Land and Environment Court of New South Wales CITATION : Grand United Friendly Society v. Parramatta City Council [1998] NSWLEC 120 APPLICANT Grand United Friendly Society PARTIES : RESPONDENT Parramatta City Council FILE NUMBER(S) : 40165 of 1998 CORAM: Talbot J KEY ISSUES: :- Parramatta LEP 1990 cl 24 LEGISLATION CITED: Land and Environment Court Act s 16(1A) National Parks and Wildlife Act 1974 Land Acquisition (Just Terms Compensation) Act 1991 (NSW). Nix & Dunn v Pittwater Council (1994) 84 LGERA 199; James Miller and Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583 at 603; CASES CITED: L Schuler A.G. v Wickman Machine Tool Sales Ltd [1974] AC 235 at 270; The Administration of the Territory of Papua New Guinea & Anor v Daera Guba (1973) 130 CLR 353 at 446; DKLR Holding Co (No. 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510 at 519 DATES OF HEARING: 8/12/98, 9/12/98 DATE OF JUDGMENT: 12/14/1998 APPLICANT Mr D Officer QC Michell Sillar LEGAL REPRESENTATIVES: RESPONDENT Mr P Tomasetti Storey & Gough JUDGMENT: 1. The applicant is the owner of the property known as 87A Hammers Road, Toongabbie. 2. By notice dated 12 April 1996 the applicant gave notice to the respondent to acquire part of the land pursuant to cl 24(1) of the Parramatta LEP 1990. The land the subject of the notice is zoned Open Space 6(c). 3. Clause 24 provides:- Acquisition of land in Zone No. 6(a) or 6(c) 24.(1) The owner of any land within Zone No. 6(a) or 6(c) may, by notice in writing, require the council to acquire the land. (2) On receipt of a notice in writing referred to in subclause (1), the council shall acquire the land. (3) Nothing in subclause (1) requires the council to acquire any land within Zone No. 6(a) or 6(c) that may be required to be dedicated to the council by the owner of the land as a condition of consent to a subdivision of land. (4) Land within Zone No. 6(a) or 6(c) may be developed for any purpose, with the consent of the council, until that land is acquired by the council where the council is satisfied that the development will not adversely affect the usefulness of the land for the purposes for which it has been reserved. 4. The applicant now seeks to enforce the notice to acquire. 5. Prior to the issue of the notice, on 4 November 1993, the applicant had lodged two development applications with the council. 6. DA 93/18754 made application for approval to subdivision of the land into three allotments and the construction of a retirement village and clubhouse village on proposed Lot 1. 7. DA 93/18756 made application for consent to the re-subdivision of the proposed Lot 2 into seventy four lots. 8. Lot 3 in the proposed subdivision the subject of DA 93/18754 contained the land zoned Open Space 6(c). 9. On 7 December 1994 the applicant commenced class 1 proceedings in respect of the deemed refusal of both development applications. 10. During 1996 the council resolved to support the development applications subject to conditions. 11. On 8 August 1996 the applicant and the respondent entered into a deed which recited the development applications, the appeals, the notice to acquire, the resolution to approve the development applications subject to conditions and an agreement to settle the proceedings on the basis set out in the deed. 12. In cl 3 of the deed the council agreed to pay a total of $1.4 million to the applicant by eleven equal instalments of $116,666.66 and a final instalment on 1 August 1997 in the sum of $161,680.15. 13. Clause 3.2 of the deed then provided:- As soon as reasonably practicable after the payment in Clause 3.1.12 of this Deed, or after the Council has made early repayment as stipulated in Clause 3.3 of this Deed, Grand United shall execute all necessary documents reasonably required by the Council in order to effect the transfer or dedication of the Open Space 6(c) Zoned Land to the Council. 14. All of the payments have been made. 15. The council claims that, following payment of the money, it is now entitled to a transfer of the title to Lot 3 in its favour and accordingly is already the owner of the land in equity with the consequence that the applicant can no longer rely on the notice to acquire the land. 16. However, pursuant to cl 4 of the deed, a number of conditions, described as condition subsequent were agreed. 4.1 In the event that the property or any part thereof is unable to be developed in accordance with the Development Consents or either or them, then Grand United may serve the Council with a notice terminating the provisions of this Deed, a copy of which is set out in Schedule 2 to this Deed. 4.2 Without limiting the generality of Clause 4.1 of this Deed, the property or any part thereof shall be deemed to be unable to be developed in accordance with the Development Consents or either of them in the circumstances of any order or other action taken by any Government or any other authority which would have the effect of preventing or restricting the operation of the Consent. 4.3 The Council acknowledges that in the event of this clause coming into operation, any payments made to Grand United by the Council pursuant to Clause 3.1 of this Deed shall be credited towards the acquisition of the open Space 6(c) Zoned Land by the Council as required by the notice. 