Land and Environment Court of New South Wales CITATION : Terry George Andriotakis v. Woollahra Municipal Council [1998] NSWLEC 124 APPLICANTS Terry George Andriotakis Efsevi Nicholas Andriotakis PARTIES : Gregory Nicholas Malouf RESPONDENT Woollahra Municipal Council FILE NUMBER(S) : 40294 of 1997 CORAM: Talbot J KEY ISSUES: :- LEGISLATION CITED: Heritage Act 1977 CASES CITED: Nettheim v Minister for Planning and Local Government & Anor (unreported CA528 of 1988 21 October 1988 at p10); Thompson v Randwick Corporation (1950) 81 CLR 87 at 106 DATES OF HEARING: 11/06/98, 12/06/98, 18/06/98 DATE OF JUDGMENT: 06/30/1998 APPLICANT Mr C J Leggat (Barrister) Perkes & Stone Solicitors LEGAL REPRESENTATIVES: RESPONDENT Mr J J Bingham (Solicitor) Deacons Graham & James Solicitors JUDGMENT: The applicants claims relief by way of declaration that draft Woollahra Local Environmental Plan Amendment No 12 (LEP 12) is invalid. The applicants are the owners of a property known as No. 48 Darling Point Road, Darling Point. By development application No. 97/087, lodged with the council on 6 May 1997, the applicants made application to the council for consent to erect a residential flat building consisting of 3x3 bedroom units and car parking. The development application was refused by council on 10 November 1997 on the ground that the existing building is considered to have heritage significance and that it is part of a rare grouping of buildings which have been identified as having heritage significance. On 6 November 1997 the applicants lodged application BA1100/97 pursuant to s 68 of the Local Government Act 1993 for consent to demolish the existing building. The application was refused on 19 January 1998 on the grounds of heritage significance after an appeal against deemed refusal of the application was lodged in this Court on 17 December 1997. The applicants appealed to this Court against both determinations of the council. After Sheahan J decided a preliminary question of law, namely that the council or the Court was not permitted to take into account the cultural and heritage significance of the building erected on the subject property, Assessors Nott and Murrell upheld the appeal against the refusal of the application to demolish the building on 11 March 1998. The class one appeal against the refusal of the development application to erect the residential flat building, filed in this Court on 11 November 1997, is pending. The first basis for the challenge to the validity of the draft LEP is that the council decided to make it in order to prevent the demolition of the existing building in circumstances where the applicants hold all the necessary approvals for demolition. It is because the council is seeking to overcome the findings by Sheahan J and the Assessors that Mr Leggat, who appears on behalf of the applicants, refers to it as the "sour grapes" point. The second ground for the challenge is that, in its consideration of the draft LEP, the council was merely going through the motions of rigorously determining heritage considerations in circumstances where, at all times, the outcome had been already determined. It is because every person concerned knew what the outcome would be that Mr Leggat refers to this part of the claim as the "Fine Cotton" point. A further claim, which alleged that the required notice of the proposed exhibition of the draft LEP was not given, is not pursued. The Facts When DA 97/087 was lodged on 6 May 1997, No. 48 Darling Point Road was not identified in Woollahra LEP as being a heritage item or situated within a heritage conservation area. It was not the subject of a Conservation Order under the Heritage Act 1977 and was not classified by the National Trust of Australia (NSW). Until that time the property had not appeared on any Heritage Survey compiled for Woollahra Council. Christopher Bluett, the council's Manager of Strategic Planning has conceded that the draft LEP was prepared for the purpose of preventing demolition of the subject property. In August 1997 Grant Taylor, a heritage architect retained by the applicants, supported the application for development consent with a heritage statement. A revised version was prepared on 2 September 1997. Mr Taylor placed a low significance rating on the existing residence. According to Mr Bluett, the Taylor statement triggered a process of investigation by the council's Heritage Officer, Ruth Daniell. The documentary evidence confirms that, by 1 September 1997, Ruth Daniell had already made a decision to recommend refusal of the development application, although at that stage additional information was required to substantiate her opinion. On 11 September 1997, Ms Daniell commissioned Hugh Fraser to prepare a heritage assessment report for the council. The report prepared by Mr Fraser in October 1997 confirmed the heritage significance of the subject property and the precinct. Mr Fraser recommended that No. 48 Darling Point Road be scheduled as an individual heritage item within the Woollahra Heritage Inventory and that as a consequence, the redevelopment of its site be refused. He also recommended that interim protection be sought under the Heritage Act until demolition control is afforded under