BURWOOD COUNCIL v PD MAYOH PTY LTD and ANOR SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY, BEAZLEY JJA AND CLARKE AJA 27 May 1997, 30 September 1997 [1997] NSWCA 54 PRECEDENT — DECISION OF COURT OF APPEAL — LOWER COURTS BOUND TO FOLLOW. On 17 May 1995 the Court of Appeal declared a Regional Environment Plan (REP) to be invalidly made, as certain alterations to Pt2 of the REP had been made outside the powers conferred by the Environmental Planning and Assessment Act. The appellant sought declarations that certain development consents granted by the second respondent in accordance with Pt3 of the REP were void. The trial judge refused to make the declarations. On appeal: It was submitted by the appellants: 1. that the Court of Appeal's judgment operated in rem; and, 2. even if the Court of Appeal's judgment did not operate in rem, the trial judge was bound to hold that the REP had been invalidly made and to grant the relief sought. Held: 1. It was not necessary to decide the first ground. 2. The Court of Appeal had declared that the REP had been invalidly made, not that it was partially invalid. Therefore, it was not open to the trial judge to come to the decision to which he did. Cases Derisi v Vaughan (1983) 3 NSWLR 17 Great Western Railway Co v Owners of SS Mostyn (The Mostyn) [1928] AC 57 Hoffman - La Roche & Co v Secretary of State for Training and Industry [1975] AC 295 Leichhardt Municipal Council v The Minister for Planning (1995) 87 LGERA PE Bakers Pty Ltd v Yehuda (1988) 15 NSWLR 437 Swane v Marsh (Unreported New South Wales Court of Appeal 18 October 1978) Tyler; Ex parte Foley (1993-94) 181 CLR 18 Priestley JA I have had the benefit of reading Clarke AJA's draft reasons in this appeal and agree with them. In my opinion they clearly show that the appeal should be upheld. I wish however to mention an additional matter. A proposition adopted by the trial judge, and essential to his decision, was that Pt3 of the REP (relating to land in the Burwood Municipality) was severable from Pt2 of the REP dealing with land in the Leichhardt Municipality. The areas dealt with by the two Parts are some distance apart and at first I was inclined to think the severability proposition was well founded. In the course of the argument in the hearing of the appeal I began to wonder whether the court was justified in assuming the correctness of 2 UNREPORTED JUDGMENTS the severability proposition simply upon a reading of the REP itself. This led to the following discussion taking place with counsel for the respondent: "CLARKE AJA: Is it right that any way that you seek to support Bignold J's conclusion depends upon your proposition about severability? CRAIG: Yes it does. PRIESTLEY JA: Would you mind turning to p80 to p87 Local Government Reports [this was the report of this court's earlier decision on the REP] where the reasons go through the procedure that had to be followed in order to get this plan complete and operative. The sort of thing I have in mind is somebody looking at the policy at SEPP No 32. Looking at it, the director has got the overall picture in mind as the plan itself says. The greater metropolitan region is the starting point of the director's thoughts and then there are particular sites but then that greater metropolitan region which came to be considered. So, going down the paragraph before, before commencing - the director was required to prepare a study of the relevant environmental plan. That, presumably, included the Burwood land. We do not know because it was not raised in the proceedings. The Minister was a party to these proceedings that we are talking about in 87 Local Government Reports. At first, my own impression was that these various areas of land, one group in Leichhardt and one business in Burwood, were so far apart that it was simply an accident that they were included in the same greater environmental plan as I asked some questions about this morning, but maybe not. Maybe the overall planner did have in mind, perhaps very peripherally, that there could be some impact to the overall scheme by the inclusion, not only of Leichhardt land, but some Burwood land It may be that if that question had been investigated the answer would have been, 'No, there is no connection'. Your severance argument might have been sound but it was not inquired into in these proceedings concerning the Leichhardt land and the Minister was a party. Just going down, s44 required the director to consider any State Environmental Planning Policy and it was not suggested in the case that that was not done. So I assume that the knowledge about that would have been in the Minister's province and so there again, if there was an argument available for saying that the two lots of land were completely separated in all planning respects, then that might have been an issue and could have been raised. It might have been an issue that might or might not have been contested if it was raised. S45 required consultation with various bodies and, presumably, that was the Burwood Council. Then s47 required the public exhibition of the draft plan. That was a public exhibition of the plan including the Burwood land. S48 allowed submissions. The people concerned principally with the Burwood aspect of the plan made submissions. One plan with land from different municipalities in it but everything going forward as one plan. lam not at all open at the moment to the suggestion that you can sever off bits of it simply upon reading the plan itself without knowing more about the policy considerations that were taken