LONDISH v KNOX GRAMMAR SCHOOL and ORS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MASON P, MEAGHER and STEIN JJA 7 November 1997, 22 December 1997 [1997] NSWCA 190 Environmental Planning and Assessment Act 1979 — s104A — interpretation of privative clause — alleged jurisdictional error. Characterisation of use — reasonably open to council — no error of law. The school purchased premises a short distance from the school campus and obtained council approval for its use as boarding premises in 1987. In 1997 it obtained a further approval to construct further accommodation for boarders and staff. The appellants sought to challenge the validity of both consents. On appeal the appellants submitted: 1. The council should not have granted the 1987 consent as a change of non-conforming use, because it should have found that the existing use had been abandoned prior to the grant of consent. Notwithstanding s104A the court could resolve a challenge to the 1987 consent because council's error deprived it of jurisdiction. 2. The trial judge erred when he expressed the test for jurisdictional error as whether the decision of council was reasonably open to it (in characterising the use as an educational establishment in granting the 1997 consent). 3. If His Honour was correct in 2, that the test was incorrectly applied by failing to consider whether the existing use relied on in March 1987 had been abandoned. Held: 1. The privative clause in s104A Environmental Planning and Assessment Act 1979 precludes review of the decision of council to grant consent in 1987 because council's decision satisfies the three limbs of the Hickman principle. 2. The court will not review the decision reached by council because the facts could reasonably have led to more than one conclusion, and the decision reached by council was reasonably open to it and within its discretion. 3. If it were necessary, for the court to decide, the use of the premises is ancillary to the educational establishment of the school and not an independent use. The use of the premises would not be characterised as a boarding-house. Ashfield Municipal Council v Australian College of Physical Education Ltd (1992) 76 LGRA 151 Brietkopf v Wyong Council (1996) 90 LGERA 269 Coles Supermarkets Australia v Minister for Urban Affairs and Planning (1996) 90 LGERA 341 P W Rygate and West v Shoalhaven City Council (1996) 91 LGRA 417 considered Bentham v Kiama Council, (1986) 59 LGRA 94 applied Darling Casino v NSW Casino Authority (1997) 71 ALJR 540 applied R v Hickman; ex parte Fox and Clinton (1945) 70 CLR 598 applied Mason P I agree with Stein JA. Meagher JA I agree with Stein JA. Stein JA This appeal concerns a residential adjunct to a private boys' boarding school on Sydney's north shore. It raises several complex issues, including the construction of a preclusive clause, abandonment of an existing use and characterisation of the proposed use of the premises. 2 UNREPORTED JUDGMENTS Knox Grammar has carried on a school at Warrawee for many years. The subject land at 55 Hastings Street Warrawee (some short distance away from the school proper) was owned by the Commonwealth and had been occupied by the CSIRO as an entomology laboratory. The laboratory had been in occupation since May 1971, at which time it was permissible with consent under the County of Cumberland Planning Scheme Ordinance. Subsequently, with the introduction of the Ku-ring-gai Planning Scheme Ordinance in October 1971, the land became zoned Special Uses 5(a), and its use as a laboratory became prohibited, but enjoyed existing use rights under the Environmental Planning and Assessment Act 1979 (the EPA Act). The use remained as a laboratory until 1986 when the Commonwealth considered it surplus to its needs. In October of that year the land was acquired at auction by the second respondent Trust for the purposes of the school, the purchase being completed in February 1987. In December 1986 the school lodged a development application with Ku-ring-gai Council for a change of use to a 'boys' school residential area'. Development consent was granted on 16 March 1987 to the 'use of the Main Building for Residential accommodation for 15 boarders, house parents and housemaster' (the 1987 consent). It seems that the approval was granted on the basis of permitting a change from one non-conforming use to another pursuant to cl54 of the Environmental Planning and Assessment Regulation 1980. The land was rezoned in April 1988 to Residential C, a zone in which 'educational establishments' are permissible with consent, but 'boarding-houses' are prohibited. In July 1995, a further development application was lodged with the council seeking approval to extensions and alterations to the buildings on the property. This application was withdrawn but replaced with another in May 1996 which sought approval for additional boarding accommodation and associated facilities for a total of 94 students and 5 staff. Council granted consent on 18 March 1997 (the 1997 consent). In the Land and Environment Court, Talbot J dismissed challenges to both the 1987 and 1997 consents. The grounds of appeal are: 1. His Honour erred in failing to find that the existing use of the land had been abandoned prior to the grant of consent for the change of use on 16 March 1987 and that, accordingly, there were no existing use rights attaching to the land which would entitle council to consent to a change of non-conforming use. 2. His Honour erred when he expressed the test for jurisdictional error as whether the decision of council was reasonably open to it (in characterising the use as an educational establishment in granting the consent in 1997). 