COUNCIL OF THE SHIRE OF WARRINGAH v JENNINGS GROUP LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, CLARKE and Cripps JJA 21 April 1992, 18 June 1992 [1992] NSWCA 50 TOWN PLANNING — development application — model or exhibition home — residential A zone — whether prohibited development as "commercial premises" — local authority refuses development consent claims that development is prohibited being for "commercial premises" — on application to the Land and Environment Court, Bannon J holds that "commercial premises" exclude dwelling houses, whether used as dwellings or not — held: (On appeal to the Court of Appeal) (per Cripps JA; Clarke JA concurring; Kirby P dissenting): Upon a true construction of "commercial premises" as applied to zone 2(a) under CL9 of the Warringah Local Environmental Plan as defined in CLS of the plan, the subject premises, being used for a commercial purpose, they were a prohibited development and the local authority could give no consent for such use — appeal allowed. Foodbarn Pty Ltd v The Solicitor General (1975) 32 LGRA 157 (CA) applied; Leichhardt Municipal Council v Mansfield (1985) 57 LGRA 214 (CA) considered. Environmental Planning and Assessment Act 1979, s76. Warringah Local Environmental Plan 1985, CLS, CL9. Kirby P In the expanding sprawl of the suburbs of a modern metropolis, it is not uncommon to see exhibition or model homes. Model or exhibition homes: a prohibited use Typically, such homes are displayed in a prominent position in housing developments awaiting the erection of new dwellings built according to designs chosen by the purchasers. Typically, they provide a place to which potential purchasers can come to inspect the neighbourhood, assess the facilities, view such homes as have been erected by earlier purchasers, choose a design amongst several on offer, negotiate finance and commit themselves to the erection of a new dwelling house of their choice on a nearby lot or the acquisition of a dwelling already erected. The exhibition model home usually provides an office. But it also provides for the potential purchasers an idea or a concept of what the home, formulating in their minds, might look like when completed nearby. Because, in this way, exhibition or model homes tend to make real the dreams and aspirations of purchasers, often of the first home they own, they fulfil a useful purpose, as anyone having contact with members of the younger generation of modest means will be aware. Those without financial difficulties can purchase already developed properties in well established suburbs. Exhibition or model homes tend to be built on the outskirts of a metropolis and, typically, in new suburbs, often at relatively modest cost. The Court was told in this appeal of the western suburbs of Sydney where exhibition or model homes are permanently on display. But generally, as common experience indicates, exhibition or model homes simply provide the developer with an office on the edge of its development. When most, or all, of the allotments are sold (or perhaps in advance of that event) the exhibition or model home is 2 UNREPORTED JUDGMENTS itself sold. Its role as a model home is finished. Its occupiers join the other residents. After a short time, no one remembers the use of the dwelling, which looks like any other, as an exhibition or model home. Indeed, its appearance and harmony with the environment is the very purpose for which it is chosen as a model. If the argument of the appellant in this case is correct, this useful facility of exhibition or model homes is prohibited entirely in virtually the whole of its local government area and specifically in all land zoned 2(a) (Residential "A" zone). People who wish to purchase new dwelling houses in areas developed for that purpose within the Warringah Shire would be obliged to travel elsewhere, perhaps to the far western suburbs to inspect a permanent exhibition or model home. Or they would be obliged to satisfy themselves with their unadorned imaginings. For in the Residential A zone of the appellant's shire such a development, by way of an exhibition or model home, would be absolutely prohibited. The Council could not even given consent if it wished to. This result appears, at first blush, to be a surprising one, and as I would think, undesirable. But such are the uncertainties of planning law that surprising results happen all the time. Accordingly, the only prudent way to approach the problem tendered to the Court by the appeal is to examine the applicable planning instrument, applying to it the ordinary rules which govern the interpretation of subordinate legislation, of which it is an example. To the familiar rules which are applied every day in this Court in its function of giving meaning to legislation enacted by Parliament, it is appropriate to add in this context the observations of Lord Reid in Gill vy Donald Humberstone and Co Limited 1963 1 WLR 929, 923f (HL). His Lordship there said that, when interpreting delegated legislation, a court should be concerned chiefly with practical considerations rather than with an over meticulous analysis of the language such as might be appropriate in construing an Act of Parliament. If the language, as interpreted, is