Reported Decision : 117 LGERA 95 Land and Environment Court of New South Wales CITATION : Neighbourhood Association DP 285121 v Murray Shire Council and Ors [2001] NSWLEC 247 APPLICANT Neighbourhood Association DP 285121 PARTIES : RESPONDENTS Murray Shire Council and Ors FILE NUMBER(S) : 40072 of 2001 CORAM: Pearlman J KEY ISSUES: Practice and Procedure :- application for summary dismissal - complete defence - jurisdiction Community Land Development Act 1989 s 4, s 13, s 25 LEGISLATION CITED: Community Land Management Act 1989 s 15 Land and Environment Court Act 1979 s 16(1A), s 20 Brimson v Rocla Concrete Pipes Ltd (1982) 2 NSWLR 937; General Steel Industries Inc v Commissioner for Railways (NSW) and Ors (1964) 112 CLR 125; Mitchell v Waugh and Anor (1993) 82 LGERA 44; CASES CITED: National Parks and Wildlife Service and Anor v Stables Perisher Pty Ltd (1990) 71 LGRA 286; Nix and Dunn v Pittwater Council (1994) 84 LGERA 199; NTL Australia Pty Ltd v Minister for Land and Water Conservation (2001) 112 LGERA 403; Scharer v State of New South Wales [2001] NSWCA 360 DATES OF HEARING: 02/08/2001 DATE OF JUDGMENT: 10/29/2001 APPLICANT Mr S M Kettle (Barrister) SOLICITORS Pogson Cronin FIRST RESPONDENT no appearance SOLICITORS N/A LEGAL REPRESENTATIVES: SECOND RESPONDENT Mr I J Hemmings (Barrister) SOLICITORS Clayton Utz THIRD RESPONDENT no appearance SOLICITORS N/A JUDGMENT: IN THE LAND AND 40072 of 2001 ENVIRONMENT COURT Pearlman J OF NEW SOUTH WALES 29 October 2001 NEIGHBOURHOOD ASSOCIATION DP 285121 Applicant v MURRAY SHIRE COUNCIL First Respondent VEBSELL INVESTMENTS PTY LTD Second Respondent BARNETT BROS PTY LTD Third Respondent JUDGMENT Introduction 1. By a notice of motion, the second respondent, Vebsell Investments Pty Ltd, seeks the summary dismissal of class 4 proceedings brought against it, or, in the alternative, the striking out of part of the class 4 application and part of the applicant's points of claim. 2. The class 4 proceedings were commenced by the applicant, Neighbourhood Association DP 285121, against the Murray Shire Council as first respondent, Vebsell Investments Pty Ltd as second respondent, and Barnett Bros Pty Ltd as third respondent. As against all respondents, the applicant claimed damages for negligence, and against the second respondent, it claimed in addition damages for breach of a development contract. 3. On 19 July 2001, I held that this Court does not have jurisdiction to hear and dispose of general claims in tort, and that claims of this nature cannot be brought under the Court's ancillary jurisdiction pursuant to s 16(1A) of the Land and Environment Court Act 1979 ("the Court Act"). On this basis, the claims brought by the applicant against the first respondent, being the local council which had granted development consent, and against the third respondent, a plumbing company, were summarily dismissed. However, the claims against the second respondent were stood over for further hearing. The statutory and factual context 4. The applicant is a neighbourhood association constituted under s 25 of the Community Land Development Act 1989 ("the Development Act"). The Development Act is designed to facilitate the subdivision of land into parcels for separate development with an interest in associated land in the nature of common or shared property (s 4). Under s 13 a development lot may be subdivided by a neighbourhood plan registered as a deposited plan, and, in accordance with s 25, upon registration of the neighbourhood plan, the neighbourhood association is constituted. 5. Sections 18(3) and (4) of the Development Act provide that the Registrar-General may refuse to register a neighbourhood plan as a deposited plan unless the plan is accompanied by relevantly, a development contract that, upon registration, becomes binding under s 15 of the Community Land Management Act 1989 ("the Management Act"). Section 15(3) of the Management Act provides as follows: 15(3) The development contract registered with a neighbourhood plan has effect as if it included an agreement under seal with covenants to the effect of those set out in Part 3 of Schedule 2. 6. Part 3 of sch 2 comprises s 4 and is headed "Neighbourhood Schemes". It provides as follows: 4. Covenant by original proprietor – neighbourhood scheme Under the agreement included by section 15 in the development contract lodged with a neighbourhood plan, the original proprietor of the land the subject of the neighbourhood scheme covenants: (a) with the neighbourhood association, and (b) with the subsequent proprietors jointly and with each of them severally, that the land will be developed in accordance with the development contract and the development consent. 7. In this statutory context, the circumstances of this case may be understood. The applicant was constituted upon registration of deposited plan 285121. The deposited plan relates to land known as Riverside Thoroughbred Estate, Four Posts Lane, Deniliquin ("the land"). The second respondent is the original proprietor and is to be taken as having covenanted in accordance with pt 3 of sch 2 of the Management Act. 8. Development consent was granted by Murray Shire Council on 16 October 1990 subject to conditions, the relevant conditions being (b) and (h) which provide as follows: b) A sewerage system or common effluent drainage system being installed with the final effluent being treated and disposed of in a manner approved by the State Pollution Control Commission. h) The provision of a bitumen sealed road from the existing bitumen to the site of the development. Such work being carried out [at] the developer's expense. 