Woollahra LEP. On 27 October 1997 council's Assessment Officer, Gordon Edgar, referred the landscape plan for the proposed development to another council officer for comment. Mr Edgar directed the other officer not to "spend too much time on it as it is likely to be refused on Heritage grounds ... sorry about the late notice". Mr Bluett conceded in cross examination that the direction in Mr Edgar's memorandum was "inappropriate" although not surprising, considering his workload. The report to the Development Control Committee, when it was resolved to refuse the development application on 10 November 1997, concludes as follows:- Notwithstanding the merits of the proposal which have been discussed, this proposal necessitates the demolition of the existing building which, although not presently officially protected as a heritage item or within a conservation area, has been identified as having heritage significance and being worthy of preservation. It is for this reason alone, therefore, that this development application must be refused. In a report to the Development Control Committee of the council held on 24 November 1997, Ms Daniell recommended that a draft LEP should be prepared for the addition of the subject property to the schedule of heritage items in the Woollahra LEP as a matter of urgency. Referring to the threat to the property, she concluded that a draft LEP should be prepared immediately and placed on exhibition for a period of fourteen days. At its meeting on 1 December 1997, the council resolved to prepare a draft LEP for the purpose of the inclusion of the subject property in the schedule of the LEP with other adjacent residences. It was resolved that the draft LEP be exhibited for a period of sixty days exclusive of the time over the Christmas/New Year period. On 15 December 1997 the council resolved to prepare and exhibit the draft LEP for a second time to overcome a perceived legal technicality. The draft plan was duly exhibited from 9 January 1998 to 9 March 1998 notwithstanding the original recommendation to council by Ms Daniell that the draft LEP be exhibited for a period of fourteen days. If the advice of the Heritage Officer had been followed, the exhibition would have been contrary to the requirements of the Act. The Department of Urban Affairs and Planning was requested to obtain an opinion from the Parliamentary Council. Parliamentary Council advised on 12 February 1998 that the draft LEP may legally be made. Submissions in support and opposition to the draft LEP were received. They were considered by council officers who reported to council on 6 April 1998 that the matters in the submissions opposed to the draft LEP were not of such substance that they warranted an alteration to the draft LEP. Nor did they warrant the process being discontinued. On 6 April 1998 Ms Daniell and Mr Bluett recommended that the council submit the draft LEP to the Department for consideration. Their recommendation was formally adopted by the council at its meeting on 6 April 1998. In the meantime the National Trust had advised the council by letter dated 1 December 1997 that the property was classified as an item of significance by the Trust on 26 November 1997. In a further letter dated 17 February 1998, the Trust communicated strong objection to demolition of the building. In a statement of evidence prepared for the purpose of the appeals to this Court by Paul Dignam, a Specialist Architect from the Heritage Office, the Heritage Council expressed the view that the proposed demolition would result in the loss of a building which has cultural significance as an individual heritage item and as a component in a heritage precinct. Robert Staas, Architect and Heritage Consultant retained by the council states, in his evidence prepared for the hearing of the appeal against demolition, that the loss of the building would be severely detrimental to the established character of this section of Darling Point and would result in an unacceptable development which would be visibly disruptive in the context. The Sour Grapes Point The applicants argument is that the decision to adopt the draft LEP was taken for the substantial purpose of thwarting the legal proceedings determined by Sheahan J and the Assessors. They submit it was improper for the council to proceed with the draft amendments after the Court granted demolition approval on 11 March 1998. They rely upon the observations of McHugh JA in Nettheim v Minister for Planning and Local Government & Anor (unreported CA528 of 1988 21 October 1988 at p10) to allege that, because the council resolved to make the LEP with the intention of achieving the collateral purpose of thwarting the determination of this Court, the exercise of power was invalid. According to the applicants, it was also a substantial purpose in the sense that it was of real significance, important and real, not imaginary. Mr Leggat contends it is not necessary for the ulterior purpose to be the sole purpose (Thompson v Randwick Corporation (1950) 81 CLR 87 at 106). It must be noted that the demolition approval does not have effect for the purposes of the EPA Act. It is therefore not a right or privilege acquired or accrued under the LEP within the meaning