PASCOE v COUNCIL OF THE CITY OF WAGGA WAGGA SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY, PRIESTLEY and SHELLER JJA 28 February 1995, 11 April 1995 [1995] NSWCA 360 Local Government Act 1919; Environmental Planning and Assessment Act 1979; departure from development consent on conditions The respondent gave a consent to the appellant for the erection of units on the condition that a site plan showing {he proposed drainage methods was submitted with the building application. The building approval was granted subject to compliance with certain requirements as to floor levels. After the appellant lodged a strata plan approval application, it was discovered that floor levels were below the stipulated levels. The respondent agreed to accept the departure from the development consent subject to * the lodgment of a bond to ensure completion of protection works by the appellant; * the payment by the appellant for other works to be carried out by the respondent. The development consent was amended in accordance with these terms. In proceedings commenced by the appellant in the Land and Environment Court for a declaration that the amended consent was invalid and orders that the respondent was obliged to repay the sum, his Honour found that the respondent had acted reasonably and disposed of the proceedings on discretionary grounds. The appellant submitted that his Honour erred in finding firstly that the amended consent was invalid and secondly that the respondent had acted reasonably. Held: As the respondent accepted that the amended consent was void, the development consent stood as at the time the appellant breached it. The respondent acted within power in accepting the departure on the condition that the appellant pay for remedial work. There was no basis upon which the appellant is entitled to recover the amount paid and his Honour was correct in dismissing the appeal. Mahoney JA The essential facts as they have emerged in argument may in my opinion be summarised as follows. On 2 December 1988 Wagga Wagga City Council gave Mr Pascoe a development consent for the erection of forty, two bedroom strata title dwelling units on land fronting Forsyth Street, Wagga Wagga. The development consent and/or the subsequent building consent required that the structure erected comply with certain requirements as to floor levels. The building was erected but the requirements as to floor levels were not complied with. The result of this non-compliance would, in the view which the Council adopted, have caused drainage difficulties. The Council took the view that, to cope with those difficulties, it was necessary for Mr Pascoe to do two things: to do certain work within the building area itself; and to arrange for changes in the drainage system in Forsyth Street to cope with the additional waters caused by the non-compliance. The non-compliance with the requirements of the consents meant that the Council could take steps, in accordance with the then existing legislative provisions, the Local Government Act 1919 and the Environmental Planning and Assessment Act 1979, to ensure compliance with the requirements and/or to prosecute Mr Pascoe for the non-compliance. Discussions took place between officers of the Council and Mr 2 UNREPORTED JUDGMENTS Pascoe and the advice of consultants was obtained. Ultimately, Council resolved to "accept the departure of the Pascoe Forsyth Street Development from the approved DA subject to: (i) the developer lodged a $5,500 bond to ensure the completion of protection works as detailed by the City Engineer; (ii) the proposed drainage works relating to the capacity of inlet structures as detailed by the City Engineer and proposed to be funded from the next s94 program be carried out immediately with such works to be at the expense of the developer, Mr Pascoe." The practical effect of this was that the Council determined or envisaged that it should have the bond of $5,500 to secure that Mr Pascoe perform the internal works and that it should itself carry out the external works but at the expense of Mr Pascoe. Council made an estimate of the cost of the external works. A figure of $16,400 was arrived at. Council then took steps to give effect to what it decided. For reasons which do not appear, it felt it necessary to amend the consent which previously had been given to Mr Pascoe. The resolution, or the effect of it, was embodied in an amended consent by adding as a condition of the consent a stipulation to the effect of the resolution. Subsequently, Mr Pascoe asked the Council to give to him the relevant copy of the approved plan. That, it may be inferred, was necessary if he was to proceed to carry out his development by sale or otherwise. He was unwilling to pay the relevant amount for the external works but it was made clear to him that if he did not, he could not obtain the document. In those circumstances, he paid the amounts. Mr Pascoe in due course brought the present proceeding to contest his obligation to do what the resolution required of him. Before the Land and Environment Court, as Bignold J recorded, the issue presented for decision was, in substance, one of discretion. Bignold J concluded that the discretion which the parties saw to be in question should be exercised against