capable of more than one interpretation, a court ought to discard the meaning which leads to an unreasonable result. It ought to adopt the interpretation which leads to the reasonably practical result, that being the imputed intention of the rule maker. See also Driscoll v J Scott Pty Ltd (1976) 50 ALJR 528, 531; Hecar Investments No 6 Pty Ltd v Lake Macquarie Municipal Council (1984) 53 LGRA 322 (LEC, Cripps J) at 323. The relevant provisions of the Act By s76 of the Environmental Planning and Assessment Act 1979 (the Act) it is provided: "76(1)Subject to this Act, where an environmental planning instrument provides that development specified therein may be carried out without the necessity for consent under this Act being obtained therefor, a person shall not carry out that development on land to which that provision applies except in accordance with the provisions of that instrument. (2)Subject to this Act, where an environmental planning instrument provides that development specified therein may not be carried out except with consent under this Act being obtained therefor, a person shall not carry out that development on land to which that provision applies unless (a) that consent has been obtained and is in force under this Act; and (b) the development is carried out in accordance with the provisions of any conditions subject to which that consent was granted and of that instrument. URJCOUNCIL OF THE SHIRE OF WARRINGAH v JENNINGS GROUP LTD (Kirby P) 3 (3) Subject to this Act, where an environmental planning instrument provides that development specified therein is prohibited, a person shall not carry out that development on land to which the provision applies. By s4 of the Act, it is provided that, except so far as the context or subject matter otherwise indicates or requires, the following meaning is given to the word "development" as used in the Act in relation to land: "'Development' in relation to land, means (a) the erection of a building on that land; (b) the carrying out of a work in, on, over or under that land; (c) the use of that land or of a building or work on that land; and (d) the subdivision of that land. In the same section "environmental planning instrument" is defined to include a local environmental plan. In 1985, the then Minister for Planning and Environment, in pursuance of s70 of the Act, made the Warringah Local Environmental Plan 1985. The issue before this Court has concerned the meaning and application of that plan. The relevant facts concerning the dispute between the parties are not in doubt. They are set out in the reasons of Bannon J who made the declaration sought by the developer, Jennings Group Limited (the respondent). It is this declaration which is the subject of the appeal. The Warringah Shire Council (the appellant) initially refused consent to a development application lodged by the respondent in July 1991 in respect of a dwelling house at Bangalow Avenue, Mona Vale. The development application disclosed that it was the purpose of the respondent to use the dwelling house as a temporary display or exhibition home. The appellant rejected the application in August 1991 upon the stated ground that the use disclosed in the proposal was a prohibited use within the residential zone in question. It was agreed between the parties that the applicable zone was zone 2(a) under the Warringah Local Environmental Plan. The appellant asserted that it had not power to grant consent. The respondent thereupon applied to the Land and Environment Court. Bannon J made a declaration that the use of the land for the purpose of a display home was permissible under the provisions of the plan. He committed to the appellant the decision of whether or not consent should be provided on the merits and, if so, upon what terms and conditions. Cf Windsor Homes (Promotions) Pty Ltd v Warringah Shire Council (1970) 19 LGRA 223. However, the appellant has challenged his Honour's interpretation of the plan by an appeal against the declaration which he made. It is that appeal which is now before this Court. According to evidence received before Bannon J, and not in contest, the respondent proposed to build the dwelling house and to use it, at first, as an exhibition or model home. The premises would be open to the public at set times. A receptionist, stationed at the home, would be employed to answer queries, act as a guide and show plans and brochures to prospective customers. The receptionist would sit with a desk in the garage portion of the proposed dwelling. It seems that the building of the dwelling went ahead. It was completed during the course of this litigation. The argument proceeded upon the basis that the respondent, which builds about one thousand to one thousand five hundred homes in the State each year, would use this dwelling as an exhibition or model home for a limited period. In this case, the respondent sought the agreement of the appellant for such use for one year. But it contemplated a possible extension of the use for another year, if the appellant so approved. The following evidence 4 UNREPORTED JUDGMENTS was given: "Q: What happens with the dwelling at the expiration of the period, whatever it may be? A: Quite often the dwelling is sold