of s 34(4) of the Act. Section 109B of the EPA Act has no application to an approval granted pursuant to s 68 of the Local Government Act. Part 5 of the EPA Act does not refer to the demolition of a building as a defined activity. The decision of the Assessors therefore has no presently relevant role to play as part of the regime created under the EPA Act. The evidence enables the Court to find that, but for the development application for consent to erect the residential flat building, the council officers would not have acted in September 1997 to instigate the process to list the property as a heritage item. Nevertheless the council was, at that stage, doing no more than carrying out its statutory duty under the charter contained in s 8 of the Local Government Act to properly manage, develop, protect, restore, enhance and conserve the environment of the area for which it is responsible and the objects stated in s 5 of the EPA Act to like effect. The development application to construct the residential flat building alerted an officer of council to the potential heritage significance of the existing building. Her inquiries and reports from appropriate experts confirmed her concerns. The identification and listing of heritage items is an ongoing process which evolves over time as relevant information is gathered. The fact that earlier studies had paid no regard to the subject building, that it was not included in the original schedule of the LEP or recognised by later amendments to the LEP may be indicative only of a lack of awareness. No matter how laudable the project might be, a council cannot be expected to have adequate resources that would enable it to investigate every building in its area at the one time. The real nub of the applicants' case is that once the appeal had been determined by the Assessors on 11 March 1998, the council should have thereupon terminated the LEP making process. However, by then the implementation of the intention to make the LEP in response to the original development application was well advanced. The factual circumstances are distinguishable from Nettheim. In that case the Minister's decision was made after the appellant launched his challenge to the validity of an existing order on the ground that relevant matters had not been considered. While the hearing was pending, the Minister was persuaded by those advising him to reconsider the matter. The Court of Appeal was not satisfied the evidence established that the motive of the Minister was to thwart the pending litigation, even though in the result the decision had that result. An essential basis of the authorities referred to by McHugh JA in Nettheim was that the council in each case did not give the proper and relevant consideration to the matters which arose on the exercise of the power. They simply made a colourable decision to prevent the other party from succeeding on an appeal. In the present case the council merely continued on with the course it had already adopted. The applicants do not allege that the council failed to address its mind to the appropriate question except to the extent they assert in the "Fine Cotton" argument, that the answer was predetermined. If the Court assumes that the motive of the council officers, in particular Ms Daniell and Mr Edgar, was ultimately to render the development application and any future appeal from the council's decision futile, it has not been proved that the collegiate body was primarily moved by the same interest. The council did not merely adopt the reports and recommendations of the officers. On 1 December 1997 and 15 December 1997, the report of council's Heritage Officer was received and noted and the recommendations adopted after proposed amendments were dealt with. The reports made clear reference to the threat of demolition, the appeal lodged against the refusal of the development application and the receipt of the s 68 application. Otherwise, the council's decision was not colourable as a decision made other than for the purpose for which the power was conferred by the EPA Act. Details of the heritage significance and the reports and assessments received by council were also dealt with. I am satisfied that the council and its officers were concerned with and were bona fide applying their minds to the planning issues and the reasons for which the statutory powers of making the LEP were conferred. The applicants have not proved otherwise. It can only be said that, at that time, no attempt to list the premises would have been made if the development application had not been received. The appropriate conclusion is that the listing was for the proper purpose of protecting an item identified as having heritage significance worthy of conservation. There were consequences for the applicants in respect of the two extant applications before council, but the desire to protect a property with heritage significance is not inconsistent with the exercise of the power. The case is distinguishable from Thompson v Randwick Corporation. The council was not bound to leave the issue of heritage significance to be determined solely as an issue in an appeal hearing. It was not obliged to leave its decision to be reviewed on appeal. Even if