Land and Environment Court of New South Wales CITATION : Fast Buck$ and Mark Thompson v Hixson Holdings Pty Limited and Byron Shire Council [1989] NSWLEC 202 APPLICANT Fast Buck$ and Mark Thompson FIRST RESPONDENT PARTIES : Hixson Holdings Pty Ltd SECOND RESPONDENT Bryon Shire Council FILE NUMBER(S) : 40120 of 1988 CORAM: Cripps J KEY ISSUES: :- Land and Environment Court Act LEGISLATION CITED: Local Government Act Environmental Planning and Assessment Act CASES CITED: Sydney City Council v Zizza 12 May 1989; Scott v Kogarah Municipal Council 23 December 1987 DATES OF HEARING: DATE OF JUDGMENT: 06/01/1989 APPLICANT Mr Bucks LEGAL REPRESENTATIVES: RESPONDENT Mr Tobias QC JUDGMENT: His Honour: On 31 May 1988, Fast Bucks and Mark Thompson commenced proceedings against Hixson Holdings Pty Limited and Byron Shire Council seeking a declaration that a building approval granted by the Council in October 1988 "was issued in breach of condition A1 of development consent No 86/177 granted by the second respondent". They also sought orders that Hixson be restrained from carrying out any work pursuant to the development consent until condition A1 of the development consent was fulfilled and that the Council be restrained from granting any further building approvals until all conditions in the development consent had been fulfilled. Until the day of hearing, Fast Bucks and Mark Thompson were represented by Hillman and Woolf Solicitors. The day before the hearing, Mr Woolf filed a notice of ceasing to act and at the hearing Fast Bucks sought to appear for himself and on behalf of Mark Thompson. I was satisfied Mr Thompson authorised Mr Bucks to act on his behalf and, in accordance with the provisions of s 63 of the Land and Environment Court Act, Mr Bucks was entitled to appear on his own behalf and on behalf of Mr Thompson. On 10 October 1988, the applicants filed points of claim as follows: building approval of the Council of 1987 was in breach of development "(a) The development consent expressly conditions A1 - A13 to be of (b) Inter alia, condition A1 of the legal agreements to be entered into. of October 1988, the certain legal had not been entered reference to October 1988 should be October 1987. On 2 December 1988 it was made clear to the Court that the applicants' challenge was confined to an allegation that the planning laws had been breached because of non-compliance with condition A1 of the development consent. In its points of defence, Hixson denied the building approval was "in breach of the Development consent" and maintained that even if the building approval had been granted in breach of condition A1, the building approval was not invalid. Alternatively, it claimed that the Court, in the exercise of its discretion, would not make any orders. The Council did not admit the allegations contained in the points of claim. It asked that in the event a breach was established, the Court not, in the exercise of its discretion, make any orders. In March 1989, the parties filed a document headed "Statement of Issues" as follows: "1. Whether the legal agreements referred to in condition A1 amended) of development consent 86/177 had been 168/177 (on 8th October 1987). 2. Whether building approval 168/177 was released prior to with condition A1 (as amended) of consent 86/177 and is thereby in breach in as aforesaid, whether the Court in the exercise its discretion should grant the relief which the I have said, Mr Bucks appeared in person and on behalf of Mr Thompson. He repeatedly stated that his motive in bringing the proceedings was to stop Hixson from introducing a tourist facility to Byron Bay under the guise of an "educational establishment" for which consent was granted. Nonetheless, he reaffirmed that there was no challenge to the consent granted by the Council in 1986 and that the issues before the Court were those identified by the parties and which are referred to above. That is to say, it was not asserted that the development consent was void because the Council misapplied its planning discretion. Mr Bucks suggested that the building approval should be "withdrawn" because its issue by the Council was in "breach of the development consent" granted in 1986. On 5 December 1986, the Byron Shire Council granted development consent for an "education establishment, Seven Mile Beach, including residential accommodation". The consent was subject to a number of conditions including the following: "(A) The following conditions will be required to be complied with before the release of any Building Applications. 1. Approval of the Minister for Education to be obtained for the proposed legal agreement and arrangements for operation of the education facility by the Northern Rivers College of Advanced Education ... 2. ... 3. ...". On 27 March 1987, the Byron Council, pursuant to s 102 of the Environmental Planning and Assessment Act resolved to modify the consent by deleting condition A1 and substituting in lieu thereof the following: "The Council of the Northern Rivers College of Advanced Education and Norsearch Limited to enter into legal agreements with the Cape Byron International Academy Pty Limited, and Hixson Holdings Pty Limited, as to arrangements for the operation of the educational facility in accordance with the Heads of Agreement submitted to Council under cover of letter from the applicant dated 20th January, 1987". On 8 October 1987, the Council approved a building application made to it pursuant to Part XI of the Local Government Act. At that time, no agreement had been entered into between the relevant parties but the parties had entered into an agreement called "Heads of Agreement" on 19 February 1987. The Council issued the building approval in October 1987 on the basis, apparently, that the Heads of Agreement dated 19 February 1987 was relevantly the "legal agreement" referred to in the development consent condition A1 as modified. It is agreed in these proceedings that the "Heads of Agreement" document does not meet the description "legal agreements" within the meaning of condition A1. It appears that Mr Bucks kept a close eye on events because in January 1988 he attended the offices of the Council asserting that the Council and Hixson had breached the