3. If His Honour was correct in 2, that the test was incorrectly applied by failing to consider whether the existing use relied on in March 1987 had been abandoned. Declarations are sought that: * the existing use rights were abandoned before the first development consent; * the development consent granted in 1987 is invalid; * the 1987 consent cannot form the basis for the 1997 development consent; and ¢ the 1997 consent is invalid. By a notice of contention, the school contends that the decision of the trial judge ought be affirmed on the additional grounds that: URJ LONDISH v KNOX GRAMMAR SCHOOL and ORS (Stein JA) 3 1. 104A of the Environmental Planning and Assessment Act 1979 prevents the appellants questioning the validity of the 1987 development consent; 2. the council's conclusion that the proposed use of the premises was as an "educational establishment' was correct, and his Honour's finding that it was not, was erroneous; and 3. even if the council's characterisation of the proposed use as an 'educational establishment' was wrong, the council's conclusion was reasonably open to it and is not open to review. Since it is essentially argued that both development consents stand or fall on the validity of the 1987 consent, it is convenient to deal first with whether the 1987 consent can be challenged at this time. This requires the construction of s104A of the EPA Act which is in the following terms: In the event that public notice of the granting of a consent is given in accordance with the regulations by a consent authority, the validity of the consent shall not be questioned in any legal proceedings except those commenced in the Court by any person at any time before the expiration of 3 months from the date on which public notice was so given. There is inconsistent authority in the Land and Environment Court regarding the construction of s104A (and its mirror provision, s35) as to whether it prevents any challenge to a consent after the expiry of 3 months, whatever the grounds. In Brietkopf v Wyong Council!, Bignold J interpreted the clause as a statute of limitations, preferring this construction to the application of the Hickman principle to preclusive clauses. In PW Rygate and West v Shoalhaven City Council,? a case heard before the judgment in Brietkopf was delivered, the Chief Judge of the Land and Environment Court, Pearlman J reaffirmed the approach she had taken earlier in Coles Supermarkets Australia v Minister for Urban Affairs and Planning3, allowing that there are circumstances in which a decision may be impugned, notwithstanding the expiry of the period specified in the privative clause. The High Court has interpreted privative clauses on a number of occasions, notably in R v Hickman; ex parte Fox and Clinton4, and more recently in Darling Casino v NSW Casino Authority>. On behalf of the appellants, Mr Tobias QC submits that the council committed a reviewable error because it 'never considered the question of whether or not the existing use that founded the 1987 consent had been abandoned... The question was whether or not existing use rights existed or not at the time of the 1987 consents'.6 The appellants submit that 's104A does not protect against a challenge based on excess of jurisdiction in the wider sense... an ultra vires act, a decision that is beyond power.'7 Talbot J held that the issue raised by the applicants/appellants was an error going to jurisdiction. Accordingly, he opined that judicial review was not excluded by s104A. In so holding, he relied in part on obiter dicta in the joint judgment of the High Court in Craig v The State of South Australia' that an (1996) 90 LGERA 269 (1996) 91 LGERA 417 (1996) 90 LGERA 341 (1945) 70 CLR 598 (1997) 71 ALJR 540 transcript p 6 lines 39-47 transcript p 3, line 34-39 (1995) 184 CLR 163 SNAMRYND 4 UNREPORTED JUDGMENTS administrative tribunal commits a jurisdictional error reviewable by a court if, inter alia, it makes an erroneous finding, reaches a mistaken conclusion or takes into account irrelevant considerations. In my view, Craig is not of assistance on the issue of s104A because it concerned a claim of jurisdictional error by an inferior court and not the interpretation of a privative clause, whereas the present case concerns the construction of the statutory provision limiting review by the court of the decision of a council. The construction urged by Mr McLellan QC, on behalf of the school, does not go as far as Bignold J in Breitkopf to prevent any challenge to the consent after the expiry of 3 months from publication. He concedes that there are circumstances in which a challenge may be made outside of that period. In oral argument before the court he submitted that the test set out by Pearlman J in Coles Supermarkets and Rygate should be adopted. Such an approach would protect the council's