whilst it is - mostly it is sold while it is a display home and then Jennings pays, I mean it leases it from the owner and then the owner usually moves in after that or may rent it to someone else but I mean usually we sell it to people who want to live in that house but not immediately." The issue argued in the appeal was whether Bannon J had erred in law in the construction he gave to the meaning of the local environmental plan as it applied to the development proposed by the respondent. The relevant provisions of the planning instrument The relevant provisions of the plan in relation to the applicable zone (zone number 2(a) (Residential "A") are as follows: "9. Except as otherwise provided in this plan, in relation to land within a zone specified in the table to this clause, the purposes (if any) for which (a) development may be carried out without development consent; (b) development may be carried out only with development consent; and (c) development is prohibited, are specified under the headings 'Without development consent', 'Only with development consent and 'Prohibited' respectively, appearing in the matter relating to the zone." Relevantly, in respect of zone 2(a), the following specifications appear: "1, Without Development Consent Dwelling houses (other than dwelling houses on land referred to in CL17(2)(b)) 2. Only with development consent Any purpose other than a purpose for which development may be carried out without development consent or a purpose for which development is prohibited 3. Prohibited Attached dwellings; boarding houses; bulk stores; car repair stations; caravan parks; commercial premises; generating works; group buildings... helipads; heliports; industries; institutions; junk yards; liquid fuel depots; mines; motels; motor showrooms; places of assembly; etc... warehouses." The appellant contends that the development proposed constitutes "commercial premises" and is thus prohibited. Bannon J held that the use of the subject premises as a display home was a separate commercial use "for clearly defines purposes of advertising in the course of trade'. Originally, by its written submissions, the respondent argued that use of the dwelling house as an exhibition home would not constitute its use as "commercial premises". Reference was placed on the decision of Hardie J in 729 Club Limited v North Sydney Municipal Council (1963) 10 LGRA 107, 115 (LVC). However, this argument was abandoned during the hearing of the appeal. Accordingly, it is appropriate, as the parties did, to accept Bannon J's determination that the subject premises would, as a display or exhibition home, become "commercial premises" within the general meaning of that phase. The question remains whether they are "commercial premises" within para 3 of the applicable zone in the applicable plan. To answer that question, it is insufficient to characterise the premises by the application of the phrase "commercial premises" in its ordinary denotation. The Warringah Local Environmental Plan offers a number of specific definitions in CLS which "except insofar as the context or subject matter otherwise indicates or requires" provide the meanings to be assigned to the words where used in the URJCOUNCIL OF THE SHIRE OF WARRINGAH v JENNINGS GROUP LTD (Kirby P) 5 plan. Given the highly technical nature of this area of the law, the only safe course is to stick to the defined meanings. "Commercial premises" are defined by CLS as follows: "°Commercial premises' means a building or place used as an office or for other business or commercial purposes, but does not include a building or place elsewhere specifically defined in this clause or a building or place used for a purpose elsewhere specifically defined in this clause." Amongst the buildings or places elsewhere specifically defined in CLS of the plan is "dwelling house". This is defined as follows: "Dwelling house' means a building containing 1 but not more than 1 dwelling." and "dwelling" is defined: "°Dwelling' means a room or suite of rooms occupied or used or so constructed or adapted as to be capable of being occupied or used as a separate domicile." The first part of the definition of "commercial premises" would therefore, upon the basis of Bannon J's holding which is not now challenged, catch the subject premises. They are by that holding, a "building... used as an office or for other business or commercial purposes". However, the question remains whether the definition is rendered inapplicable by the exclusion which follows. Is the building "elsewhere specifically defined in this clause"? Alternatively, is it "a building... used for a purpose elsewhere specifically defined in this cause". Used as an exhibition or model home, the building is not, within the second part of that exclusion, "used for a purpose elsewhere specifically defined" in CL5 of the plan. It is not used as a "dwelling house'. On the contrary, it is used as a exhibition or model home, as found, for the purpose of trade. But that leaves the first basis upon which premises, otherwise "commercial premises" as defined, would drop out of the definition, namely if they were a: "\.. building... elsewhere specifically defined in this clause." The requirement to consider