know how the mistake occurred other than to say that it occurred through nothing that was done or omitted to be done by or on behalf of the Council.

Hitherto, I have not expressed any finding whether this belief was formed and held honestly and on reasonable grounds. Whereas I am prepared to find that the Respondents' mistaken belief was honestly held (again giving the Respondents the benefit of the doubt) I am not prepared to find that it was held on reasonable grounds, because the Respondents, as very experienced developers/builders, should in my judgment, should have acted more reasonably by requiring some written and formal notification of the approval, they believed to have been granted: cf Ziade v Woollahra Council (unreported Court of Appeal 28 April 1994) This is more especially so in the case of those works which were not specifically discussed (only three matters were discussed) at the on-site meeting held on 29 May 2000 in respect of which matters Mr Nicholas deposed (vide par 21 of his affidavit sworn 3 July 2000):

….In my opinion, the minutes and the resolutions passed addressed all of the matters the subject of the s 96 modification application. Matters not identified in the resolutions were matters not in dispute. (my emphasis) .

Both as a matter of logic and reasonable common sense, it could not reasonably be concluded (whether mistakenly or otherwise) on any basis that resolutions approving works A, B and C also approved works D, E, F, G etc (being works that are unrelated to the approved works).

It follows that whereas I am prepared to find that some of the works (covered by the s 96 modification application) might honestly (but not reasonably) have been believed by the Respondents to have been approved on 29 May 2000, they could not honestly and reasonably have believed that all of the works covered by the s 96 modification had been so approved on that occasion.

Moreover, as I have earlier held following Mr Guy's instruction given to Mr Bechara on 23 June 2000 on the basis of his assertion that the s 96 modification application had not been approved, which instruction Mr Bechara openly disobeyed, there was no longer any honest or reasonable foundation for the Respondents' mistaken belief. Yet in these circumstances, the Respondents continued to carry out what is now accepted to be the unlawful works. This conduct, when considered in the light of the Respondents' long standing misconduct generally, in carrying out the development in breach of the Development Consent and Construction Certificate and in blatant disregard to what has been vindicated as legitimate protests raised by neighbouring residents, is telling evidence of misconduct by the Respondents involving a wilful disrespect for the authority of the Council and for the planning laws.

It was submitted, on behalf of the Respondents, that the evidence given by the neighbouring residents concerning the Respondents' misconduct was inadmissible because, according to the bold submission, the Respondents' misconduct was irrelevant to the exercise of the Court's discretion. The Respondents' submission was said to be supported by the oft cited judgment of the Full Court of the South Australian Supreme Court in Kouflidis v City of Salisbury (1982) 49 LGRA 17 and in particular, the following passages at 19-20 of the judgment of King CJ:

In my opinion, moreover, the past unlawful use is not a relevant factor in determining whether consent should be granted. That decision should be made upon the planning considerations envisaged by the Act and regulations irrespective of the past or continuing conduct of the applicant. I do not think that there is any warrant in the Act or regulations for refusing or deferring an application or appeal by reason of the unlawful conduct of the applicant.

The learned judge in the Land and Valuation Court was rightly concerned with the activities of a person who, cynically and fraudulently, changes the use of his or her land, and who hopes, by doing so, to present planning authorities with a fait accompli, and thus to extract a planning consent to the changed use. His Honour posed the question: How should such a person fare when his or her application comes to be considered at the administrative and judicial level? The answer, it seems to me, is that the unlawful use should be ignored. It does not enter into the planning considerations upon which the planning decision must be made. The punishment of the unlawful conduct should be left to criminal proceedings. The supposed fait accompli should not be recognized as such. The unlawful user of the land should gain no advantage from having established an unlawful use. Any argument based either directly or indirectly upon the unlawful use should be firmly rejected. For instance, the argument put in the present case that the patronage given the unlawful business by the public indicates a local demand for the facility and is a consideration in favour of planning consent, should be rejected as an attempt to gain an advantage from the unlawful use by erecting an argument on the basis of that unlawful use.

Although an applicant for consent should derive no advantage, direct of indirect, from the unlawful use, I do not think that it should be an impediment to the consideration of his application on its planning merits. If on the merits a planning consent should be given, it is desirable in the public interest that it should be given irrespective of the past conduct of the applicant. It is desirable that the position should be regularized leaving the past unlawful conduct to be punished by penal sanctions. Refusal to entertain an application while an unlawful use continues might result in a pointless impasse. A landowner who maintained, contrary to the planning authority's view, that his use of the land did not require consent, but who was willing to seek consent to avoid conflict, would be unable to obtain consent unless he first desisted from the disputed use, perhaps closed his business. If refusal to consider the application were confined to cases of cynical, fraudulent or manipulative conduct, the planning authority and the Planning Appeal Board would be required to inquire into and decide whether the conduct in a particular case answered that description. I do not think that a planning authority such as a council or an administrative appeals tribunal such as the board is equipped by its constitution or procedures to deal with allegations of improper motives. I think that the most expedient course, and that indicated by the Act and regulations, is for the administrative authorities and the courts to deal with the planning application on its planning merits, ignoring any arguments based directly or indirectly upon unlawful use and leaving the punishment of the unlawful conduct to penal proceedings.