decision from review in the instant case. In the respondents' written submissions, Mr McLellan adumbrated an alternative test which would differentiate between decisions which are ultra vires in the broad and narrow senses. He suggests that the effect of s104A is to 'immunise from challenge decisions involving ultra vires in the broad sense. Such a construction of s104A would still permit challenges to the validity of decisions on grounds of ultra vires in the narrow sense to proceed'.2 He continues: 'If the category of errors exempted from the operation of s104A is to be limited to ultra vires in the narrow sense, then the nature of the error raised in these proceedings falls outside that class'.!0 While that may be true in this case, I do not accept Mr McLellan's alternative test. It seems to me that its application to differing factual circumstances may have the capacity to cause more trouble than it resolves. For myself, I prefer the Hickman test applied on a case by case basis. In Darling Casino, it was alleged that the NSW Casino Control Authority committed a jurisdictional error in dealing with an application for a casino licence. $155(1) of the Casino Control Act 1992 (NSW), a privative clause, was the response. The section is in the following terms: Except as otherwise provided in this section, a decision of the Authority under this Act is final and is not subject to appeal or review. The general comments of Gaudron and Gummow JJ on State preclusive clauses are obiter, the wording of the clause that their Honours faced differing from s104A of the EPA Act. Nonetheless, the High Court's decision offers some assistance in the task of construction. Gaudron and Gummow JJ refer to the Hickman principle, which they describe as a rule of construction. The test set out by Dixon J in Hickman is that a preclusive clause prevents legal challenge to a decision which: * does not on its face exceed the authority conferred by the legislation; * is a bona fide attempt to exercise the powers conferred; and * relates to the subject matter of the legislation. According to their Honours, one should commence with a presumption that the legislature did not intend to deprive citizens from access to the courts. They continued, 'However and provided the intention is clear, a privative clause may 9. paraS4 10. paraS9 URJ LONDISH v KNOX GRAMMAR SCHOOL and ORS (Stein JA) 5 preclude review for errors of any kind. And if it does, the decision in question is entirely beyond review so long as it satisfies the Hickman principle'. [emphasis added]!! As well as outlining the test to be applied, their Honours make helpful observations on the approach to be taken by the Court when faced with a preclusive clause: That concession indicates the preferable approach to the issues raised by the appeal: there must be an error shown before it is necessary to consider the conditions of the exercise of power under s18 and any immunising effect of s155...Accordingly, the first step is to determine what, if any, errors were made by the Authority. !2 In my view this is a sound approach to ascertaining the application of s104A to any given circumstance. The test discussed in the joint judgment in Darling Casino makes it clear that in certain circumstances a decision will still be reviewable by a court, notwithstanding the privative clause. However other errors, such as failure to take account of relevant considerations (and the converse), 'a mere defect or irregularity which does not deprive the tribunal of the power to make the award or order' (per Deane and Gaudron JJ in Deputy Commissioner of Taxation v Richard Walter Pty Ltd,13), will not be sufficient to overcome an ouster clause. The question has arisen as to whether a challenge based on a breach of the rules of natural justice or procedural fairness is precluded by s104A. In Coles Supermarkets, Pearlman J discussed the alternative propositions as to whether the privative clause would prevent review on this ground, but ultimately found that the applicant did not have a legitimate expectation of being consulted. In the High Court in the Darling Casino case, the appellant proceeded only on its claim for jurisdictional error and abandoned the ground of want of procedural fairness.!4 I prefer to leave for another day the question of whether a challenge based on a denial of natural justice would be excluded by s104A. I do this for at least two reasons. First, it may be that a breach of natural justice may arise in the context of bad faith. But second, and most importantly, it does not arise for consideration in this appeal. Applying as I believe appropriate, the three limbs of Hickman to the subject decision to grant the 1987 consent, it is apparent that: * the council's decision to grant the change of use, based on an assumption that there was an extant existing use was, on its face, within its authority, * there is no suggestion of mala fides by the council, and * the decision to grant the consent related to the subject matter of the EPA Act. Accordingly, the 1987 consent is protected by s104A from a challenge that the council erred in granting the consent on the basis of an existing use, which the appellants submit had been abandoned. What are the implications of this finding for the validity of the 1997 consent? Clearly, the 1997 consent cannot be challenged on the basis that the existing use of the premises, which changed from a laboratory in 1987, has been abandoned. 