the council was seeking to ensure that its decision could not be disturbed on appeal it would not necessarily follow, on that ground alone, that it was not acting bona fide. Once the process of making the LEP had been initiated, in my opinion no obligation to review that process arose as a consequence of the Court's unrelated decision under the different legislation of the Local Government Act. The main and real purpose of drafting the LEP was to thwart the intention of the applicants to demolish a building in respect of which the council had advice that it was worthy of protection as a heritage item. The consequence of making the LEP amendment is that, thereafter, it will be necessary for the council, and the Court on appeal, to take account of the heritage significance of the building before any development can be carried out, including demolition. That does not have the effect of thwarting the decision by the Assessors. It still remains in force as an approval to demolish the building for the purposes of the Local Government Act. If the LEP is made, the applicants will be required to satisfy the additional requirement of the EPA Act. The Court is not satisfied that the applicants have made out the "sour grapes" argument. The Fine Cotton Point The applicants do not rely on any one piece of evidence. It is the totality of the evidence which Mr Leggat says allows the Court to conclude that the council and its officers merely went through the motions of determining heritage considerations in a rigorous manner in circumstances where at all times those involved knew the intended and eventual outcome was never in doubt. In other words, the process was a sham because the decision was predetermined. The applicants must establish that the council, as the collegiate body, predetermined the issue, not simply that the respondent's officers predetermined the issue. The motives of the respondent's officers are irrelevant unless the council acted to adopt their reports and recommendations in a way which tainted its decision with some error of law. By the time the council itself first came to consider the making of the draft LEP on 1 December 1997, it had before it the report to the Development Control Committee on 24 November 1997. That report consisted of observations about the issues by Ms Daniell, and the Hugh Fraser heritage assessment was annexed. The recommendation by Ms Daniell was adopted. The recommendation included that her report be received and noted It was clearly open for the council to decide whether or not No. 48 Darling Point Road should be included in the schedule. An amendment was moved on 1 December 1997 to the effect that it not be included. The amendment was lost. On 15 December 1997, when the matter was reconsidered, the motion, in the form first moved, did not include No. 48 Darling Point Road. A successful amendment included the property. It is difficult to see how, in those circumstances, the council had predetermined the matter. It is always open for a council to rely on the inquiry, report and recommendation of its officers provided the report makes it aware of all the relevant facts or those facts are available from some other source, including the general knowledge of the members. After the matter was further considered by the Urban Planning Committee on 6 April 1998, the council had available to it a detailed summary of the submissions received. The applicants seek to argue that, because the actual submissions were not presented to it, council was in some way misled or not properly informed. It is beyond question, from a line of authorities well established in this Court, that a council is presumed to have notice of all material in the council files. So far as the applicants rely on the state of mind of Ms Daniell and Mr Edgar on 1 September 1997 and 27 October 1997, it must be pointed out that the officers were dealing with the development application at that time, not the application for demolition or the draft LEP. Finally, Mr Leggat made a Jones v Dunkel type submission that, because the respondent elected not to call Ms Daniell, Mr Fraser, Mr Dynan, Mr Staas or Mr Edgar, the Court should draw an adverse inference. This submission overlooks the nature of the proceedings. The question the Court has to determine does not involve deciding whether the council is correct, but merely whether it was open for the council to decide as it did or whether it acted improperly. Both questions are decided against the applicants. Conclusion The Court is satisfied that the evidence does not establish that the council acted to make the draft LEP for an improper purpose. The determination was not predetermined and it was not made for the purpose of defeating or thwarting the outcome of litigation, at least in the sense that it would not have otherwise made the decision. It was open for the council to decide what it did on the material before it. In the circumstances, the respondent is entitled to the exercise of the Court's discretion in its favour in regard to an order for costs. Orders 1. Application dismissed. 2. The applicants are ordered to pay the respondent's costs of the proceedings. 3. The exhibits 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.