9. It is to be noted that the State Pollution Control Commission ("the SPCC") has been replaced by the Environment Protection Authority ("the EPA"). 10. The development contract was signed by the council on 25 June 1993 and registered by the Registrar-General on 15 September 1993. Relevantly, it provided as follows: 2. Amenities All sewerage … services are to be provided to the scheme by the developer. 3. Architectural design and landscaping … The Developer is responsible for the construction of the access road from the Four Post Lane to the boundary of the individual lots. 'Developer' is defined in s 3 of both the Development Act and the Management Act as the original proprietor of the neighbourhood parcel. In this case, that is the second respondent. The applicant's claims against the second respondent 11. The applicant's claims against the second respondent were formulated at some length in its points of claim, but it is only necessary, for present purposes, to summarise them. 12. The first claim is couched principally in terms of negligence in that the second respondent is alleged to have been negligent in installing a sewerage disposal system which was neither adequate nor suitable. 13. The second claim relates specifically to breach of the development contract, and was formulated in terms of the second respondent failing to obtain the approval of the SPCC or the EPA for the sewerage system installed on the land, in failing to provide an adequate disposal system, and in failing to construct an adequate internal road. 14. The applicant seeks damages, interest and costs, and in particular, in relation to the second respondent, it seeks the following orders (adopting the applicant's numbering in its class 4 application) and points of claim: 8 A declaration that the second respondent is in breach of conditions of the relevant development consent to treat effluent on the site in a manner approved by the SPCC or the EPA. 9. An order that the second respondent remedy the disposal system on the site, such that effluent is treated in a manner approved by the EPA and/or the SPCC and as required by conditions of development consent imposed by the first respondent. 10. An order that the second respondent is negligent and liable to the applicant for damages in contract and tort. 11. An order if appropriate, that the second respondent pay the costs, loss or damages incurred by the first respondent in remedying the sewerage disposal system to an acceptable standard. 12. A declaration that the second respondent is in breach of the neighbourhood development contract … and/or its duty of care and/or was negligent in failing to install an adequate sewerage disposal system on the site and in failing to construct an adequate internal bitumen road to the site. 13. An order that the second defendant (sic) remedy its failure to comply with the relevant conditions of development consent for the site. The Notice of Motion 15. The second respondent contends that the class 4 application should be summarily dismissed upon two grounds, namely, that there is no jurisdiction in this Court to entertain a claim for damages for negligence, and, secondly, that insofar as this Court has jurisdiction to grant relief for breaches of a development contract, the second respondent has a complete defence in that it has fully complied with all the terms of the development contract and the development consent. 16. The scope of the class 4 jurisdiction of this Court is defined in s 20 of the Court Act. Section 20(1)(e) provides that this Court has jurisdiction in respect of proceedings referred to in subsection (2), which in turn provides as follows: 20(2) The Court has the same civil jurisdiction as the Supreme Court would, but for section 71, have to hear and dispose of proceedings – (a) to enforce any right, obligation of duty conferred or imposed by a planning or environmental law or a development contract; (b) to review, or command, the exercise of a function conferred or imposed by a planning or environmental law or a development contract; (c) to make declarations of right in relation to any such right, obligation or duty or the exercise of any such function; and (d) whether or not as provided by section 68 of the Supreme Court Act 1970 – to award damages for a breach of a development contract. 17. For the purposes of sub-s (2), a "planning or environmental law" is defined in sub-s (3) by reference to a number of specified statutes, none of which are presently relevant. However, a "development contract" is defined in sub-s (5) as meaning, amongst other things, "… an agreement implied by section 15 of the Community Land Management Act 1989 …". 18. It was held in National Parks and Wildlife Service and Anor v Stables Perisher Pty Ltd (1990) 71 LGRA 286 that the resolution of a claim for general damages in negligence is beyond the jurisdiction of this Court, or, in other words, the jurisdiction to hear and dispose of such a claim is not conferred upon this Court by s 20(2). 