conditions of development consent. He was then told that in the opinion of some, the "Heads of Agreement" satisfied condition A1. It is clear that in the early part of 1981 the Council had second thoughts about the lawfulness of the work being undertaken pursuant to the building approval. Later, it expressed the opinion that what was being undertaken was in breach of the development consent granted in 1986. Whether it also had the opinion that the building approval was void is not clear. On 25 March 1988, the Council wrote to Hixson informing it that the Heads of Agreement did not constitute a binding contract and that "until such time as a satisfactory legal agreement necessary to comply with condition A1 of the development consent is received, that no further building applications may be processed and approved". It is clear that the Council had received legal advice about the matter but the content of that advice is not before me. The matter was discussed at some length by Council in April 1988. Council accepted that one of its officers had made an error in assuming that the "Heads of Agreement" represented the relevant "legal agreeme nts" and for that reason the Council resolved to halt the building work that was being undertaken. It achieved this result by refusing to approve certain engineering plans for works necessary for the project. No further work was undertaken on the site. In June 1988, Hixson entered into a "design and construction" agreement with Civic Construction (Aust) Pty Limited and an agreement with Norsearch Holdings Pty Limited to be its project manager. In August 1988, it entered into a number of agreements with Cape Byron International Academy Pty Limited, Norsearch Limited (a company associated with Northern Rivers College of Advanced Education) and the Northern Rivers College of Advanced Education. These agreements are claimed by Hixson to be in compliance with condition A1. On 14 September 1988, Hixson lodged a fresh development application with the Council and in February 1989 development consent was granted subject to certain conditions. For present purposes, I am assuming that the development application lodged on 14 September 1988 was substantially for the same development referred to in the earlier application and consent. The development consent issued by the Council in February 1989 contained the following provision: "The following educational conditions will be required to be complied with before the release of building approvals:- 1. The development must be formally affiliated with a recognised Australian University or College of Advanced Education as defined by State Government enabling legislation and which is eligible for funding pursuant to Commonwealth/State government (Higher Education) legislation. This institute is referred to as "the affiliated institute" in the following conditions". I am informed that Hixson has appealed to the Court against the imposition of certain conditions annexed to the development consent and that this appeal will be soon heard. Dr Munro, on behalf of Hixson, has given evidence to the effect that at the present time Hixson intends to develop the subject land in accordance with the development consent granted in February 1989 and that it does not intend to act upon the development consent granted in 1986 or to undertake building work under the authority of the building approval in 1987. An undertaking was given to the Court by Mr Tobias QC on behalf of the Developer that if Hixson proposes to undertake building works in purported reliance on the building approval granted in 1987 and the development consent issued in 1986, it will give Mr Fast Bucks fourteen days notice of its intention. Although cross examined to suggest to the contrary, I accept Dr Munro's evidence that since May 1988 Hixson have not undertaken any physical work on the subject land. Furthermore, I accept his evidence to the effect that Hixson is not, at present, proposing to undertake the development authorised by the consent in 1986 or do any building work under the authority of the building approval granted in October 1987. As I have said above, the development consent granted in 1986 is not the subject of challenge. Because I accept the evidence of Dr Munro and note the undertaking given by Mr Tobias QC on behalf of Hixson, I do not consider there is any threat that any activities will be undertaken on the subject land in reliance of either the development consent in 1986 or the building approval in 1987. It is, therefore, not necessary for me to resolve the question whether, upon the interpretation of condition A1 favourable to Mr Bucks, the agreements entered into in August 1988 complied with the requirements of that condition. Mr Tobias has argued that they do and in this regard he is supported by Mr O'Rourke on behalf of the Council. Mr Bucks has submitted that they do not and that they are so structured that Hixson will be at liberty to erect buildings and thereafter maintain a tourist complex and not an educational establishment in breach, I must infer, of the development consent. In this regard, Mr Bucks sought to tender an advice to the Council from its solicitors that the August agreements did not meet the requirements set out in condition A1 and another memorandum of advice, said to have been made available to the Northern Rivers College of Advanced Education. The Northern Rivers College of Advanced Education was not represented but upon Mr Bucks informing me of the circumstances in which the advice came to be given, and later, how the advice came into Mr Bucks' possession, it seemed to me that the legal professional privilege prima facie attaching to the document said to have been given to the Northern Rivers College of Advanced Education had not been waived and I declined to inspect it. The Council claimed legal professional privilege and I declined to inspect the advice it received. However, evidence was given to the effect that in March 1989 Mr Bucks was informed by officers of the Council that the Council had received legal advice to the effect that the agreements in August 1988 did not comply with condition A1. As I have said, it is unnecessary for me to resolve this matter in the light of my conclusion that