In my judgment, the evidence of the Respondents' misconduct is relevant to the exercise of the Court's discretion. The reasoning in Kouflidis (which has been consistently applied by this Court in the exercise of its comprehensive appellate jurisdiction embracing planning appeals, building appeals, demolition order appeals and building certificate appeals) does not in my judgment, apply to misconduct of a party who seeks the favourable exercise of the Court's judicial discretion under the EP&A Act ,. s 124 .

In the context of the exercise of the statutory discretion conferred by s 124 which is analogous to the equitable remedy of injunction in aid of the enforcement of public law (cf Enfield City v Development Assessment Commission (2000) 199 CLR 135) the conduct of the parties will generally be a relevant consideration in the exercise of the judicial discretion.

As I have already found, the Respondents are guilty of relevant misconduct in their blatant and cavalier disregard of the Council's authority and of the planning laws and in their aggressive and anti-social conduct directed the neighbouring residents who were legitimately protesting that the Respondents were consistently and wilfully deviating from the approved plans.

Weighing all the foregoing findings in the balance, I am of the clear opinion that the case for granting injunctive relief is far stronger than is the case for withholding that relief altogether.

Accordingly, I propose to exercise my judicial discretion by granting the injunctive relief claimed, subject however, to my consideration (which immediately follows) of the question whether that relief should be reasonably mollified and if so, to what extent.

E. SHOULD THE INJUNCTIVE RELIEF BE MOLLIFIED BY GIVING THE RESPONDENTS THE OPPORTUNITY TO REGULARISE THE UNLAWFUL WORKS?

The question necessarily arises because it has long been established that it is relevant to the wide judicial discretion conferred upon the Court by the EP&A Act, s 124. A typical formulation of the relevant question and an insightful illustration of how the judicial discretion is to be exercised is found in the following passage from the judgment of Stein JA (with which the other Judges of Appeal concurred) in Tynan v Meharg (1998) 101 LGERA 255 at 259: -

Whether any injunction should be softened or mollified by suspending its operation in order to allow the appellants the opportunity to make fresh applications to the council to regularise the situation. This was rejected by Sheahan J and, I think, rightly so. That the building had been erected in a location where it was not permitted was known to the appellants from around July 1995. They had more than ample opportunity from that time until today to make the necessary application for development consent and building approval. For whatever reason, they have not done so. The practice of the Land and Environment Court, if an application for consent or approval is made before class 4 civil enforcement proceedings have been heard, is to defer those proceedings until the merits application is determined. Even since the judgment by Sheahan J on 13 February 1998 the opportunity has been available to the appellants, which they have chosen not to pursue. In my opinion, little weight should be given to this aspect. In any event, the stay granted by Sheahan J, which has been extended to 1 October 1998, has, in effect, suspended the order for almost eight months.

Despite the obvious force of the Council's submission that in view of the Respondents' outright rejection of the Council's settlement offer made in its letters of 4 July 2000 and 5 July 2000 before the commencement of hearing, it is no longer appropriate to afford the Respondents the opportunity to regularise the planning breach situation, I am of the opinion that it is neither too late, nor is it inappropriate to consider the question of providing the Respondents with the opportunity to seek, by whatever appropriate means that may be available, to regularise the situation.

The question of the means of regularising the situation has been debated chiefly by reference to the Respondents' s 96 modification application which remains undetermined by the Council. A number of issues arise in this regard, but the most significant is whether it remains legally possible for approval to be granted in view of the fact that all of the works, the subject of the application, have already been carried out by the Respondents.

The Council's position as evidenced in their Solicitor's letters of 4 and 5 July 2000 to the Respondents' Solicitors is that it is not legally possible for approval to be granted in circumstances where the relevant works have already been executed. This position was adhered to in argument with the Council placing ultimate reliance upon the decision of Sheahan J in Herbert v Warringah Council (1997) 98 LGERA 270, where his Honour held at 278 that the modification power conferred by the EP&A Act, s 102 (since repealed but substantially re-enacted as s 96) was not available to modify a development consent where the works referred to in the application have already been carried out.

The Respondents submitted that Herbert was wrongly decided and should not be followed. The Council submitted that Herbert was correct and should be followed.

Since reserving my judgment in the present case, this Court has reconsidered the question whether the statutory modification power is available in a case where the works, the subject of the modification application, have already been carried out. Talbot J in Windy Dropdown Pty Ltd v Warringah Council [2000] NSWLEC 240 (unreported 17 November 2000) has now held that the statutory modification power is available in a case where the development has already been carried out.

In the course of his fully reasoned judgment, Talbot J discusses a number of the earlier decisions of this Court on the question, including Herbert, which his Honour considered to involve, upon analysis, no more than following the earlier decision of the Chief Judge in Connell v Armidale City Council (unreported 25 September 1996), a decision which Talbot J noted (par 14) to be extempore in which the Chief Judge "was hampered by the circumstance that Mr Connell appeared without legal representation, a fact which she lamented in the judgment at p 4".

In contrast, in Windy Dropdown, Talbot J acknowledged that he had had the benefit of "full argument and submissions from Counsel representing both parties": par 15.

This being the current state of conflicting authority in this Court on the question, it becomes necessary for me to decide how the question is to be determined in the present case.