Mr Pascoe. When the matter came before this Court, Mr Drummond for Mr Pascoe presented the appeal in a different way. He addressed the validity of the consent and the effect of non-compliance with a condition of it and he took objections in terms of his oral and written submissions. Were it necessary to decide the issue, I doubt that the appellant is entitled to pursue an appeal in that form. The issue which the parties posed for decision in the Land and Environment Court was a different issue. The judge dealt with the matter on the basis to which in his judgment he referred and he decided that issue. Had the matters now sought to be raised been raised before the judge, it is likely - I think it is inevitable - that the proceeding would have been conducted differently. Evidence would, I think, have been adduced to deal with aspects of what, for the reasons to which I shall refer, are in my opinion the real issues which arise from what the parties had done. However, assuming that the appeal may be pressed as it was before this Court, I am of opinion that the appeal should fail. I agree with the orders proposed by Sheller JA and generally with his Honour's reasons. In my opinion, the appellant's submissions misconceive what the Council did. The Council had given a consent to development and building. This involved that the work was to be done in the manner stipulated. It was not so done: the stipulation as to floor levels were not complied with. The result of that was to URJ PASCOE v COUNCIL OF THE CITY OF WAGGA WAGGA (Sheller JA) 3 give rise to the drainage problems referred to between the parties. Council concluded that, to solve the drainage problems, it was necessary to do the internal and external work to which I have referred. The external work was to be done by the Council but at Mr Pascoe's expense. The external work was not properly the subject of a development or building consent in the sense that such a consent could require Mr Pascoe to do it. The work was to be done outside Mr Pascoe's premises, in a public street or thereabouts. It was not a matter to which, as such, the development or building consent related. The proper analysis of the events is that the building was erected in breach of a condition. Council was entitled to take such steps as were available by reason of the breach of the condition. What it did was, in effect, to decide that it would take no relevant action to, for example, interfere with the building works themselves or prosecute the builder if the builder did what the resolution proposed. The builder was, I shall assume, initially unwilling to agree to this in the sense that he did not accept the conclusion of the Council and its advisers that the work was necessary or would cost what the Council estimated. But he was faced with the position that, if he did not pay the money, the development could not be carried to completion, by sale or otherwise, and, no doubt, Council would reconsider its position. In these circumstances, he paid the sum in question. (Nothing has turned upon the difference between the sum of $16,400 and the amount paid by Mr Pascoe). It might perhaps have been possible for Mr Pascoe, before the Land and Environment Court, to raise issues different from those formulated before Bignold J. He might have claimed return of the money merely upon the basis, for example, that it was paid as the result of unacceptable pressure. That was not the issue fought below. As I have indicated, if it had been, different questions would have been investigated and different evidence called. Those issues cannot now properly be raised on appeal. Mr Davison SC, for the Council, accepted that the Council had erred in thinking that as the result of its resolution it was necessary for an amended consent to be given. It was his submission that what the Council did accorded generally with what I have said. There was discussion during the appeal of the powers of the Council in such a situation. It was not, I think, submitted that a council, faced with a breach of a condition, cannot agree to take no action upon the breach if the effect of the breach is rectified, or it is paid sufficient itself to rectify it. In the circumstances, it is not necessary to pursue the detail of that aspect of the matter. In my opinion, the appeal should be dismissed with costs. Priestley JA I agree with Sheller JA. Sheller JA INTRODUCTION This is an appeal from decisions of Bignold J of 24 September and 28 November 1991. On 2 December 1988 the Council of the City of Wagga Wagga consented to the appellant, Peter James Pascoe's, Development Application to erect 40 x 2 bedroom dwelling units on land fronting Forsyth Street, Wagga Wagga. The consent was subject, inter alia, to a condition (h) that a site plan approved by the City Engineer showing the proposed method of effectively filling, paving, sewering and draining the site be submitted with the Building Application. The plan was to detail proposed fill, floor and road levels which demonstrated that "the majority of overload [sic, overland] flow' would discharge to Forsyth Street and that satisfactory drainage was maintained for 4 UNREPORTED JUDGMENTS adjacent properties. On 22 December 1988 and 6 January 1989 the development consent was amended in a manner