19. Since National Parks v Stables Perisher, the Court Act has been amended by the insertion of s 16(1A) which provides as follows: 16(1A) The Court also has jurisdiction to hear and dispose of any matter not falling within its jurisdiction under any other provision of this Act or under any other Act, being a matter that is ancillary to a matter that falls within its jurisdiction under any other provision of this Act or under any other Act. 20. The precise ambit of jurisdiction conferred by s 16(1A) has been the subject of a number of decisions of this Court and of the Court of Appeal since the section was enacted in 1993, many of which are referred to in NTL Australia Pty Ltd v Minister for Land and Water Conservation (2001) 112 LGERA 403 at 412 and 413. The position seems to be that s 16(1A) does not operate to confer jurisdiction on this Court in relation to a matter which is separate to and independent of the matter properly within jurisdiction (Mitchell v Waugh and Anor (1993) 82 LGERA 44). Thus, in obiter remarks in Nix and Dunn v Pittwater Council (1994) 84 LGERA 199 at 205, Gleeson CJ stated that a claim for damages for nuisance could not reasonably be regarded as ancillary to class 4 proceedings alleging the carrying out of unauthorised earthworks in breach of the Environmental Planning and Assessment Act 1979. On the other hand, in Scharer v State of New South Wales [2001] NSWCA 360, it was held by Stein JA with whom Hodgson JA agreed (Davies AJA dissenting) that a claim for damages for obstructing a right of way in a national park was ancillary to proceedings to be taken in this Court in its exclusive jurisdiction to enforce that right of way. 21. In this case, the applicant claims damages for negligence arising out of the installation of the sewerage system. In my opinion, this claim as framed is a general claim for damages in tort, and it is not ancillary to the applicant's second claim, which arises out of alleged breaches of the development contract, and which, by virtue of s 20(2) of the Court Act, falls within the jurisdiction of the Court. Moreover, the extended jurisdiction of this Court conferred by s 16(1A) need not be relied upon by the applicant to base its claim for damages for breaches of the development contract, because the power to award such damages is expressly provided for in s 20(2)(d) of the Court Act. 22. Hence, I conclude that, so far as the class 4 application comprises a claim for damages for negligence, it should be struck out, and it will be necessary, if the whole claim is not otherwise summarily dismissed, to consider precisely what parts of the class 4 application and the points of claim fall into that category. The claim relating to breaches of the development contract 23. The second respondent submits that this claim should be summarily dismissed on the application of the test set out in General Steel Industries Inc v Commissioner for Railways (NSW) and Ors (1964) 112 CLR 125. That test was enunciated by Barwick CJ in the following passage on p 129: It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action – if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal – is clearly demonstrated. The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument';'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense'. 24. On behalf of the second respondent, Mr Hemmings asserted in particular that the applicant's case is "manifestly groundless" because the second respondent has plainly and completely fulfilled its obligations under the development contract and the development consent. This assertion, however, does not stand up, because the matters on which it is based are the subject of dispute, and it depends upon findings of fact and law about which there is, in my opinion, some basis for argument. 25. I deal first with the sewerage system. The first matter of argument is whether, on the proper construction of condition (b) and in the light of correspondence from the SPCC, the obligation of the second respondent was to install an oxidation pond system as opposed to a transpiration bed system which was in fact installed. The correspondence in question is a letter from the SPCC dated 18 June 1991 addressed to consultants of the second respondent which states in part as follows: The Commission sought advice from the Department of Health in regard to the proposal. Such advice has since been obtained and we are informed that oxidation pondage is considered to be a more effective form of disposal of these wastes … The Commission concurs with this advice. 26. Mr Hemmings claimed that condition (b) is silent as to the type of system to be installed, and that there was no obligation to install an oxidation pond system. But condition (b) requires the effluent to be treated and disposed of in a manner approved by the SPCC, so there is at least an argument that "the manner approved" by the SPCC was an oxidation pond. 27. Furthermore, as Mr Kettle, appearing for the applicant, submitted, there is also an arguable case that condition (b), properly construed, required the approval of the SPCC to the system which was installed, an approval which he claimed was never obtained. 