17. On the same day (namely 8 August 1996) Pearlman J made orders by consent whereby the development applications were determined by the granting of consent subject to conditions which, inter alia, included conditions 18 and 50 in identical terms as follows:- Pursuant to s 94 of the Environmental Planning & Assessment Act, the applicant will dedicate to the Council the land identified as proposed Lot 3 in both DA 10798 of 1994 and 10799 of 1994 subject to the payment by way of set off provided for in clause 3 of the Deed entered into between the Council and the applicant of 8th August 1996. The dedication is in satisfaction of the contributions required to be paid by the applicant in respect of both proceedings numbered 10798 of 1994 and 10799 of 1994. 18. In summary, the agreement made in regard to the acquisition of Lot 3 was that it would proceed either:- a) on the basis that the land will be dedicated pursuant to a condition of development consent, or b) that the land will be acquired pursuant to a notice given on 12 April 1996 requiring compulsory acquisition pursuant to cl 24(1) of the LEP. 19. If (a) then no further payment for s 94 contributions is required. 20. If (b) the payments pursuant to the deed will be credited against compensation payable to the owner. 21. A principal purpose of the deed is to take account of a foreseeable contingency that the owner of the land might be frustrated in obtaining the full benefit of the development consents. If that occurred, then the requirement for dedication of the land pursuant to s 94 is obviated. 22. On 24 October 1997 the Minister for the Environment imposed an Interim Protection Order (IPO) under s 91B of the National Parks and Wildlife Act 1974 over land being part of Lot 2 and the proposed Lot 3. 23. The applicant appealed to this Court against the imposition of the IPO. Judgment refusing the appeal was delivered on 18 May 1998. 24. In the meantime, on 30 October 1997 and 24 December 1997, the respondent's solicitor requested the applicant to make arrangements for transfer of title to the land in Lot 3. Transfer has not occurred. 25. On 14 May 1998 the applicant issued a notice purporting to be pursuant to cl 4.1 of the deed whereby the provisions of the deed were terminated. 26. On 19 May 1998 a further notice to acquire the land pursuant to cl 24(1) of the LEP was served on the council. The applicant does not seek to rely on this notice. 27. An IPO is made pursuant to s 91B of the National Parks and Wildlife Act 1974. It is apposite to note that this section does not allow development to take place even if it is in accordance with a development consent within the meaning of the EPA Act. This position contrasts with the effect of s 91AA (stop work orders), s 118A (harming threatened species etc) and s 118D (damage to habitat of threatened species etc). The Applicant's Case 28. Mr Officer QC, who appears for the applicant, primarily contends that nothing which has occurred since detracts from or subsumes the effect of the notice to acquire the land zoned 6(c) Open Space issued on 12 April 1996. 29. Prima facie, the applicant is entitled to exercise its right pursuant to cl 24(1) of the LEP to "require the council to acquire the land". 30. The deed recognises the notice given on 12 April 1996. The Council's Response 31. The council, on the other hand, has raised a number of arguments which rely upon the effect of the development consents and the deed in the events that have happened to demonstrate the applicant is no longer in a position to demand that the land be acquired by compulsory acquisition. 32. The council's case is best demonstrated by setting out the relief that it seeks in a cross application filed on 19 November 1998:- (a) a declaration that the cross applicant is the equitable owner of the land zoned for Open Space purposes and referred to in clause 3.2 of the Deed; (b) a declaration that in the circumstances and events which have occurred the cross respondent is bound to transfer or dedicate to the cross applicant the land zoned Open Space and referred to in clause 3.2 of the Deed; (c) an order that the cross respondent specifically perform the obligation set out in clause 3.2 of the Deed by executing all necessary documents reasonably required to transfer or dedicate to the cross applicant the land zoned Open Space; (d) a declaration that the cross applicant is an "owner" within the meaning of clause 24 of the Parramatta LEP 1990 (Toongabbie Ward) amendment No. 9 dated 24 October 1995 being an owner who is required to join in the giving of any notice under clause 24 of the said LEP; (e) ... (f) a declaration that the Deed has not been terminated by the cross respondent; (g) alternatively to (f) above, a declaration that if the Deed has been validly terminated by the cross respondent (which is denied) that the cross applicant is notwithstanding the termination of the Deed the owner of the land zoned Open Space referred to in clause 3.2 of the Deed and entitled to the relief set out in clauses (a), (b) and (c) hereof. 33. The Court accepts it does not have the necessary jurisdiction to make the declarations which the cross application seeks. However, if it is necessary for the Court to make findings in respect of some of those matters, to enable it to exercise the jurisdiction which it clearly has, to consider whether the notice issued on 12 April 1996 is effective, then it may do so pursuant to s 16(1A) of the Land and Environment Court Act. 34. The questions raised by the council are matters which the Court has jurisdiction to hear and dispose of pursuant to s 16(1A) being matters that are incidental to the matter that falls within jurisdiction (Nix & Dunn v Pittwater Council (1994) 84 LGERA 199). They are not matters in respect of which the Court may grant primary relief. Consideration of the Issues 35. When the notice to acquire was issued, none of the matters which the council seeks to raise as a defence had occurred. 