But for the supervening judgment of Talbot J in Windy Dropdown, I would, I think, have been disposed in the interests of judicial comity and certainty in the law to have adopted the existing settled state of authority in this Court as exemplified in the decision of Sheahan J in Herbert which had recently been cited in the judgment of Handley JA, sitting singly in the Court of Appeal, in Tynan v Meharg (No 2) (1998) 102 LGERA 119, where his Honour said at 121:

Development consent may regularise for the future what had hitherto been an unlawful use of land or buildings, but the line of authority in the Land and Environment Court or its predecessor which was analysed by Sheahan J in Herbert establishes that these powers were not available, prior to Act No 152 of 1997, to regularise the unlawful erection of a structure.

The reference by Handley JA to Act No 152 of 1997 is a reference to the powers now contained in the EP&A Act , s 149A to s 149G relating to the issue of building certificates.

In context, I do not think that Handley JA's reference to Herbert can be taken as a clear and deliberate endorsement of the actual decision in Herbert holding that the statutory modification power was not available in a case where the works had already been carried out. This is because "the line of authority" so referred to, going back to the predecessor of this Court, could not have included the statutory modification power because it simply did not exist under the planning laws that were in force prior to the enactment of the EP&A Act.

Having considered for myself the competing authorities in this Court, I would respectfully agree with Talbot J's conclusion that the power of modification conferred by the EP&A Act, s 96 construed in its context and having regard to its obvious purpose in the legislative scheme, is available even in a case where the relevant works have already been carried out. The proper effect of s 96 is principally to be found in the language of that section rather than in the text of other provisions of the EP&A Act, most notably s 76A and s 124(3) and in the legislative policy that has been discerned therein. Those sections deal with the question of the need for development consent, but in view of the express terms of s 96(4) reference to those sections is not a likely source of illumination of the true meaning of s 96.

Moreover, s 96 is a "facultative" provision of the Act to which s 76A is expressly declared to be subject: vide s 76C cf North Sydney Council v Michael Standley and Associates Pty Limited (1997) 97 LGERA 433 dealing with the modification power contained in the predecessor s 102 of the EP&A Act.

In Michael Standley, the President observed at 445 in reference to the EP&A Act s 76 (now re-enacted as s 76A):

I see no reason why the opening words Subject to this Act are not sufficient to ensure this result, because they allow s 102 to operate according to its terms, thereby lifting the prima facie prohibitory operation of the balance of the subsection: see also Valhalla Cinemas Pty Ltd v Leichhardt Municipal Council (1986) 60 LGRA 240 at 246.

This holding, in my respectful opinion, means that any relevant prohibition in s 76A is to be read subject to any modification that may be granted pursuant to s 96 to a relevant development consent.

The facts of the present case provide an apt illustration of the relationship between s 76A and s 96.

As I have already held, the "unlawful works" attain that status by virtue of the operation of s 76A because although the development was approved by the Development Consent and the Construction Certificate, the works deviating from the approved plans were "not carried out in accordance with the conditions of the consent" and hence created a breach of the Act. However, assume that the modification application be now approved. The result would be that by dint of the exercise of the modification power, the relevant prohibition contained in s 76A(1) no longer would operate.

However, the question immediately arises at what point of time would the prohibitory effect of s 76A(1) yield to the modification approval? On this question, there are two possible answers, depending upon the construction to be given to s 96(4).

One is that the modification approval is effectively related back to the grant of the development consent that it modifies. This is the view of Talbot J in Windy Dropdown as I would respectfully understand his judgment, when he states the following proposition at par 31:

The effect of s 96(4) is that any development already carried out in conformity with the consent as modified is deemed to have been carried out in accordance with the consent so modified. On that basis, no conflict with s 76A will arise as the development is deemed to have been carried out pursuant to a consent.

The competing answer, and the one that I would respectfully prefer, is that the modification is effective to oust the prohibitory effect of s 76A but only from the date that the modification is granted .

Modification of a development consent in accordance with this section is not to be construed as the granting of development consent under this Part but a reference in this or any other Act to a development consent is a reference to the development consent so modified.

104. In my opinion, the second clause in s 96(4) is a conventional " referential " provision, having conventional effect such as is provided in the Interpretation Act 1987 , s 68: cf Interpretation Act 1897 , s 25 as applied by the Court of Appeal in Albury City v North Albury Shopping Centre Pty Ltd (1985) 1 NSWLR 220 . Its meaning is, I think, quite clear, namely that whenever a development consent is modified, any reference contained in the EP&A Act (eg s 76A and s 122 ) or any other Act to the development consent is to be construed as a reference to the development consent as so modified. However, this does not require a fictional relation back of the modification to the date when the development consent that it modifies, was granted. In other words, just as s 68 of the Interpretation Act 1987 requires a reference to an Act to be construed as a reference to that Act " as in force for the time being " , but does not require the effect of any legislative amendment to be related back to the date of the original enactment, so s 96(4) is to be interpreted, according to its ordinary and natural sense, as requiring a reference to a development consent that has been subsequently modified to be construed as a reference to that consent as so modified from the date that the modification is granted .