hypothetical capability One such specific definition is a "dwelling house" which incorporates the definition of a "dwelling". That definition, in turn, addresses attention to the actual occupation or use but also to the capability of the "room or suite of rooms" of "being occupied or used as a separate domicile". The importance of this distinction has been drawn to attention in earlier decisions of this Court. In Leichhardt Municipal Council v Mansfield (1985) 57 LGRA 214 the phrase under consideration was the definition of "dwelling house" in the Environmental Planning and Assessment Model Provisions 1980, CL4. That term was adopted by, and repeated in, the Leichhardt Local Environmental Plan. In turn, that plan imported the word "dwelling". This was defined as a room or suite of rooms occupied or used or so constructed or adapted as to be capable of being occupied or used as a separate domicile. This Court held that the Assessor of the Land and Environment Court had erred in law in construing the term "professional consulting rooms" by failing to consider the necessary hypothetical test of whether there was, on the ground floor of the building, a room or suite of rooms "so constructed or adapted as to be capable of being occupied or used" as a separate domicile. In Mansfield, my reasons enjoyed the concurrence of Hope and McHugh JJA. At 221 of the report, I said: "\.. The fact that the definition envisages that the whole of the dwelling house may be used as professional consulting rooms indicates that, in some cases, no part of the dwelling house will be used, in fact, as a separate domicile. But that 6 UNREPORTED JUDGMENTS simply indicates that in a number of instances, the test as to whether the model provisions have been complied with will necessitate the hypothetical question being asked. In cases where the whole of the premises are used as professional consulting rooms, at least, there will be no room or suite of rooms actually occupied or used as a separate domicile. Accordingly, the definition used contemplates that, in such cases, regard should be had to the hypothetical test of whether there is within the dwelling a room or suite of rooms 'so constructed or adapted as to be capable of being occupied or used' as a separate domicile." The presumed purpose of confining permissible 'professional consulting rooms' to a 'dwelling house' and then limiting 'dwelling house' to a building containing one, but not more than one, dwelling, can be understood if the general objects of the limited nature, organisation and size of the professional practice permitted by the definition of 'professional consulting rooms' are kept in mind. In part, the object may be to prevent large scale or multiple professional practises which could alter the character of the neighbourhood. In part, it may be to impose a limitation upon the loss of premises capable of being used as a separate domicile. Counsel for the appellant conceded that the policy might appear 'quaint'. It might or might not be so. Whatever it is, the Court must give meaning to the words used. It would be easier to do so if the policy emerged more clearly from those words." This holding applies to the present case. The words of capability contained in the definition of "dwelling", imported in turn in the definition of "dwelling house", cannot be ignored. Applied to the instant building, there is no doubt that it is one which contains one but not more than one dwelling, in the sense of a room or suite of rooms capable of being occupied or used as a separate domicile. The fact that it is not at present being so occupied or used is not determinative of its capability. That capability renders the building in question one which is specifically defined in CLS the definition clause, of the Warringah Local Environmental Plan. It thus excludes the building in question from the definition of "commercial premises" contained in that clause. Accordingly, where "commercial premises" appear in the list of developments which are prohibited within the subject zone, that prohibition is inapplicable in the present case. It is inapplicable because "commercial premises", where there appearing, enjoy a special definition which does not apply to these premises. Conclusion: the development is permitted with consent The foregoing conclusion is sufficient to uphold the declaration made by Bannon J. The respondent did not contend that it was entitled to proceed with the subject development without development consent. It acknowledged that its building was not a "dwelling house" within the first paragraph of the provisions applicable to zone 2(a), not being a "dwelling house" actually to be occupied or used as such, at least initially. Iam prepared to accept that concession, without determining whether it is correct. Accordingly, the premises not being a "dwelling house" capable of being developed without development consent and not being "commercial premises", the only ground upon which it was suggested the development was prohibited within CL3, it was a development falling within CL2. It was thus one permitted only with development consent. That development consent was reserved to the appellant. It was up to it to decide whether or not to grant or