not here material. On 10 January 1989 the Council granted building approval under Pt11 of the Local Government Act 1919 (LG Act) for the development subject to a condition 11 that floor levels should comply with minimums specified on a plan number 3947-1 "and labelled in red ink". This plan originally formed part of a series of plans accompanying the appellant's building application which had been submitted to the Council's engineering department in purported fulfilment of condition (h). Initially the Council advised that the plan did not satisfy the requirement of condition (h) but, in the result, the Council's Forward Engineer, Mr Le Lievre, on the appellant's behalf, designed drainage works associated with the proposed development. His design was recorded by superimposition on the plan. Part of Mr Le Lievre's design was to nominate floor levels for most of the dwelling units in the proposed development. One notation on the plan was "nominated floor levels are suggested absolute minimum RL's". On the Council's copy of the plan, which was in evidence, the nominated levels were written in blue ink circled in red ink. On the copy of the plan released to the appellant on the grant of the building approval the floor levels were, apparently, marked in red ink. This copy of the plan disintegrated through constant usage during the construction process and no longer existed at the date of hearing. Mr Le Lievre personally marked both plans. He conceded he may have used different colours when marking the two sets of plans on two separate occasions. Although it was possible the copy of the plan provided to the appellant stipulated floor levels different from those shown on the Council's copy, his Honour thought it more probable that the floor levels recorded on the plan issued to the appellant were the same as those recorded on the plan retained by the Council. Accordingly he found that the floor levels referred to in condition 11 of the building approval were those shown on the Council's plan. Early in June 1989, when the development was almost complete, the appellant requested the Council's building department to make a final inspection of the development for a building certificate to be issued so that approval of the strata plan could be obtained. When they were checked by the Council's engineering department it was discovered that the floor levels of many of the dwelling units were below the stipulated levels. The differences ranged between 105mm and 375mm. When these deviations from the stipulated levels first came to the attention of the parties in June 1989 after the appellant had lodged an application for the Council's approval of a strata plan in respect of the development pursuant to s37 of the Strata Titles Act 1973, his Honour found that the appellant's initial response was twofold. First he asserted that the Council staff had inspected and approved each floor slab before the concrete was poured. Secondly he asked for help from the Council urgently (owing to the high interest charges he was liable for in respect of the development) to solve the problem so that he could obtain strata title and immediately sell the development. Council responded to the appellant's request for urgent help by suggesting that he obtain an engineer's report to confirm that overland flow from the development site would reach Forsyth Street in a 1 in 100 year storm event. even if drainage works in that street failed. The appellant retained the services of a consulting engineer, Mr Kendall, and together they went to the Council's engineering department to discuss the problem with the Council's engineers. At that discussion Mr Kendall produced detailed calculations of run-off from the URJ PASCOE v COUNCIL OF THE CITY OF WAGGA WAGGA (Sheller JA) 5 development site in the event of such a flood and expressed the opinion that the drainage system on the site was adequate. Following this discussion the Council's City Engineer prepared a report to the Council recommending that it "accept the departure" from the approved development application subject to the appellant's lodging a bond of $5,500 to assure completion of on-site protection works, comprising the construction of a kerb along sections of the internal road. Although the Council did not fully adopt the City Engineer's recommendations, at a meeting on 26 June 1989 it resolved to receive the City Engineer's report and "to accept the departure from the approved development subject to: (i) the developer lodging a $5,500 bond to ensure the completion of protection works as detailed by the City Engineer; (ii) the proposed drainage works relating to the capacity of inlet structures as detailed by the City Engineer and proposed to be funded from the next S94 program be carried out immediately with such works to be at the expense of the developer, Mr Pascoe." On 27 June 1989 the City Engineer informed the appellant of this decision. The appellant asked what the costs of the drainage works had to do with his plans and was told the Council had decided that he had to pay for that by way of a contribution before the Council released the plans. Later he was instructed to attend at the cashier and upon payment of the money a Council officer would take the plans for signature and release. The