105. I have dwelt on the question of the effect of s 96(4) at some length in the present case because of the importance to the known facts concerning the unlawful works carried out by the Respondents, namely the existence of the present civil enforcement proceedings and of criminal prosecutions brought against the Respondents for alleged offences committed against the Act. In such circumstances and assuming the approval of the Respondents' modification application, it would be vital to determine the effect of any modification of the Development Consent - in a word, does the modification entirely "blot out" or erase any breach of the EP&A Act (civil and criminal) arising from the operation of s 76A. In my opinion, the answer is clearly "no". However, this does not mean that any modification of the Development Consent that may hereafter be granted, would not have a potentially highly significant impact upon the question whether in the exercise of the Court's discretion, the relevant breach of the EP&A Act should be remedied.

106. Having concluded that it is legally possible for the Respondents' modification application to be granted approval even though the works, the subject of the application, have already been carried out, the further issue to arise in the present case is the fact that the unlawful works are greater in nature and extent than are the works detailed in the Respondents' pending modification application. The obvious discrepancy in these facts concerning the unlawful works is that even assuming that the Respondents' modification application were granted approval, there would remain unlawful works not covered by the modification. However, the problem is by no means incurable and could be remedied by a further modification application or an amendment of the existing application covering all of the unlawful works.

107. The foregoing discussion leads me to the conclusion that the unlawful works are capable of being regularised by the grant of approval to a modification application under s 96 of the EP&A Act, but that the Respondents' pending s 96 modification application does not cover the entire gamut of the unlawful works and in order that all those works be covered by any modification that may be granted to the Development Consent, a further modification application would need to be made in an attempt by the Respondents to regularise the proven breaches of the EP&A Act.

108. Another potential avenue for possible regularising of the situation is for the Respondents to make an application to the Council for the issue of a building certificate in terms of s 149A to 149G of the EP&A Act. Such an approach was held to be a means of "regularising" a breach situation in Ireland v Cessnock City Council (1999) 103 LGERA 285, where it was held that the Council (or the Court, on appeal) had the discretion to issue a building certificate in circumstances where the Council is not obliged to issue the certificate - see at p 299 to 300.

109. In the exercise of the wide judicial discretion conferred by s 124, I am of the opinion that it is appropriate in the present case to afford the Respondents the opportunity to seek to regularise the planning breach situation, thereby mollifying the effect of the mandatory injunction.

110. In so concluding, I have considered all my findings relevant to my decision not to withhold the injunctive relief claimed in the present case, but I have given particular weight to the facts concerning the nature and extent of the breaches of the EP&A Act, their environmental consequences and the Respondents' objective and subjective culpability in committing the breaches and the fact that most of the unlawful works were covered by the Respondents' s 96 modification application which was made in February 2000 but which remains undetermined by the Council, notwithstanding recommendations from Mr Guy and the Council's Inspection Committee that the application be approved. I have also considered the fact that the Council has resolved to institute criminal prosecutions against the Respondents for their carrying out of the unlawful works.

111. Effect can be given to my conclusion by suspending the mandatory injunction for a period of four months to enable the Respondents to pursue the task of seeking to regularise the planning breaches by appropriate applications to the Council (and if need be, by way of appeal to this Court). If the process has been diligently pursued by the Respondents but is not completed within the four month period of suspension, the Court could, on reasonable application, extend the period of suspension to enable the process to be regularly and fairly concluded.

112. For all the foregoing reasons, I am of the opinion that the proper exercise of the judicial discretion called for by the facts of the present case is to grant the declaratory and mandatory injunctive relief claimed by the Council but to suspend the operation of the injunction for a period of four months (with liberty to apply to extend the suspension) to provide the Respondents with the opportunity to make appropriate applications to the Council in an attempt to regularise the planning breach situation.

113. Accordingly, I make the following orders - 1. Declare that the Respondents have carried out on property known as 65 Sunnyside Crescent, Castlecrag, works as described under the heading "Works" in the Amended class 4 application filed on 9 August 2000, (a copy whereof is hereunto annexed and marked "A") in breach of Environmental Planning and Assessment Act 1979, s 76A(1). 2. Order that each of the Respondents, within 28 days of the date of these orders, execute the Rectification Works (as specified under the heading "Rectification Works" in the aforesaid Amended class 4 application) so as to remedy the aforesaid breaches of the Environmental Planning and Assessment Act 1979. 3. Suspend the operation of Order 2 for a period of four months so that the Respondents have the opportunity to make application to the Council to regularise the breach of the Environmental Planning and Assessment Act 1979 with liberty to apply on three days' notice for any reasonable necessary extension of the suspension. 4. The question of costs be reserved with liberty to apply on three days' notice. 5. The exhibits be 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.

67. As I have earlier noted, the Respondents called no evidence concerning the carrying out of the unlawful works other than their evidence concerning their mistaken belief that the Council's Inspection Committee had granted approval to their s 96 modification application on 29 May 2000 and the evidence of Mr Abdullah who had been sub-contracted by the Respondents to install the domestic air-conditioning system to the development.

68. In particular, the Respondents called no evidence in rebuttal of the evidence of the neighbouring residents corroborated by the expert opinion of Mr Donni of the perceived adverse environmental consequences of the unlawful works--namely privacy invasion (visual and aural) to several neighbouring properties.