refuse it on its merits and if granted to decide any conditions which it might lawfully specify. URGOUNCIL OF THE SHIRE OF WARRINGAH v JENNINGS GROUP LTD (Cripps JA) 7 The result of this analysis, which follows from the language of the plan, is neither surprising nor subversive of the plan's purpose. It permits the useful facility of exhibition or model homes within the Shire, subject to the consent of the appellant and to any conditions which it may properly attach. It does not place the provision of such consent beyond the power of the appellant, as its argument suggested. It involves no affront to the residential purposes of zone 2(a). It is always necessary for the dwelling house to be constituted by a "dwelling" and for such premises either to be actually occupied or used or capable of being occupied or used as a separate domicile. This assures that such "dwelling" will be built in harmony with the dwelling houses in a Residential "A" zone. The mistake of the Council was the same mistake as was made by the Leichhardt Municipal Council in Mansfield. It looked only to the actual use of the premises the subject of the development application. It ignored the alternative consideration in the definition addressed to whether the dwelling was so "constructed or adapted as to be capable of being occupied or used" as a separate domicile. This the subject premises undoubtedly were. Ample protection against the misuse or undue prolongation of a commercial use of the dwelling within the zone is provided by the obligation, acknowledged by the respondent, to secure the development consent of the Council and to submit to its lawful conditions. Order Accordingly, I believe that the declaration made by Bannon J was correct. The appeal should be therefore be dismissed with costs. Clarke JA I agree with the orders and reasons of Cripps JA. Cripps JA This is an appeal from a decision of Bannon J in the Class 4 jurisdiction in the Land and Environment Court declaring that the use of land at Mona Vale for the purpose of a display home was permissible with the consent of the Warringah Shire Council (the Council) under the provisions of the Warringah Local Environmental Plan 1985 (WLEP). The matter came before the Land and Environment Court in the following way. AV Jennings Pty Ltd (the Developer) sought development consent for the use of the subject land to display a project home. The Council refused consent claiming the use was prohibited under WLEP. At the time the matter came before Bannon J, the house had been partly constructed. Now, we are told, it is finished. The Council does not dispute that it was lawful for the Developer to erect the house without development consent provided it had building approval, which it did. It submits, however, that although it was lawful to erect the house, the WLEP absolutely prohibited its use for a temporary period as a display home. The evidence before Bannon J was that the house would be used for display purposes for one or two years after which it would be sold to people wishing to live in it. CL9 of WLEP provides that in relation to land specified in the Table to the clause the purposes (if any) for which (a) (a)development may be carried out without development consent; (b) development may be carried out only with development consent; and (c) development is prohibited, are specified under the headings "Without Development Consent", "Only with Development Consent" and "Prohibited", respectively appearing in the matter relating to the zone. The subject land is in zone No 2 (a) (RESIDENTIAL "A"). Under the heading "Only with Development Consent" is the following: "Any purpose other than a purpose for which development may be carried out without development consent or a purpose for which development is prohibited". 8 UNREPORTED JUDGMENTS Dwelling houses are lawful without development consent. Under the heading "Prohibited" is a list of nominated defined uses, one being "commercial premises". CLS of WLEP provides that except in so far as the context or subject matter otherwise indicates or requires: "°Commercial premises' means a building or place used as an office or for other business or commercial purposes but does not include a building or place elsewhere specifically defined in this clause or a building or place used for a purpose elsewhere specifically defined in this clause". "°Dwelling' means a room or suite of rooms occupied or used or so constructed or adapted as to be capable of being occupied or used as a separate domicile". "'Dwelling house' means a building containing one but not more than one dwelling". Bannon J held that the present use of the land and house is a use for a commercial purpose and that finding has not been challenged. He held that the present use did not fall within the nominated prohibited category of "commercial premises" (that being the only one relied on by the Council) because it came within the exclusion "a building or place elsewhere specifically defined" by reason of the fact that it was a suite of rooms "constructed... as to be capable of being occupied or used as a separate domicile". Mr Tobias QC, on behalf of the Council, submits that, properly understood, the instrument, although permitting the erection and