36. The Court must assume that, when the parties entered into the deed, they intended that it would have the consequences for which it provided. 37. There is no express provision in the deed which contemplates that the right of termination was to be qualified except upon the happening of the event that the property, or any part thereof, is unable to be developed in accordance with the development consents or either of them. 38. The circumstances which arose following the imposition of the IPO, as a form of Government intervention, were contemplated by the deeming provisions in cl 4.2. 39. It was specifically recognised by the terms of the deed that the notice given on 12 April 1996 pursuant to cl 24(1) of the LEP had been properly given and had effect and that it could operate in the future to require the council to acquire the open space land. That expectation was not conditioned upon the happening of any event or that some event had not occurred, except the happening of the act of termination. 40. The IPO relevantly restricted the operation of the consent in respect of Lot 2 until the IPO expired in October 1998. Moreover on 23 October 1998, the Minister extended the IPO from 23 October 1998 to 23 January 1999. There is no challenge to the legal right of the Minister to extend the IPO in this way in these proceedings and accordingly the Court must, if it be relevant, determine the issues here on the basis that the development of Lot 2 continues to be restricted by the extension of the IPO. The Right of Termination 41. Mr Tomasetti seeks to argue, on behalf of the council, that, on a proper construction of cl 4.2, after taking account of the intentions of the parties at the time the agreement was reached, it was intended only to operate where the order or other action taken by the Government would have the effect of permanently preventing or restricting the operation of the consent. 42. The argument on behalf of the council must be rejected having regard to the wide range of circumstances which, as a matter of construction, could justify the service of a notice terminating the provisions of the deed in accordance with cl 4.1. These circumstances are merely further clarified in one respect by the deeming provisions in cl 4.2. For example, cl 4.1 is expressed in wide enough terms to cover a unilateral decision by the applicant that the land is unable to be developed in accordance with the development consents by reason of commercial constraints, or the like. 43. No part of cl 4 of the deed suggests that there must be permanent constraint upon development before a notice of termination may be served. The rationale for this is obvious given the nature of a development consent which is sensitive to changing conditions. The Section 94 Contribution 44. It is clear that whenever, and if ever, the development consents are acted upon, the adjustments contemplated by conditions 18 and 50 constitute an arrangement which satisfies any obligation to make contributions pursuant to s 94 of the EPA Act. If the development consents are not to be acted upon for any reason and the development does not proceed, then s 94 has no application. That this is so and was expressly contemplated by the parties is reflected by the provisions of cl 4.3 of the deed whereby the monies paid by council pursuant to the deed up to that point are thereafter to be applied as a set off against compensation payable for compulsory acquisition of Lot 3. 45. Mr Tomasetti asks the Court to give consideration to statements made before the Chief Judge when the intended effect of conditions 18 and 50 was explained by council's solicitor as being to provide for s 94 contributions to the value of $1 million by the dedication of the open space land and a cash adjustment. Although the orders were made by consent, the statements relied upon were made only on behalf of the council. Nevertheless it is not appropriate to have regard to this declaration of intention in order to construe the words of the deed. The same approach should be taken in respect of evidence of subsequent events in the context of construction. It is nonetheless appropriate to take account of later conduct to determine the effect of matters with which the contract deals. 46. As a matter of principle a court will not take account of extrinsic evidence of the intention of a party from statements made at the time of making an agreement in writing or before or after that time. The duty of the court is to construe the deed according to the words used and not what was intended to be written. The contract or agreement made by the deed does not change its original meaning by reason of subsequent events. 47. Where something unforseen occurs or where circumstances change, that does not ordinarily lead to a change in the meaning of the words used irrespective of whether the parties do anything under the agreement in the meantime (James Miller and Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583 at 603; L Schuler A.G. v Wickman Machine Tool Sales Ltd [1974] AC 235 at 270; The Administration of the Territory of Papua New Guinea & Anor v Daera Guba (1973) 130 CLR 353 at 446). 