69. In these circumstances, I accept the Council's unchallenged evidence and I am satisfied that the unlawful works do involve the adverse consequences that are deposed to in the Council's evidence. Those consequences are not considered to be highly significant or substantial, but they are not trifling and insignificant. They are of such a nature that would in appropriate circumstances, warrant a mandatory injunction for the carrying out of rectification works.

70. In this respect, it is further to be noted that the Respondents led no evidence that the mandatory injunction claimed would impose a disproportionate remedy or would otherwise cause the Respondents economic hardship.

71. I have earlier held that I have given the benefit of the doubt to the Respondents concerning their mistaken belief that the Council's Inspection Committee had on 29 May 2000 granted approval to their s 96 modification application. I put my finding this way because ultimately I do not know how the mistake occurred other than to say that it occurred through nothing that was done or omitted to be done by or on behalf of the Council.

72. Hitherto, I have not expressed any finding whether this belief was formed and held honestly and on reasonable grounds. Whereas I am prepared to find that the Respondents' mistaken belief was honestly held (again giving the Respondents the benefit of the doubt) I am not prepared to find that it was held on reasonable grounds, because the Respondents, as very experienced developers/builders, should in my judgment, should have acted more reasonably by requiring some written and formal notification of the approval, they believed to have been granted: cf Ziade v Woollahra Council (unreported Court of Appeal 28 April 1994) This is more especially so in the case of those works which were not specifically discussed (only three matters were discussed) at the on-site meeting held on 29 May 2000 in respect of which matters Mr Nicholas deposed (vide par 21 of his affidavit sworn 3 July 2000):

....In my opinion, the minutes and the resolutions passed addressed all of the matters the subject of the s 96 modification application. Matters not identified in the resolutions were matters not in dispute. (my emphasis).

73. Both as a matter of logic and reasonable common sense, it could not reasonably be concluded (whether mistakenly or otherwise) on any basis that resolutions approving works A, B and C also approved works D, E, F, G etc (being works that are unrelated to the approved works).

74. It follows that whereas I am prepared to find that some of the works (covered by the s 96 modification application) might honestly (but not reasonably) have been believed by the Respondents to have been approved on 29 May 2000, they could not honestly and reasonably have believed that all of the works covered by the s 96 modification had been so approved on that occasion.

75. Moreover, as I have earlier held following Mr Guy's instruction given to Mr Bechara on 23 June 2000 on the basis of his assertion that the s 96 modification application had not been approved, which instruction Mr Bechara openly disobeyed, there was no longer any honest or reasonable foundation for the Respondents' mistaken belief. Yet in these circumstances, the Respondents continued to carry out what is now accepted to be the unlawful works. This conduct, when considered in the light of the Respondents' long standing misconduct generally, in carrying out the development in breach of the Development Consent and Construction Certificate and in blatant disregard to what has been vindicated as legitimate protests raised by neighbouring residents, is telling evidence of misconduct by the Respondents involving a wilful disrespect for the authority of the Council and for the planning laws.

76. It was submitted, on behalf of the Respondents, that the evidence given by the neighbouring residents concerning the Respondents' misconduct was inadmissible because, according to the bold submission, the Respondents' misconduct was irrelevant to the exercise of the Court's discretion. The Respondents' submission was said to be supported by the oft cited judgment of the Full Court of the South Australian Supreme Court in Kouflidis v City of Salisbury (1982) 49 LGRA 17 and in particular, the following passages at 19-20 of the judgment of King CJ:

In my opinion, moreover, the past unlawful use is not a relevant factor in determining whether consent should be granted. That decision should be made upon the planning considerations envisaged by the Act and regulations irrespective of the past or continuing conduct of the applicant. I do not think that there is any warrant in the Act or regulations for refusing or deferring an application or appeal by reason of the unlawful conduct of the applicant.

The learned judge in the Land and Valuation Court was rightly concerned with the activities of a person who, cynically and fraudulently, changes the use of his or her land, and who hopes, by doing so, to present planning authorities with a fait accompli, and thus to extract a planning consent to the changed use. His Honour posed the question: How should such a person fare when his or her application comes to be considered at the administrative and judicial level? The answer, it seems to me, is that the unlawful use should be ignored. It does not enter into the planning considerations upon which the planning decision must be made. The punishment of the unlawful conduct should be left to criminal proceedings. The supposed fait accompli should not be recognized as such. The unlawful user of the land should gain no advantage from having established an unlawful use. Any argument based either directly or indirectly upon the unlawful use should be firmly rejected. For instance, the argument put in the present case that the patronage given the unlawful business by the public indicates a local demand for the facility and is a consideration in favour of planning consent, should be rejected as an attempt to gain an advantage from the unlawful use by erecting an argument on the basis of that unlawful use.

Although an applicant for consent should derive no advantage, direct of indirect, from the unlawful use, I do not think that it should be an impediment to the consideration of his application on its planning merits. If on the merits a planning consent should be given, it is desirable in the public interest that it should be given irrespective of the past conduct of the applicant. It is desirable that the position should be regularized leaving the past unlawful conduct to be punished by penal sanctions. Refusal to entertain an application while an unlawful use continues might result in a pointless impasse. A landowner who maintained, contrary to the planning authority's view, that his use of the land did not require consent, but who was willing to seek consent to avoid conflict, would be unable to obtain consent unless he first desisted from the disputed use, perhaps closed his business. If refusal to consider the application were confined to cases of cynical, fraudulent or manipulative conduct, the planning authority and the Planning Appeal Board would be required to inquire into and decide whether the conduct in a particular case answered that description. I do not think that a planning authority such as a council or an administrative appeals tribunal such as the board is equipped by its constitution or procedures to deal with allegations of improper motives. I think that the most expedient course, and that indicated by the Act and regulations, is for the administrative authorities and the courts to deal with the planning application on its planning merits, ignoring any arguments based directly or indirectly upon unlawful use and leaving the punishment of the unlawful conduct to penal proceedings.