11. per Gaudron and Gummow JJ at 555 B-C 12. Darling Casino at 546B-C 13. (1995) 183 CLR 168 at 206-7 14. p545 6 UNREPORTED JUDGMENTS It follows that there was available to the council an alternative source of power upon which it could have granted the 1997 consent, as an enlargement, expansion or intensification of the use which was the subject of the 1987 consent, and 'a mistake in the source of the power works no invalidity', (Minister of Urban Affairs and Planning v Rosemount Estates Pty Ltd!5). Nonetheless, it may be argued that the degree of the enlargement, from 15 to 94 boarders, takes it beyond the scope of the existing use provisions in the EPA Act. If the 1997 consent was considered an enlargement of an existing use, it would not be necessary to answer the remaining challenges to the 1997 consent. However, I will proceed to do so in any event since they have been fully argued and because of the rider I have mentioned above. The appellants' second ground of appeal contends that Talbot J applied the wrong test for determining whether the decision of the council to grant the 1997 consent could be successfully challenged. His Honour found that the consent granted by the council could be valid on one of two bases - it was 'reasonably open' for the council to grant the consent as an intensification of an existing use, or to grant consent to the permissible use of the premises as an 'educational establishment'. The appellants submit that the issue of whether or not the use of the land falls within the characterisation of 'educational establishment' is not a matter of discretion, but a jurisdictional fact and a matter which goes to the court's jurisdiction. Accordingly, the court can review the council's decision as being in excess of jurisdiction. In response, the respondents assert that the council's decision was not one of jurisdictional fact (which would be reviewable by the court) but a finding of primacy fact not ordinarily reviewable. It is a question of law whether the primary facts can necessarily fit the statutory description, Azzopardi v Tasman UEB Industries Ltd.!6 However, whether facts fall within the meaning of an ordinary, expression, such as 'educational establishment' as a matter of common understanding, is a question of fact. Although more than one conclusion might reasonably have been reached by a decision-maker, an incorrect finding will not involve an error of law (see Hope v Bathurst City Council!7). In such cases, it is not for the court to substitute its own opinion for that of the primary decision maker: Minister for Aboriginal Affairs v Peko Wallsend!8. The present case was commenced in class 4 of the Land and Environment Court's jurisdiction, by way of judicial review. There is a line of authority in the Land and Environment Court commencing in 1986, to the effect that if the opinion formed by the decision-maker was not vitiated by irrelevant considerations and one which was reasonably open to make, the court will not review the substance of the decision: see for example, Bentham v Kiama Council,!9 Leichhardt Municipal Council v Maritime Services Board and other cases cited in the footnote.20 See also my article discussing the policy issues 15. (1996) 91 LGERA 31 at 85 16. (1985) 4 NSWLR 139 at 156 17. (1980) 144 CLR 1 18. (1986) 162 CLR 24 19. (1986) 59 LGRA 94 20. (1985) 57 LGRA 169. See also Taylor & Anor v Hornsby Shire Council,(1990) 69 LGRA 281 Malcolm on behalf of Maryland Residents Group v Newcastle City Council (1991) 73 LGRA URJ LONDISH v KNOX GRAMMAR SCHOOL and ORS (Stein JA) 7 concerning agency deference 'Relationship of Tribunals to the Decision-Maker, Deference to Agency Expertise - The Experience of the Land and Environment Court in New South Wales'?! In the circumstances of this case, it is apparent that the evidence and material before the council may have reasonably admitted to more than one conclusion. The decision reached by council to categorise the development as an 'educational establishment' and not a 'boarding house' was one which was reasonably open to it to make and within its discretion. Accordingly, in my opinion the council's decision is not reviewable by the court. In Bentham the issue was whether a proposed development should be characterised as an hotel (which was prohibited) or, as council found, a conglomeration of a motel, tavern and conference centre, (which was permissible with consent). In that case, I expressed the test thus: the fact that minds might differ and conclude otherwise than did the Council is no reason to vitiate its decision. It was a decision which, in my opinion, was reasonably open to Council to make. It sought and acted on advice from the department. To put the question a different way, is the decision 'looked at objectively,...so devoid of any plausible justification that no reasonable body of persons could have reached [it]'? (Lord Diplock in Bromley Borough v Greater London Council [1983] 1 AC 768, 821). I do not believe so.?2 Despite the urgings of counsel for the appellants, I see no reason to depart