use of a dwelling houses without the need for development consent, prohibits its use after erection for a commercial purpose of a display home. He submits that the words "building or place elsewhere specifically defined" do not, and are not intended, to include the use of that building or place. He submits that, having determined to exclude commercial purposes generally in the zone by reference to the definition of "commercial premises" and other nominated prohibited uses, it would be a strange result to exclude from the prohibited purposes the very type of commercial activity to which the definition of "commercial premises" is directed. He also submits that it is clear from the instrument read as a whole that the drafters sought generally to prohibit commercial type uses in residential zones. It is a mistake, in my opinion, to seek to interpret the provisions of the instrument by reference to the nominated uses under the heading "Prohibited" in zone 2(a). Permissible uses under the heading "Only with Development Consent" are not confined to those uses defined by CLS and which are not prohibited. Furthermore, on any view of the matter, it could not be said that it was the intention of the drafter of the instrument that all commercial activities are to be prohibited in zone 2(a). For example, hotels and buildings used for offices for administrative purposes by statutory bodies such as Elcom are permissible with the consent of the Council. It would seem to me, however, that the question has been answered by this Court in Food Barn Pty Ltd v The Solicitor General 1975 32 LGRA 157. In Food Barn Pty Ltd the Court of Appeal was concerned, inter alia, with whether a "warehouse" as defined was excluded from the definition of "shop" as defined. Shop was defined to mean: "A building or place used or intended to be used for the purpose of selling, exposing or offering for sale by retail goods, merchandise or materials, but does not include a building or place elsewhere specifically defined in this clause or a building or place used or intended for use for a purpose elsewhere specifically defined in this clause or for a roadside stall". URGOUNCIL OF THE SHIRE OF WARRINGAH v JENNINGS GROUP LTD (Cripps JA) 9 Warehouse was defined to mean: "A building or place used or intended for use for the storage of goods, merchandise or materials pending their sale and distribution to persons engaged in the retail trade". At 161 Glass JA (with whom Samuels and Hutley JJA agreed) said: "The last submission was based upon the finding of the trial judge that a substantial use to which the premises were being put brought them within the definition of warehouse. From this starting point it was argued that in the definition of shop the concluding phrase, 'for a purpose' should be construed in the same way as 'for the purpose' in the opening words. On this footing a building used inter alia for a purpose elsewhere specifically defined in the clause, viz a warehouse fell within the proviso and was therefore not a shop. In my opinion this construction does violence to the logical structure of the definition. There are purposes specifically defined in CL4 such as place of public worship, educational establishment, hospital and dwelling house which could not possibly fall within the purpose of selling by retail. There are others such as general store, refreshment rooms, hotel and service stations which could. Warehouse belongs to the former group. It could not have been intended to exclude from the genus of shop purposes, purposes which would not have been included in any event. The clear intention is to exclude purposes which would otherwise be a species of that genus. Shop was to include all shops except shops specially defined". In CLS of the WLEP there are a number of definitions referable to commercial purposes. Some are specifically defined as, for example, an "hotel". Some are defined by reference to purpose as, for example "motor show room". Adopting the reasoning of Glass JA in Food Barn (a decision which has been repeatedly followed during the last 15 years), I am of the opinion that "commercial premises" in the WLEP was intended to include all commercial purposes except those commercial purposes elsewhere specifically defined. Bannon J held in the present case that the use is for a commercial purpose. That being so, the use is prohibited. In my opinion, the appeal should be upheld. The application before the Land and Environment Court was for a declaration that the use of the land for the purpose of a display home was permissible under the WLEP. There was no application for a declaration that the use was prohibited although in the notice of appeal the Court is asked to make that order. I do not think it is appropriate for this Court to make the declaration asked. In my opinion the orders should be: 1. Appeal upheld; 2. The order and declaration of Bannon J set aside; 3. The application to the Land and Environment Court be dismissed with costs; and 4. The respondent to pay the appellant's costs of the appeal. Counsel: Appellant: MH Tobias QC with DN Wilson Respondent: MG Craig QC with WR Davison Solicitors: Appellant: Wilshire Webb 10 UNREPORTED JUDGMENTS Respondent: Abbott Tout Russell Kennedy