48. Under the terms of the deed it could be expected that the council could be required to compulsorily acquire the land and get credit for the payments totalling $1.4 million. Under the conditions of consent it could expect to have the land vested in it by dedication and pay out the sum of $1.4 million. The conditions 18 and 50 operate consistently with the deed remaining in force. They are not expected to operate following termination of the deed. The question of s 94 contributions is thereafter left for determination according to the terms of any future development application which may or may not reflect the frustration to the applicant's desire to carry out development strictly in accordance with the existing development consents. The Effect of Termination 49. The reference to terminating the provisions of the deed in cl 4 means that any benefits or other consequences of actions taken pursuant to the deed up to the date of termination remain on foot. Upon the giving of the notice, any right to seek future performance of the agreement is destroyed unless otherwise provided in the deed itself. Therefore after the date of termination, each of the parties are relieved from any further obligations to perform any requirements of the deed except as expressly provided in cl 4.3. 50. Having regard to the express provisions in cl 4.3 it must be accepted as a matter of construction that the parties intended that any outstanding rights which may have accrued pursuant to cl 3 were at an end. The Relevance of Equitable Interests 51. In the events that have happened, either of the parties may have acquired some equitable interest that did not exist at the date when the deed was executed and the consents were granted by the Court. 52. In particular, the council claims that it is entitled to a transfer of the legal title as provided in cl 3.2 of the deed. Nevertheless, it is not in dispute that the applicant remains the legal owner of the land. 53. It is not for this Court to finally determine within jurisdiction whether the council is entitled to be treated as having an equitable interest in the land. However, the right to call for a transfer of the land does not make the person holding that right an owner in the absence of some express provision to the contrary. 54. A person who has a beneficial interest in land has a right at law to compel the legal owner to hold all of the rights which the law gives the beneficiary in accordance with the obligations which equity imposes. The right of the beneficiary constitutes an equitable estate in the property. The equitable estate is engrafted on to, not carved out of, the legal estate. Equity does not say that the cestui que trust is the owner of the land (DKLR Holding Co (No. 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510 at 519). 55. During argument the parties were reminded that definition (b)(i) of "owner" in the Dictionary contained in the Local Government Act 1993 is incorporated in the EPA Act. Neither party contended that the definition provided any assistance in the present case. 56. If there are equitable interests in the land itself or in the compensation to be paid as a consequence of the termination and compulsory acquisition, then they fall to be adjusted between the parties by the order of some court which has the appropriate jurisdiction to make those adjustments. Whether the Council is an Owner for the Purpose of cl 24 57. The council's claim that it is to be regarded as an owner who is entitled to join in the giving of any notice under cl 24 of the LEP is rejected because at the date the notice was given the council was not the legal owner of the land. Indeed at that time it had no interest in the land. Election 58. The Court is satisfied that the making of the IPO gave rise to an election to serve the council with a notice terminating the provisions of the deed. That election was made when the notice was served on 14 May 1998. The IPO was, at that date, extant and had the effect of preventing the operation of the consent or at least restricting the capacity of the applicant, as the developer, to develop the land in accordance with the development consent until the expiration of the term of the IPO. 59. The council relies on actions taken by the applicant, allegedly relying upon the development consents, to show that the obligation to dedicate Lot 3 has arisen and that the right to terminate has been lost. 60. Initially, the applicant appealed against the effect of the IPO made by the Minister on 24 October 1997. 61. In August 1998 the applicant requested permission to remove trees from part of the land "to allow development of Lot 2 in accordance with the current consent following assessment of building platform locations". 62. A building approval for a sound barrier fence required by the conditions of development consent was issued on 20 August 1998 in response to a building application lodged in December 1996. 63. This argument would have more substance if the deed provided that the right to terminate arises only in the event that the action taken by the Government permanently prevents the operation of a development consent. The deed in terms draws a distinction between preventing and merely restricting the operation of the consent. 