77. In my judgment, the evidence of the Respondents' misconduct is relevant to the exercise of the Court's discretion. The reasoning in Kouflidis (which has been consistently applied by this Court in the exercise of its comprehensive appellate jurisdiction embracing planning appeals, building appeals, demolition order appeals and building certificate appeals) does not in my judgment, apply to misconduct of a party who seeks the favourable exercise of the Court's judicial discretion under the EP&A Act,. s 124.

78. In the context of the exercise of the statutory discretion conferred by s 124 which is analogous to the equitable remedy of injunction in aid of the enforcement of public law (cf Enfield City v Development Assessment Commission [2000] HCA 5; (2000) 199 CLR 135) the conduct of the parties will generally be a relevant consideration in the exercise of the judicial discretion.

79. As I have already found, the Respondents are guilty of relevant misconduct in their blatant and cavalier disregard of the Council's authority and of the planning laws and in their aggressive and anti-social conduct directed the neighbouring residents who were legitimately protesting that the Respondents were consistently and wilfully deviating from the approved plans.

80. Weighing all the foregoing findings in the balance, I am of the clear opinion that the case for granting injunctive relief is far stronger than is the case for withholding that relief altogether.

81. Accordingly, I propose to exercise my judicial discretion by granting the injunctive relief claimed, subject however, to my consideration (which immediately follows) of the question whether that relief should be reasonably mollified and if so, to what extent.

E. SHOULD THE INJUNCTIVE RELIEF BE MOLLIFIED BY GIVING THE RESPONDENTS THE OPPORTUNITY TO REGULARISE THE UNLAWFUL WORKS?

82. The question necessarily arises because it has long been established that it is relevant to the wide judicial discretion conferred upon the Court by the EP&A Act, s 124. A typical formulation of the relevant question and an insightful illustration of how the judicial discretion is to be exercised is found in the following passage from the judgment of Stein JA (with which the other Judges of Appeal concurred) in Tynan v Meharg (1998) 101 LGERA 255 at 259:--

Whether any injunction should be softened or mollified by suspending its operation in order to allow the appellants the opportunity to make fresh applications to the council to regularise the situation. This was rejected by Sheahan J and, I think, rightly so. That the building had been erected in a location where it was not permitted was known to the appellants from around July 1995. They had more than ample opportunity from that time until today to make the necessary application for development consent and building approval. For whatever reason, they have not done so. The practice of the Land and Environment Court, if an application for consent or approval is made before class 4 civil enforcement proceedings have been heard, is to defer those proceedings until the merits application is determined. Even since the judgment by Sheahan J on 13 February 1998 the opportunity has been available to the appellants, which they have chosen not to pursue. In my opinion, little weight should be given to this aspect. In any event, the stay granted by Sheahan J, which has been extended to 1 October 1998, has, in effect, suspended the order for almost eight months.

83. Despite the obvious force of the Council's submission that in view of the Respondents' outright rejection of the Council's settlement offer made in its letters of 4 July 2000 and 5 July 2000 before the commencement of hearing, it is no longer appropriate to afford the Respondents the opportunity to regularise the planning breach situation, I am of the opinion that it is neither too late, nor is it inappropriate to consider the question of providing the Respondents with the opportunity to seek, by whatever appropriate means that may be available, to regularise the situation.

84. The question of the means of regularising the situation has been debated chiefly by reference to the Respondents' s 96 modification application which remains undetermined by the Council. A number of issues arise in this regard, but the most significant is whether it remains legally possible for approval to be granted in view of the fact that all of the works, the subject of the application, have already been carried out by the Respondents.

85. The Council's position as evidenced in their Solicitor's letters of 4 and 5 July 2000 to the Respondents' Solicitors is that it is not legally possible for approval to be granted in circumstances where the relevant works have already been executed. This position was adhered to in argument with the Council placing ultimate reliance upon the decision of Sheahan J in Herbert v Warringah Council (1997) 98 LGERA 270, where his Honour held at 278 that the modification power conferred by the EP&A Act, s 102 (since repealed but substantially re-enacted as s 96) was not available to modify a development consent where the works referred to in the application have already been carried out.

86. The Respondents submitted that Herbert was wrongly decided and should not be followed. The Council submitted that Herbert was correct and should be followed.

87. Since reserving my judgment in the present case, this Court has reconsidered the question whether the statutory modification power is available in a case where the works, the subject of the modification application, have already been carried out. Talbot J in Windy Dropdown Pty Ltd v Warringah Council [2000] NSWLEC 240 (unreported 17 November 2000) has now held that the statutory modification power is available in a case where the development has already been carried out.