into account in including Burwood land in this plan." Having reflected on this aspect of the case I have become firmer in the opinion which I provisionally foreshadowed in the last paragraph of the above quotation. My point is not that Pt3 is not severable, but that it may be or may not be, and URJ BURWOOD COUNCIL v PD MAYOH PTY LTD and ANOR (Clarke AJA) 3 I do not think the court should act on the basis that it is severable, merely upon the materials that were available in the Land and Environment Court and in this court Counsel for the respondent argued that the position I had indicated I might reach was not open to the court; his argument however did not seem to me to go further, in substance, than saying that it was plain from reading the REP itself that Pt3 could be severed from it and thus avoid the invalidity that had been declared in respect of the REP. The considerations that are explained in the passage from the argument that I have set out above are in my view stronger than the argument about the plain meaning of the text in this respect. In short it is not in my opinion so plain as counsel argued and I do not think the court is in a position to act upon the proposition accepted by the trial judge. I agree with the way Clarke AJA suggests this appeal should be brought to a formal conclusion. Beazley JA I agree with Clarke JA. Clarke AJA The "Greater Metropolitan Regional Environment Plan No 1" (the Regional Plan) was made on 21 December 1993. Subsequently the validity of that plan was challenged in proceedings in Leichhardt Municipal Council v The Minister for Planning. Those proceedings ultimately found their way to this Court which on 17 May 1995 declared that the Regional Plan was invalidly made on 21 December 1993: ((1995) 87 LGERA 78). This declaration provoked Burwood Council (the appellant) to seek declarations that certain development consents granted by the Minister for Planning and Urban Affairs (the second respondent) were void and of no effect and to seek a number of consequential orders. Both the second respondent and PD Mayoh Pty Ltd (Architects) (the first respondent) filed submitting appearances save as to any order for costs. The proceedings were heard before Bignold J and there was no appearance for either of the respondents. The trial Judge observed that the sole basis for the appellant's claims to substantiate relief was the effect of the decisions of the Court of Appeal declaring the Regional Plan to have been invalidly made. Further, his Honour said that "the legal consequences of this decision are decisive of the outcome in the present case because the two development consents granted by the second respondent are expressed to have been granted 'in accordance with the provisions of the Regional Plan' and of cl783DA of Burwood Planning Scheme Ordinance' (Burwood PSO), the latter provision having been made by a provision of the Regional Plan expressly amending Burwood PSO." Bignold J went on to say that during the course of argument it became clear that the Regional Plan contained separate provisions related to specific lands within Leichhardt Municipality and separate provisions relating to specified land within the Burwood Municipality and that the Court of Appeal had been concerned only with the provisions in the Regional Plan relating to the Leichhardt lands. As Bignold J put it ".....the Court of Appeal's judgment in Leichhardt Municipal Council v The Minister for Planning has absolutely nothing to say in relation to Pt3 of the REP (relating to land situate in Burwood). Moreover, as was candidly conceded by Counsel for the appellant the reasoning of the majority judgment in the Court of Appeal given by Priestley JA, had absolutely no application to the provisions of Pt3 of the REP." 4 UNREPORTED JUDGMENTS Why then, asked the trial Judge, should it be held that the declaratory judgment of the Court bound his Honour to uphold the application made by the appellant and grant the declaratory relief sought. In answering the question his Honour expressed the opinion that "the only realistic basis for an affirmative answer to such question is that the decision of the Court of Appeal operates as a judgment in rem". Bignold J then referred to the judgment of Hope JA in PE Bakers Pty Ltd v Yehuda (1988) 15 NSWLR 437. Having heard argument in the matter the trial Judge reserved his decision and, when doing so, invited counsel for the appellant to make further submissions in relation to the question whether the Court of Appeal's judgment operated as a judgment in rem. Supplementary written submissions were filed and considered by Bignold J who ultimately concluded that the decision was not to be understood as a judgment in rem. This conclusion led his Honour to decide that the binding effect of the judgment could only be founded upon the doctrine of stare decisis. His Honour then went on: "So understood, I am of the further opinion that the Court of Appeal's decision does not govern the outcome of the present case because the ratio of that decision is that the Minister in altering a clause in the draft form of the REP [another expression for the Regional Plan] imposing height controls on certain developments within Leichhardt Municipality exceeded the power of alteration conferred by s51(1) of the Environmental Planning & Assessment Act 1979 (the EP& A Act)......... As I have earlier stated this decision has no relevance to, or bearing upon, the provisions of Pt3 of the REP which apply solely to land within the Municipality Burwood, and operate entirely independently