appellant attended the cashier and paid the sum of $16,400. The building certificate was signed and the plans were released. The appellant said he paid the sum because he required the plans as soon as possible so as to minimise the cost of the delay which had occurred. By letter of 4 August 1989 the Council advised the appellant's solicitors how the sum of $16,400 had been calculated and said that the developer had been requested to pay for the drainage works particularised because they were "considered necessary to achieve a satisfactory level of floor protection for the development. A satisfactory level of floor protection would have existed if the development had been constructed in accordance with approved plans." After receiving the payment the Council undertook the engineering works on the drainage system in Forsyth Street but the appellant did not undertake the required on-site works. On 28 August 1989 the Council served the appellant with a notice to comply and on 12 September 1989 wrote to the body corporate of the strata plan to say that because of the appellant's default in carrying out the on-site works as required by a condition of the release of the strata plan the Council would be entering the property to carry out the necessary works. This has not been done. On 7 September 1989 the Council purported to amend the development consent by adding an additional condition (q) in terms of the conditions upon which in June ie Council had resolved to accept the departure from the development consent. The parties accept that the requirements of s103 of the Environmental Planning and Assessment Act 1979 (the EPA Act) were not complied with and hence the amendment was invalid. PROCEEDINGS IN THE LAND AND ENVIRONMENT COURT On 28 November 1990 the appellant commenced class 4 proceedings in the Land and Environment Court for declarations that the amended consent was invalid and orders that the Council repay to the appellant the contribution of $16,400 and interest thereon. 6 UNREPORTED JUDGMENTS The appellant contended that the development consent was invalidated by the amendment, unless the new condition (q) could be "severed". In consequence there was no consideration for the payment made by the appellant and the Council was obliged to repay it; Goff and Jones, The Law of Restitution, 4th ed at 40 and 400. Alternatively the appellant might have argued that the payment was made under a mistake of law; David Securities Pty Ltd v Commonwealth Bank of Australia (1991) 175 CLR 353 at 369 and following. Bignold J approached the matter differently. He observed that most of the facts were not in dispute. He noted that the appellant had discontinued an appeal pursuant to s97 of the EPA Act against the Council's determination amending the development consent. He understood the present proceedings to call for the assessment of the reasonableness or unreasonableness of the Council's conduct by reference to the standard of "legal reasonableness" as applied in judicial review proceedings. He said there could only be one answer to the question whether on the facts as he found them the Council had acted reasonably in demanding the payment of $16,400 in respect of the carrying out of remedial engineering drainage work in response to its realisation that the completed development did not comply with the floor levels prescribed by the approved plans and that answer was in the affirmative. This conclusion was sufficient to dispose of the proceedings on discretionary grounds. Having reached that conclusion his Honour, for completeness, went on to examine the following matters, relied upon by the appellant: "(i) the (Council) had not demonstrated that the drainage design volunteered by Mr Le Lievre was effective; (ii) the (Council) had failed in the course of its routine inspections of building progress on the applicant's development to satisfy itself that the required floor levels were being observed; (iii) the (Council) had not established that there had been a breach of the Environmental Planning and Assessment Act 1979; (iv) even if a breach had been established there was no need to remedy it - in this respect the Court should prefer the expert opinion of Mr Kendall that the drainage system for the development was adequate to the contrary opinions of the (Council's) engineers." As to the first Bignold J said that the appellant had not demonstrated that Mr Le Lievre's drainage design was in any way deficient. Moreover the appellant had previously accepted and benefited from the design. As to (ii) whatever duty the Council may have had in relation to its routine inspections of the building work whilst in progress, the primary duty to ensure that the required floor levels were observed remained with the appellant, as the builder. As to (iii) his Honour was satisfied on the evidence that the Council had established a relevant breach of the EPA Act and of Pt11 of the LG Act. Although Mr Le Lievre may not, in terms, have approved his drainage design, as condition (h) of the development consent contemplated, the requisite approval could be inferred from the fact that the Council, in granting building approval, imposed condition 11 stipulating the required floor levels by reference to the plan prepared by Mr Le Lievre. As to (iv) his Honour did not think, in the circumstances of the case, that the consequences of the breach of development consent and building approval could be determined merely by preferring Mr Kendall's engineering opinion to the contrary opinions of the Council's engineers. He said it was not surprising that the Council's engineers would adopt a more cautious and conservative URJ PASCOE v COUNCIL OF THE CITY OF WAGGA WAGGA (Sheller JA) 7 engineering opinion of the consequences of the deviation from the approved drainage design than would a consulting engineer retained by a developer, after the event. Similarly it was not surprising and not unreasonable that the Council would prefer the opinion of its own engineers and would hold the developer financially responsible for the immediately execution of improvements to the Forsyth Street drainage system. Finally there was me overwhelming fact that the appellant sought the Council's help to solve the problem and accepted, at least at the relevant time. the Council's solution. In all the circumstances even if the Court's discretion were to be exercised by reference to a broader range of considerations than would be encompassed by the standard of "legal unreasonableness", the Court's discretion to grant or withhold relief should be exercised by not intervening in the transaction that was concluded between the parties in June 1989. Bignold J concluded by saying: "As I would understand the significance of the proven facts the (Council's) decision on 26 June 1989 to conditionally allow the departure from the approved plan, was a decision essentially directed to its statutory functions under s37 of the Strata Titles Act 1973. If this be so the (appellant's) claim that the financial payment was improperly exacted by the (Council) under the Environmental Planning and Assessment Act 1979 would appear to be wholly misconceived. However in view of the manner in which the litigation was conducted it has not been necessary for me to deal with this question, however crucial it otherwise appear to be to the proceedings." On 24 September 1991 his Honour dismissed the application and the Council's cross application for a declaration and order remedying the breach of the development consent. On 28 November 1991, he ordered the appellant to pay one half of the Council's costs. APPEAL Ground | of the amended notice of appeal asserts that his Honour erred in failing to hold that condition (q) of the amended consent dated 12 September 1989 was invalid. Grounds 2 - 8 are directed to what are said to he errors in his Honour's conclusion that the Council had acted reasonably. The appellant contended that Bignold J's approach to the case was flawed and that he should first have held that the amendment on 12 September 1989 to the development consent was beyond power and void and then considered whether this resulted in avoiding the original development consent so that there could be no breach of it. Alternatively the avoidance of the amendment would mean that the payment made to the Council was without consideration and hence recoverable. The Council accepted that the amended consent of 12 September 1989 was void. It follows, in my opinion, that the amendment can be ignored and the development consent remains as it was at the time the appellant breached it. Despite an argument that there had been no breach, his Honour found there was and no reason is shown for interfering with this conclusion. One way that the breach could have been dealt with was to require the appellant to rectify it. What might have been a draconian solution was sensibly avoided by the proposal to carry out other work which would remove any detrimental overland flow problem. The Council required a bond to ensure the appellant carried out his part of the work and a payment to cover the Council's costs of carrying out other parts of this work. 8 UNREPORTED JUDGMENTS The questions posed by the appellant for determination in this Court were whether the Council could validly accept the departure from the development consent on condition that the appellant pay these moneys and whether the amount of the payment could be recovered for reason that there was a total failure of consideration or the payment was made under compulsion or mistake. The appellant relied upon a passage in the judgment of Kitto J in Bell Brothers Pty Ltd v Shire of Serpentine-Jarrahdale (1969) 121 CLR 137 at 145. His Honour said: "But where a person or body having power to grant or withhold a permission for another to pursue a course which he cannot lawfully pursue without that permission has used the power in order the exact a payment which he or it is not authorised to exact, the case is entirely different. The law holds that the involuntariness of the payment is established, because the parties were not on equal terms. As Abbot CJ said in Morgan v Palmer (1824) 2 B and C 729 at 735; 107 ER 554 at 556: "...if one party has the power of saying to the other, "That which you require shall not be done except upon the conditions which I choose to impose', no person can contend that they stand upon anything like an equal footing.' In the same case Littledale J said: 'Iam of opinion that this defendant has no right to retain the money which was paid to him by