88. In the course of his fully reasoned judgment, Talbot J discusses a number of the earlier decisions of this Court on the question, including Herbert, which his Honour considered to involve, upon analysis, no more than following the earlier decision of the Chief Judge in Connell v Armidale City Council (unreported 25 September 1996), a decision which Talbot J noted (par 14) to be extempore in which the Chief Judge "was hampered by the circumstance that Mr Connell appeared without legal representation, a fact which she lamented in the judgment at p 4".

89. In contrast, in Windy Dropdown, Talbot J acknowledged that he had had the benefit of "full argument and submissions from Counsel representing both parties": par 15.

90. This being the current state of conflicting authority in this Court on the question, it becomes necessary for me to decide how the question is to be determined in the present case.

91. But for the supervening judgment of Talbot J in Windy Dropdown, I would, I think, have been disposed in the interests of judicial comity and certainty in the law to have adopted the existing settled state of authority in this Court as exemplified in the decision of Sheahan J in Herbert which had recently been cited in the judgment of Handley JA, sitting singly in the Court of Appeal, in Tynan v Meharg (No 2) (1998) 102 LGERA 119, where his Honour said at 121:

Development consent may regularise for the future what had hitherto been an unlawful use of land or buildings, but the line of authority in the Land and Environment Court or its predecessor which was analysed by Sheahan J in Herbert establishes that these powers were not available, prior to Act No 152 of 1997, to regularise the unlawful erection of a structure.

92. The reference by Handley JA to Act No 152 of 1997 is a reference to the powers now contained in the EP&A Act, s 149A to s 149G relating to the issue of building certificates.

93. In context, I do not think that Handley JA's reference to Herbert can be taken as a clear and deliberate endorsement of the actual decision in Herbert holding that the statutory modification power was not available in a case where the works had already been carried out. This is because "the line of authority" so referred to, going back to the predecessor of this Court, could not have included the statutory modification power because it simply did not exist under the planning laws that were in force prior to the enactment of the EP&A Act.

94. Having considered for myself the competing authorities in this Court, I would respectfully agree with Talbot J's conclusion that the power of modification conferred by the EP&A Act, s 96 construed in its context and having regard to its obvious purpose in the legislative scheme, is available even in a case where the relevant works have already been carried out. The proper effect of s 96 is principally to be found in the language of that section rather than in the text of other provisions of the EP&A Act, most notably s 76A and s 124(3) and in the legislative policy that has been discerned therein. Those sections deal with the question of the need for development consent, but in view of the express terms of s 96(4) reference to those sections is not a likely source of illumination of the true meaning of s 96.

95. Moreover, s 96 is a "facultative" provision of the Act to which s 76A is expressly declared to be subject: vide s 76C cf North Sydney Council v Michael Standley and Associates Pty Limited [1998] NSWSC 163; (1997) 97 LGERA 433 dealing with the modification power contained in the predecessor s 102 of the EP&A Act.

96. In Michael Standley, the President observed at 445 in reference to the EP&A Act s 76 (now re-enacted as s 76A):

I see no reason why the opening words Subject to this Act are not sufficient to ensure this result, because they allow s 102 to operate according to its terms, thereby lifting the prima facie prohibitory operation of the balance of the subsection: see also Valhalla Cinemas Pty Ltd v Leichhardt Municipal Council (1986) 60 LGRA 240 at 246.

97. This holding, in my respectful opinion, means that any relevant prohibition in s 76A is to be read subject to any modification that may be granted pursuant to s 96 to a relevant development consent.

98. The facts of the present case provide an apt illustration of the relationship between s 76A and s 96.

99. As I have already held, the "unlawful works" attain that status by virtue of the operation of s 76A because although the development was approved by the Development Consent and the Construction Certificate, the works deviating from the approved plans were "not carried out in accordance with the conditions of the consent" and hence created a breach of the Act. However, assume that the modification application be now approved. The result would be that by dint of the exercise of the modification power, the relevant prohibition contained in s 76A(1) no longer would operate.

100. However, the question immediately arises at what point of time would the prohibitory effect of s 76A(1) yield to the modification approval? On this question, there are two possible answers, depending upon the construction to be given to s 96(4).

101. One is that the modification approval is effectively related back to the grant of the development consent that it modifies. This is the view of Talbot J in Windy Dropdown as I would respectfully understand his judgment, when he states the following proposition at par 31:

The effect of s 96(4) is that any development already carried out in conformity with the consent as modified is deemed to have been carried out in accordance with the consent so modified. On that basis, no conflict with s 76A will arise as the development is deemed to have been carried out pursuant to a consent.

102. The competing answer, and the one that I would respectfully prefer, is that the modification is effective to oust the prohibitory effect of s 76A but only from the date that the modification is granted.

Modification of a development consent in accordance with this section is not to be construed as the granting of development consent under this Part but a reference in this or any other Act to a development consent is a reference to the development consent so modified.