from Bentham. It follows that I agree with the trial judge that it is not for the court to decide whether or not, on whatever evidence might now be available, the development should be categorised as an 'educational establishment' or a "'boarding-house' (or for that matter some other characterisation). Nonetheless, Talbot J went on to determine whether, had it been his role to decide, he would have categorised the development as an educational establishment or a boarding-house. Because his Honour made a finding and because the issue has been argued before the court, I will also address the matter. The Ku-ring-gai Local Environmental Plan (the LEP) defines the following terms: 'Educational establishment' means a building used or intended for use as a school, college, technical college, academy, lecture hall, gallery or museum, but does not include a building used or intended for use wholly or principally as an institution. "'Boarding-house' includes a house let in lodgings or a hostel but does not include a motel. Talbot J said that if it were necessary for him to decide the issue, he would have found that the proposed development was not an educational establishment based on the features outlined by Pearlman J in Ashfield Municipal Council v Australian College of Physical Education Ltd.23 In that case, residential buildings located opposite an educational facility were let to up to five students or staff, who occupied separate lockable portions of the building and had the shared use of common facilities. The contest principally concerned whether the premises 356, Save Blue Lagoon Beach Action Group Inc v Kelvest Pty Ltd(unreported Pearlman J 21 October 1993), Oshlack v Richmond River Council And Iron Gates Developments Pty Ltd (1994) 82 LGERA 236. 21. in R Creyke (ed) Administrative Tribunals: Taking Stock, Centre for International and Public Law, ANU, 1992 22. at page 98 23. (1992) 76 LGRA 151 8 UNREPORTED JUDGMENTS should be characterised as a dwelling house, which was permissible without consent, or as a boarding house, which was prohibited (although it was argued parenthetically that the use was ancillary to the educational establishment). Her Honour held that the use of the houses was as a boarding house, rather than a dwelling house and rejected the argument that the use was ancillary to the educational establishment. His Honour said that the similarities between the facts in the instant case and the Australian College of Physical Education would lead him to the conclusion that the development was a boarding house. While some features are no doubt similar, one needs also to consider that nature of the relationship between the educational establishment and its occupants. Precedent did not require the trial judge to follow the application of the law in Australian College of Physical Education case to the facts, and certainly does not require me to do so. In each case the premises provided accommodation only and was physically separate from the school premises, students were allocated a particular room and had the use of joint facilities. I will outline the competing cases presented by the parties. The appellants argue that the proposed student residence is not ancillary to the school so as to qualify as an educational establishment; and further, even if it is, it is a separate and independent use of the land, which should have two characterisations and that one of these is a boarding house which is prohibited. The indicia which the appellants submit indicate that the development is not ancillary to the school (which is undoubtedly an educational establishment) include the fact that there is a separate fee payable for boarding and that boarding is not a necessary requirement of being educated at Knox. That is, boarding is a separate arrangement from the educational component of the school. Schooling and instruction take place on the physically separate main school campus, and there is no formal teaching on the premises the subject of the development application. The appellants also rely on the statement in the Australian College of Physical Education in which premises were held to be a boarding-house: What has to be considered is the use and occupation of the premises on the facts adduced in evidence. When one considers the evidence that the premises are owned by the Respondent (which, of course, is not itself an occupant) whose students apply to it for an agreement to occupy a numbered room, for rent, with services provided, and with a sharing of common facilities in each house, it seems to me inescapable that what is more appropriate as described here is letting the house as lodgings.... it would be stretching common sense to think that a house, designed solely for the provision of residential accommodation and not for the provision of education, was a building used as a school or college or academy, simply because the occupants were students or staff of an educational establishment across the street.24 The respondents point to matters of differentiation from the Australian College of Physical Education case, which they submit was merely a place for students to live, whereas the Knox boarding school premises is to be an integrated part of a 24 hour education programme conducted by