the plaintiff. He had not any legal authority to make the charge...... The granting a licence was a public duty imposed by law, and for the execution of that he had no right to any payment.... Here, the plaintiff was merely passive, and submitted to pay the sum claimed, as he could not otherwise procure his licence (737-739; 558)'." In 1989 s37 (1) of the Strata Titles Act provided as follows: "Subject to this Division, a local council shall, on application made to it for a certificate of approval of a proposed strata plan, issue to the applicant a certificate of approval of that plan if it is satisfied as to the matters specified in either of the following paragraphs: (a) that (i) the provisions of s306 of the Local Government Act 1919 have been complied with with respect to the erection of any building containing any proposed lots to which that plan relates or that any departure from those provisions is such as need not be rectified: (ii) the proposed lots illustrated by that plan substantially correspond with parts of any such building shown in the building plans accompanying the application made to the local council for its approval of the erection of any such building and designated in those building plans as being intended to separate occupation; and (iii) any such building was completed not more than twelve months, or such longer period as the local council may in any particular case fix, before the application for the certificate of approval under subsection was lodged with the local council; or (b) that - (i) separate occupation of the proposed lots illustrated by that plan will not contravene the provisions of the Environmental Planning and Assessment Act 1979 or of any environmental planning instrument within the meaning of that Act; URJ PASCOE v COUNCIL OF THE CITY OF WAGGA WAGGA (Sheller JA) 9 (ii) any consent required under that Act or instrument has been given in relation to the separate occupation of the proposed lots illustrated by that plan; and (iii) having regard to the circumstances of the case and the public interest, the subdivision to which the plan relates will not interfere with the existing or likely future amenity of the neighbourhood." It seems to me that subs(1) is relevant. S306 of the LG Act provided: "(1) A building shall not be erected or used in contravention of the provisions made by or under this Act. (2) A building erected for any purpose other than residential shall not subsequently be occupied or used for residential purposes without the prior consent of the council." Consistent with these provisions, the Council was perfectly entitled to refuse to issue the appellant with a certificate of approval of the proposed strata plan in respect of a building which did not comply with s306 unless the departure did not need to be rectified. Granting to the appellant the certificate of approval was not, in the language of Littledale J, a public duty imposed upon the Council by law. The Council was under a duty not to issue it unless the departure from the development consent did not need to be rectified. The price for such departure being accepted was the carrying out or payment for alternative work. In 1989, the Council of a municipality was empowered to control and regulate the erection of buildings in the municipality and Ptll of the LG Act applied accordingly; s305 (1). S317A (1) enabled any person to apply for a certificate to the effect * that in the opinion of the Council a building in all respects complied, inter alia, with the Act, the ordinances and the plans and specifications, if any, approved by the Council and the EPA Act or * "if there has been any contravention of the Act or any departure from the approved plans and specifications, or any contravention of" the EPA Act "... that such contravention or departure is not such as need be rectified". It was implicit that the Council might accept a departure, which includes not only failure to comply with the development consent but also the carrying out of remedial work, even though the departure is in breach of the EPA Act. S317B (1A) enabled the Council to order the owner to demolish a building erected or altered without the approval of Council or "as an alternative, to carry out to the satisfaction of the Council such work specified in the notice as is necessary to make the building or the building as altered, as the case may be, comply with the Act and Ordinances." The power was conferred on the Council by the word "may" meaning that the power might be exercised, or not, at discretion; Interpretation Act 1987 s9 (1); Ward v Williams (1955) 92 CLR 496 at 505. In my opinion the Council acted within power in adopting the sensible course it did and no basis has been shown for calling in aid the principle referred to by Kitto J in Bell Brothers Pty Ltd v Shire of Serpentine-Jarradale. Accordingly there is no basis upon which the appellant is entitled to recover the amount of $ 16,400 and Bignold J was right to dismiss his application. ORDER I propose that the appeal be dismissed with costs. Appeal dismissed with costs. Counsel for the Appellant: JS Drummond 10 UNREPORTED JUDGMENTS Instructed by: Walsh and Blair (Wagga Wagga) Counsel for the Respondent: WR Davison SC/DR Parry Instructed by: Farrell Lusher (Wagga Wagga)