104. In my opinion, the second clause in s 96(4) is a conventional "referential" provision, having conventional effect such as is provided in the Interpretation Act 1987, s 68: cf Interpretation Act 1897, s 25 as applied by the Court of Appeal in Albury City v North Albury Shopping Centre Pty Ltd (1985) 1 NSWLR 220. Its meaning is, I think, quite clear, namely that whenever a development consent is modified, any reference contained in the EP&A Act (eg s 76A and s 122) or any other Act to the development consent is to be construed as a reference to the development consent as so modified. However, this does not require a fictional relation back of the modification to the date when the development consent that it modifies, was granted. In other words, just as s 68 of the Interpretation Act 1987 requires a reference to an Act to be construed as a reference to that Act "as in force for the time being_"_, but does not require the effect of any legislative amendment to be related back to the date of the original enactment, so s 96(4) is to be interpreted, according to its ordinary and natural sense, as requiring a reference to a development consent that has been subsequently modified to be construed as a reference to that consent as so modified from the date that the modification is granted.

105. I have dwelt on the question of the effect of s 96(4) at some length in the present case because of the importance to the known facts concerning the unlawful works carried out by the Respondents, namely the existence of the present civil enforcement proceedings and of criminal prosecutions brought against the Respondents for alleged offences committed against the Act. In such circumstances and assuming the approval of the Respondents' modification application, it would be vital to determine the effect of any modification of the Development Consent--in a word, does the modification entirely "blot out" or erase any breach of the EP&A Act (civil and criminal) arising from the operation of s 76A. In my opinion, the answer is clearly "no". However, this does not mean that any modification of the Development Consent that may hereafter be granted, would not have a potentially highly significant impact upon the question whether in the exercise of the Court's discretion, the relevant breach of the EP&A Act should be remedied.

106. Having concluded that it is legally possible for the Respondents' modification application to be granted approval even though the works, the subject of the application, have already been carried out, the further issue to arise in the present case is the fact that the unlawful works are greater in nature and extent than are the works detailed in the Respondents' pending modification application. The obvious discrepancy in these facts concerning the unlawful works is that even assuming that the Respondents' modification application were granted approval, there would remain unlawful works not covered by the modification. However, the problem is by no means incurable and could be remedied by a further modification application or an amendment of the existing application covering all of the unlawful works.

107. The foregoing discussion leads me to the conclusion that the unlawful works are capable of being regularised by the grant of approval to a modification application under s 96 of the EP&A Act, but that the Respondents' pending s 96 modification application does not cover the entire gamut of the unlawful works and in order that all those works be covered by any modification that may be granted to the Development Consent, a further modification application would need to be made in an attempt by the Respondents to regularise the proven breaches of the EP&A Act.

108. Another potential avenue for possible regularising of the situation is for the Respondents to make an application to the Council for the issue of a building certificate in terms of s 149A to 149G of the EP&A Act. Such an approach was held to be a means of "regularising" a breach situation in Ireland v Cessnock City Council [1999] NSWLEC 153; (1999) 103 LGERA 285, where it was held that the Council (or the Court, on appeal) had the discretion to issue a building certificate in circumstances where the Council is not obliged to issue the certificate--see at p 299 to 300.

109. In the exercise of the wide judicial discretion conferred by s 124, I am of the opinion that it is appropriate in the present case to afford the Respondents the opportunity to seek to regularise the planning breach situation, thereby mollifying the effect of the mandatory injunction.

110. In so concluding, I have considered all my findings relevant to my decision not to withhold the injunctive relief claimed in the present case, but I have given particular weight to the facts concerning the nature and extent of the breaches of the EP&A Act, their environmental consequences and the Respondents' objective and subjective culpability in committing the breaches and the fact that most of the unlawful works were covered by the Respondents' s 96 modification application which was made in February 2000 but which remains undetermined by the Council, notwithstanding recommendations from Mr Guy and the Council's Inspection Committee that the application be approved. I have also considered the fact that the Council has resolved to institute criminal prosecutions against the Respondents for their carrying out of the unlawful works.

111. Effect can be given to my conclusion by suspending the mandatory injunction for a period of four months to enable the Respondents to pursue the task of seeking to regularise the planning breaches by appropriate applications to the Council (and if need be, by way of appeal to this Court). If the process has been diligently pursued by the Respondents but is not completed within the four month period of suspension, the Court could, on reasonable application, extend the period of suspension to enable the process to be regularly and fairly concluded.

112. For all the foregoing reasons, I am of the opinion that the proper exercise of the judicial discretion called for by the facts of the present case is to grant the declaratory and mandatory injunctive relief claimed by the Council but to suspend the operation of the injunction for a period of four months (with liberty to apply to extend the suspension) to provide the Respondents with the opportunity to make appropriate applications to the Council in an attempt to regularise the planning breach situation.

1. Declare that the Respondents have carried out on property known as 65 Sunnyside Crescent, Castlecrag, works as described under the heading "Works" in the Amended class 4 application filed on 9 August 2000, (a copy whereof is hereunto annexed and marked "A") in breach of Environmental Planning and Assessment Act 1979, s 76A(1).

2. Order that each of the Respondents, within 28 days of the date of these orders, execute the Rectification Works (as specified under the heading "Rectification Works" in the aforesaid Amended class 4 application) so as to remedy the aforesaid breaches of the Environmental Planning and Assessment Act 1979.

3. Suspend the operation of Order 2 for a period of four months so that the Respondents have the opportunity to make application to the Council to regularise the breach of the Environmental Planning and Assessment Act 1979 with liberty to apply on three days' notice for any reasonable necessary extension of the suspension.

4. The question of costs be reserved with liberty to apply on three days' notice.

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