the school. Portions of letters from the school's headmaster supporting the development application state: 24. at 155-156 URJ LONDISH v KNOX GRAMMAR SCHOOL and ORS (Stein JA) 9 Boarding of students is and has been for decades a standard part of the school's activities. The boarding of students is not, in any sense, independent of the primary use of Knox Grammar School. It is simply one of the functions that forms part of the total school activities.25 Before and after school and at night...boarders are supervised by teaching staff of Knox Grammar School. During this time they are subject to boarding house discipline which includes homework times, bed making etc. All major meals...are provided by the school in the dining room on the senior school site...Boarders are subject to certain special requirements such as attendances at Chapel service in the school chapel on Friday evenings.2¢ While the facts in this and the Australian College of Physical Education case may be superficially similar, it seems to me that the first sentence of the above quote from Pearlman J is salient. In the instant case, the nature of the use and occupation of the premises appears to be fundamentally different from that which her Honour faced. In the earlier case, the occupation of the premises was, it seems, by tertiary students who would apply for accommodation on their own behalf. This is a quite different relationship from that between a school, to whom the care and responsibility of the students has been entrusted by their parents, and its students. The degree of control and discipline which the school can be expected, and claims to exercise, over the boarding students would be far greater than that which was sought to be exercised (or would be tolerated) by the tertiary students who occupy the Ashfield premises. All meals are provided by the school at the main school site and students are regulated in where and when they must undertake study and other activities. By contrast, the tertiary students (who are free to come and go as they please) provide their own meals with a kitchen available in each house for their use, are responsible for their own study time and the upkeep of their own rooms. Applying a purposive approach to the definition of boarding-house, it does not seem necessary for the school's residential facility to be characterised as a boarding-house because of the degree to which the school is involved in, and exercises control over, the activities and life of the students. I am satisfied that the Knox boarding facility is ancillary to the educational establishment and is not a "'boarding-house'. The second limb of the appellants' argument is that, even if one of the uses of the premises falls within the definition of 'educational establishment', the development has two independent purposes, one being a prohibited use as a boarding-house. The appellants rely on Foodbarn Pty Ltd v Solicitor General,?7 for the principle that where one of a number of independent uses is prohibited, it is irrelevant that another of the uses is permitted. I am unpersuaded that the premises are to be used as a boarding-house. This is not a case where two separate activities are to be carried on the same premises. The issue is the proper characterisation of the use to which the premises are to be put, and for the reasons I have set out, I do not accept the appellants' submission that the use should be characterised as a boarding-house. Although I would be prepared to find that the proposed development is ancillary to and not independent of an educational establishment, Mr Ayling, on behalf of the council, submits that it is not necessary to categorise the use as an 25. AB 130 E-G 26. AB 145-146 27. (1975) 32 LGRA 157 10 UNREPORTED JUDGMENTS educational establishment to find that it is permissible with council's consent. An 'educational establishment' is an innominate permissible use under the LEP. Accordingly, it is not necessary to affirmatively establish that the use is for the purposes of an educational establishment as defined. It is sufficient to establish that the proposed use is not for the purposes of a boarding house. Therefore, any use which is not a boarding house, or another use prohibited under the land use table, it matters not whether the use falls strictly within the terms of the definition of educational establishment. There is merit in this argument. Clearly the provision of boarding facilities and associated study and supervision is for an educational purpose, enabling students whose parents may live distant from the school or be taken away from home by work commitments, have a stable and continuous education, even if (which I expressly do not find) the boarding premises is not strictly an educational establishment as defined. In my opinion, the appeal against both the 1987 and 1997 consents must fail and be dismissed with costs. Appeal dismissed with costs Counsel for the appellants: M Tobias QC and C McEwan Solicitors for the appellants: Norton Smith & Co Counsel for the first and second respondents: P McLellan QC, BJ Preston and M Evans Counsel for the third respondent: J Ayling Solicitors for the first and second respondents: Mallesons Stephen Jaques Solicitors for the third respondent: Abbott Tout