28. As against this, Mr Hemmings referred to a letter from the council to the consultants for the second respondent dated 10 July 1991 which states: Council agrees to a transpiration bed disposal area being used to service this subdivision subject to Council reserving the right to require the installation of oxidation pond to a design and in a location approved by the State Pollution Control Commission should any nuisance, health hazard, or surcharge occur from this transpiration bed. Council's Health Surveyor is of the opinion oxidation pondage is a more effective method of disposal of waste from this subdivision. 29. Mr Hemmings also relied upon a letter from the council to the second respondent's consultants dated 18 June 1993 which informed the second respondent that: Council considers that all conditions have been satisfactorily met in relation to the abovementioned subdivision with the exception of condition (h) which requires the sealing of the road from the end of the existing bitumen to the entrance of the development 30. Furthermore, a question arises as to the proper construction of cl 2 of pt 1 of the development contract which provides that "[a]ll sewerage … services are to be provided to the scheme by the developer". Does this clause imply a term into the development contract that the sewerage services are to be adequate or suitable for the purposes of the neighbourhood scheme? Alternatively, is the second respondent's obligation under this clause merely to provide sewerage services whether or not adequate or suitable for the purpose for which they are to be installed? And, if the obligation is to provide sewerage services which are adequate or suitable, did the second respondent breach that obligation? 31. The matters that I have set out demonstrate, in my opinion, that the applicant has at least an arguable case relating to the sewerage system, and whether or not that case will succeed will depend upon findings of fact and construction of the relevant instruments. The applicant's case is not, in these circumstances, "manifestly groundless". The summary dismissal of its claims should only be ordered in the clearest of cases (Brimson v Rocla Concrete Pipes Ltd (1982) 2 NSWLR 937 at 944). Accordingly, so far as concerns the applicant's claim relating to the sewerage system, I am not prepared to order summary dismissal. 32. The obligation concerning the making of the road raises similar questions of construction and fact. It appears to be the case that the council, at the second respondent's behest and cost, constructed a bitumen sealed road from the existing bitumen to the entrance to the land. Mr Hemmings claimed that this was done in full satisfaction of the second respondent's obligation under condition (h). But Mr Kettle pointed to cl 3 of pt 1 of the development contract which provides for "… the construction of the access road from the Four Post Lane to the boundary of the individual lots". Although a gravel access road appears to have been constructed, the applicant claims that what was required, in light of condition (h) and cl 3 properly construed, was a bitumen sealed road providing access to the individual lots. 33. On the facts presently before me, the road claim seems to be weak, but it is at least arguable, and accordingly, I refrain on this basis also from ordering the summary dismissal of the applicant's case. The alternative claim 34. The second respondent's notice of motion sought, in the alternative, the striking out of par 10 in the class 4 application, and a number of paragraphs in the applicant's points of claim. 35. As I have set out above, par 10 of the class 4 application sought an order "… that the second respondent is negligent and liable to the applicant for damages in contract and in tort". Although this prayer for relief refers to "contract", it is nonetheless a claim for general damages, and, for the reasons I have earlier outlined, the Court lacks jurisdiction to make such an order. I will order therefore that par 10 be struck out. 36. The paragraphs which the second respondent sought to be struck out of the applicant's points of claim are pars 6 to 13, 18, 23, 25 to 30, 32 and 34. It is unnecessary to repeat them in full, and it is sufficient to note that the majority of them contain factual assertions about the sewerage disposal system – its installation, its type, its defects, and its inadequacy and unsuitability. 37. The assertions about the sewerage system, which are contained in pars 6 to 13, 18, 25, 26, 27, and 34 may or may not be relevant, and therefore I will not strike them out. However, pars 23, 28, 29, 30 and 32 relate directly to the applicant's claim for general damages, and it is appropriate that they be struck out. Orders 38. In accordance with the foregoing, I make the following orders: (1) The second respondent's claim for summary dismissal of the class 4 proceedings is dismissed. (2) The class 4 proceedings should proceed to a hearing limited to the alleged breaches of the development contract and damages in respect thereof. (3) Paragraph 10 of the class 4 application is struck out. (4) Paragraphs 23, 28, 29, 30 and 32 of the applicant's points of claim are struck out. (5) I reserve the question of costs. (6) The exhibit may be returned. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.