of the provisions of Pt2 of the REP (which latter Part was the sole focus of the Court of Appeal's decision)." The appellant appealed from this decision and on the hearing of the appeal the first respondent was represented and presented arguments against the upholding of the appeal. It will be seen that there were two steps in the reasoning of the trial Judge. First, his Honour considered whether the decision of the Court of Appeal constituted a judgment in rem and concluded that it did not. Secondly, he considered whether, according to the doctrine of precedent, that decision bound him to grant the declarations that were sought and, because the earlier decision related to the Leichhardt land and the present case the Burwood land, concluded that there was no reason why he should consider himself bound by that decision. It is important at the outset to understand that the fundamental issue in the appeal was whether Bignold J was bound by the declaration made by the Court of Appeal that the Regional Plan had been invalidly made on 21 December 1993. Although Bignold J had said that a conclusion that the judgment operated in rem did not necessarily mean that the declarations sought should be given there was no argument presented to this Court contrary to the proposition that if the judgment was "in rem" the declarations which had been sought should be made. The apparent reason why this stand was taken was that the development consents which were challenged were all based upon the validity of the Regional Plan. On the hearing of the appeal the appellant submitted, first, that the judgment operated in rem and, secondly, that even if it did not operate in rem Bignold J was bound, according to the doctrine of precedent, to hold that the Regional Plan had been invalidly made and, consequently, to grant the relief sought. Much time was spent in a discussion on the difficult question whether the judgment operated in rem. There is, in my opinion, much to be said in favour of the view that the trial URJ BURWOOD COUNCIL v PD MAYOH PTY LTD and ANOR (Clarke AJA) 5 Judge reached the wrong conclusion on this question. It is not, however, necessary to pursue that point because the case can be shortly dealt with on the second ground. It is clear that the Court of Appeal in the majority judgment dealt only with land in the Leichhardt Municipality, concluding that the Minister had exceeded the power of alteration conferred by the EP & A Act. Notwithstanding that the argument and reasoning in the decision related only to the Leichhardt land the majority were of the view that it should be declared that the plan had been invalidly made. In other words although the argument was directed to the Leichhardt land, the conclusion that the Minister had acted in excess of power with relation to that land led the Court to make a declaration that the instrument (not simply a part of the instrument) was invalidly made. Prima facie, therefore, it would not be open to a court lower in the hierarchy than the Court of Appeal to make an order or a declaration which was inconsistent with that made by the Court of Appeal. Unfortunately Bignold J did not seek argument upon this question and in his reasons pointed out that the Court of Appeal had not been called upon to consider the doctrine of severability. His Honour added that any reasonable application of that doctrine would inevitably result in the survival intact of Pt3 of the Regional Plan. His Honour concluded: "Such a result, which I hold to apply in the present case, is entirely consistent with many cases which have held delegated legislation to be partially invalid." The difficulty with this conclusion is that the Court of Appeal did not declare the instrument partially invalid. It held that the Regional Plan had been invalidly made. There is no room for an implication that only part of the plan had been invalidly made. The order was clear in its terms and in consequence, in my opinion!'. the doctrine of precedent required that the trial Judge adopt that proposition as his starting point. This did not occur for, as I have made clear, the line of reasoning adopted by the trial Judge led him to reach a conclusion which was clearly contrary to the order expressed by the Court of Appeal. Although discussion of the doctrine of precedent usually focuses on the difficulty in some cases of identifying the ratio decidendi.. it is clear, in my opinion, that in appropriate cases the actual decision binds fan inferior court. Where that decision takes the form of a declaration that a statutory instrument is invalid it would seem clearly to follow that no inferior court is thereafter entitled to say that the instrument is valid or partly valid. The position was expressed, in teens with which I agree, by Lord Diplock in Hoffman-La Roche & Co v Secretary of State for Trade and Industry [1975] AC 295 at 365: "Under our legal system, however, the courts as the judicial arm of government do not act on their own initiative. The jurisdiction to determine that a statutory instrument is ultra vires does not arise until its validity is challenged in proceedings inter parses either brought by one party to enforce the law declared by the instrument against another party or brought by a party whose interests are affected by the law so declared sufficiently directly to give him locus stand) to initiate proceedings to challenge the validity of the instrument. Unless there is such a challenge and, if there is, until it has been upheld by a judgment of the court, the validity of the statutory instrument