64. There is nothing inconsistent between relying on the effect of the restriction placed on the operation of the consent whilever the IPO is in force on the one hand, and proceeding in the meantime to take steps which might enable the applicant to act on the consent in the future. 65. The alleged conduct of the applicant does not amount to the type of unequivocal conduct that entitles another party to rely on a binding election to affirm. If the service of the notice of termination had been deferred until after the expiration of the IPO, then arguably the council might have relied on the alleged conduct to assert that it had been induced to believe that performance could be insisted upon (Sargent v A.S.L. Developments Ltd (1974) 131 CLR 634). That did not happen in this case. The Obligation to dedicate the Land 66. Although the council might, in the circumstances, have had an accrued right to insist upon dedication of the open space land pursuant to the conditions of development consent, that right has not been realised. All the council has done is to call for the transfer of the legal title following payment of the final instalment pursuant to cl 3 of the deed. 67. The conditions of the development consent referred to the effect of the deed. The provisions of the deed expressly recognised that the notice to acquire could have future operation following termination of the provisions of the deed. 68. Once the deed was terminated, the future rights of the parties changed. The agreement contemplated that the issue of land acquisition would then be dealt with by way of resumption rather than dedication. 69. The council contends that cl 24(3) of the LEP disentitles the applicant to rely on the notice of acquisition because of the continuing effect of conditions 18 and 50. This argument overlooks the fact that the conditions of development consent were not in force when the notice was given. 70. When the conditions of development consent were imposed, the parties contemporaneously acknowledged that the notice to acquire would be held in abeyance whilever the applicant was able to proceed to carry out development in accordance with the consents. 71. The agreement was made on the specific understanding that the land would be dedicated pursuant to the conditions of consent only if the development consents could be carried into effect. That has not occurred. 72. In the circumstances the alternative scenario contemplated at the time of the agreement has come to pass and the applicant is entitled to have the open space land compulsorily acquired by the council. The Future Consequences 73. Following acquisition the applicant is entitled to fair and full compensation subject to the set off for the monies already paid as expressly foreshadowed by the provisions of cl 4.3 of the deed. 74. I realise that the granting of relief to the applicant, thereby requiring the council to acquire the open space land, could have the consequence that the council is frustrated from receiving a contribution pursuant to s 94 of the EPA Act. It is not the role of the Court in these proceedings, nor is it an issue, to determine whether the right to a s 94 contribution is lost forever. 75. Nothing decided in these proceedings will have the effect of disentitling the applicant to act on the development consent if it becomes entitled to do so in the future. That could depend on what further action is taken in regard to the IPO or whether the open space land is acquired by the Minister for the Environment. Those circumstances will have to be addressed if and when they arise and according to the facts as they are at that time. Discretion 76. It is not sufficient to say that because technically, as a matter of strict law, the development consents remain on foot, the Court should exercise its discretion to refuse relief. 77. The arguments that the council prays in aid of the exercise of discretion will not necessarily mean that difficulties which may arise out of an anomalous result will be resolved. On one view of it they could be exacerbated. 78. There are two simple issues to be resolved. The first is whether the applicant gave a proper notice pursuant to cl 24(1). The second is whether anything that has happened since, in particular the grants of development consents and the execution of the deed, have an effect on the efficacy of that notice. 79. If the answer to those questions results in what is now regarded as an anomaly, the Court can only conclude that the council must have had the benefit of appropriate advice at the time and was aware of the potential for that to occur. In other words, it must be regarded as having understood and intended the results of its own actions. Conclusion and Orders 80. The applicant is entitled to a declaration and order claimed in the Further Amended Application Class 4 as follows:- A declaration that the respondent is required by the notice in writing from the applicant dated 12 April 1996 to acquire the land specified therein in accordance with clause 24 of the Parramatta LEP. An order that the respondent take all such necessary steps to acquire proposed Lot 3 at 87A Hammers Road, Old Toongabbie in accordance with the Parramatta LEP and the provisions of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW). 81. The question of costs is reserved. 82. 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.