there is now no relevant threat. Furthermore, it is undesirable that I express any concluded view about the matter because the matter has not been adequately argued on behalf of the applicant. Mr Bucks appears to be of the opinion that the agreements could not be characterised as "legal agreements" because they contained conditions precedent. I have looked cursorily at the agreements and I am bound to say that his argument is not self-evident to me. However that may be, if Hixson wishes to proceed with the development upon the authority of the 1986 development consent, the matter can be determined later. As I have said, there is no present threat that this will happen. Mr Bucks' principal submission is that the building approval was given in breach of the development consent. Assuming this to be so, it would not follow, in my opinion, that the building approval is void (see Sydney City Council v Zizza 12 May 1989 Bignold J unreported and Scott v Kogarah Municipal Council 23 December 1987 Bignold J unreported). In Zizza's case, Bignold J determined that the provisions of s 314(4) were directory and not mandatory. Upon the evidence before me, I cannot conclude otherwise than that it was open to the Council to be satisfied that the building to be erected in accordance with the building application would be in accordance with the Environmental Planning and Assessment Act ie the development consent. Upon the interpretation I have placed on condition A1 (that being the one most favourable to Mr Bucks), the grant of building approval was not inconsistent with the consent notwithstanding that at that time the "legal agreements" had not been entered into. The development the subject of the development consent was commenced shortly after the grant of building approval in October 1978. At that time, no "legal agreements" had been entered into. The question is whether Hixson was in breach of the terms of the development consent by carrying out the development ie undertaking building work before any "legal agreements" had been entered into. I have not found it easy to interpret condition A1. It would seem to me, however, that I must have regard to the intent of the condition. I assume that the words "building applications" should be "building approvals". Furthermore, I am prepared to assume that the condition was not intended to operate merely as some sort of advance warning to Hixson that it would not get building approval until it had entered into "legal agreements" with the result that if the Council gave building approval before that happened, the condition was intended to have no further effect. With some misgiving, I have come to the conclusion that condition A1 should be interpreted to mean that before any physical development could be physically undertaken on the land the "legal agreements" referred to in the condition must have been entered into. The words, "the following conditions will be required to be complied with before the release of any building applications", are followed by thirteen conditions, including condition A1. The inte rpretation I have given to the condition is not inconsistent with a similar meaning being given to the other twelve conditions, all of which were intended to be fulfilled before any physical work was undertaken on the land. Conformably with the interpretation referred to above, as at May 1988, Hixson was in breach of its development consent. Mr Fast Bucks commenced the suit towards the end of May 1988. The circumstance that the Council had informed Hixson that it was in breach and that it would not process any further applications did not disentitle Mr Bucks to maintain the present proceedings. There is now no threat that work will be undertaken pursuant to the development consent or building approval and for that reason it is not necessary for me to determine whether the August agreements comply with condition A1 as interpreted. Furthermore, it is not appropriate, in my opinion, to declare that the undertaking of physical work on the land at the date of the commencement of the suit was unlawful because it was carried out in breach of condition A1 of the development consent. In my opinion, there would be no utility in making a formal declaration to that effect. If the agreements entered into in August 1988 do, in fact, comply wi th condition A1, a declaration would serve no utility because although a breach would have been established, no consequential order would have been made. If the August 1988 agreements comply with condition A1 any further development being undertaken on the land would not be unlawful. If, however, the agreements entered into in August 1988 do not comply with condition A1 and further work is undertaken in purported reliance of the 1986 development consent and the 1987 building approval, the appropriate declarations and orders can be made later in the event that proceedings are taken in the Court. As I have said, at the present time there is no threat to undertake work in reliance on the earlier condition and approval. For reasons which I have set out above, I decline to declare the building approval granted in October 1987 void. I note the undertaking referred to above, namely, that Hixson will not undertake any activity on the subject land in purported reliance on the development application granted by the Cou ncil in 1986 or the building approval granted by the Council in 1987 without giving to Mr Fast Bucks fourteen days notice of its intention so to do. In these circumstances, the formal order is that the suit be dismissed. In my opinion, there should be no order for costs. The suit has been dismissed but Mr Bucks has achieved some success in the proceedings. He has successfully argued that Hixson was in breach of the development consent in undertaking development in the first part of 1988 without having first entered into the relevant "legal agreements". I do not think the Council is entitled to its costs. Although in May 1988 it stopped Hixson undertaking further development, it must have earlier encouraged Hixson to believe it could undertake the development. Accordingly, the formal order of the Court is application dismissed. No order as to costs. 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.