and the legality of acts done pursuant to the law declared by it are presumed. It would, however, be inconsistent with the doctrine of ultra vires as it has been developed in English law as a means of controlling abuse of power by the executive arm of government if the judgment of a court in proceedings properly constituted that a statutory instrument was ultra vires were to have any lesser consequence in law than to 6 UNREPORTED JUDGMENTS render the instrument incapable of ever having had any legal effect upon the rights or duties of the parties to the proceedings (cf Ridge v Baldwin [1964] AC 40). Although such a decision is directly binding only as between the parties to the proceedings in which it was made, the application of the doctrine of precedent has the consequence of enabling the benefit of it to accrue to all other persons whose legal rights have been interfered with in reliance on the law which the statutory instrument purported to declare." This authority is consistent with the dictum of Viscount Dunedin in Great Western Railway Co v Owners of SS Mostyn (The Mostyn) [1928] AC 57 at 73: "Now, when any tribunal is bound by the judgment of another court, either superior or co-ordinate, it is, of course, bound by the judgment itself. And if from the opinions delivered it is clear.........what the ratio decidendi was which led to the judgment, then that ratio decidendi is also binding." This statement has been questioned by the editors of Precedent in English Law (Cross & Harris) at p60 where they explain that it probably means that an inferior Court bound by the judgment is bound to make a similar order to that made in the previous case when all the material facts are similar. Neither The Mostyn nor Cross & Harris were dealing with a case in which a declaration had been made but I am unable to accept that it is open to an inferior court to make a declaration that a statutory instrument is partially valid when a superior court has declared that the statutory instrument was invalidly made. A similar problem was discussed in Tyler; Ex parte Foley (1993-94) 181 CLR 18. In that case McHugh J spoke of authorities from which it was impossible to exact a ratio decidendi saying (at 37): "Because it is impossible to extract a ratio decidendi from either of the two cases, each decision is authority only for what it decided. But what is meant by saying that a case whose ratio decidendi cannot be discerned, is authority for what it decided? It cannot mean that a court bound by that decision is bound only by the precise facts of the case. Stare decisis and res judicata are different concepts. In my opinion, the true rule is that a court, bound by a previous decision whose ratio decidendi is not discernible, is bound to apply that decision when the circumstances of the instant case 'are not reasonably distinguishable from those which gave rise to the decision'." I apprehend that the learned trial Judge probably had in mind that the facts in the present case were reasonably distinguishable in that the earlier authority dealt only with the Leichhardt land but in my opinion this approach fails to take account of the fact that the ultimate decision declared the instrument invalid. In these circumstances it was not open to him to conclude, as impliedly he must have, that the declaration actually made was wrong in so far as the court should, for instance, have declared the instrument only partially invalid. In this respect the observations of Moffat P in Swane v Marsh, (unreported) New South Wales Court of Appeal, 18 October 1978, approved by this Court in Derisi v Vaughan (1983) 3 NSWLR 17 at 26, are pertinent. Although Bignold J did not expressly suggest that the Court had overlooked some matter his conclusion could only have been based upon the view that the Court ought to have come to the decision that, upon the application of the doctrine of severability, the instrument was only partially invalid. It was only on these bases that his Honour could have found that the Regional Plan was valid in so far as it related to the Burwood land. That course was not, in my respectful opinion, open to his Honour and his decision cannot stand. URJ BURWOOD COUNCIL v PD MAYOH PTY LTD and ANOR (Clarke AJA) 7 In these circumstances it is clear that the appeal must be allowed and the judgment set aside. I am in some doubt as to what should be the precise form of the order to be made by this Court. My disposition is to make the declarations sought by the appellant in its amended application but during the hearing before us there was no consideration of the precise type of order that should be made in the event that the appeal succeeded and it would therefore seem to me to be preferable that the Court defer making a final order until the parties have had an opportunity to consider these reasons and to make any submissions that they wish upon the form of the order. The respondent should, in any event, pay the appellant's costs of the appeal and have a certificate under the Suitors Fund Act 1951 in respect of those costs. The formal order I propose is that the matter be stood over for seven days. Appeal to be allowed and judgment set aside but stood over for seven days to enable parties to make submissions upon the form of orders to be made. Counsel for the Appellant: DP Wilson Solicitor for the Appellant: Abbot Tout Counsel for the First Respondent: MG Craig QC/SC Churches Solicitor for the First Respondent: Deacons Graham & James Solicitor for the Second Respondent: C Hanson - Minister for Planning & Urban Affairs