Land and Environment Court of New South Wales CITATION : Innis Holdings v Manly Council [2007] NSWLEC 878 APPLICANT Innis Holdings PARTIES : RESPONDENT Manly Council FILE NUMBER(S) : 10365 of 2007 CORAM: Murrell C KEY ISSUES: Appeal :- Judgment No. 2 on s 94 Contribution - fair and reasonable - Newbury Test LEGISLATION CITED: Environmental Planning and Assessment Act 1979 Manly Section 94 Contributions Plan 2004 CASES CITED: Lake Macquarie City Council v Hammersmith Management Pty Ltd [2003] NSW CA 313; Russo v Burwood Municipal Council CA DATES OF HEARING: 11/09/2007, 12/09/2007, 13/09/2007 and 03/12/2007 EX TEMPORE JUDGMENT DATE : 3 December 2007 APPLICANT Mr A. Galasso, SC Instructed by T. Sattler of Sattler & Assoc LEGAL REPRESENTATIVES: RESPONDENT Ms S. Duggan, barrister Instructed by Ms R. Vickers of Pike Pike and Fenwick JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Murrell C 3 December 2007 10365 of 2007 Innis Holdings v Manly Council JUDGMENT 1 This is a second judgment in these proceedings. The first judgment I delivered on 20 September 2007, on the merits of the development application. As agreed by the parties, I was to deliver the merits of the application prior to the parties proceeding to make submissions with respect to the s 94 issue. As such, today I am in a position to issue the formal Orders of the Court for the appeal, including the s 94 matter and the conditions required in terms of the previous judgment that I delivered. 2 The judgment is in respect of the s 94 contribution, which is contained in council's condition No 87 for the erection of a dwelling house at No. 40, lot 2, Gurney Crescent, Seaforth. 3 The applicant is not contesting the validity of the plan, but in fact it is a challenge in terms of s 94B(3) of the Environmental Planning and Assessment Act, 1979. The council in its conditions requires a contribution of $25,732.50, and the applicant, on the other hand, contends that it is reasonable to require a 1% levy, that is, $9,400 in respect of the subject application. 4 By way of background the condition originally read to require a contribution of some $66,600, and there were amended plans which had the effect of deleting the flat at the lower level and therefore reduced the number of bedrooms, such that the contribution would have then been $51,500 thereabouts. 5 Following submissions made on the s 94 matter council had failed to take into account, as had been pointed out by the applicant's representatives, its resolution to apply a reduction of 50% for dwellings erected within this precinct, this area, under the s 94 plan. 6 By way of background, this is a subdivision of land that was originally proposed for roadway and as such was rezoned by the Department of Planning, and a subdivision subsequently occurred. At the time the subdivision was made it is also in evidence that there were works in kind and contributions made at the subdivision stage. The actual extent of those is unknown in these proceedings and has not been detailed as such. 7 The validity of the plan is clearly something that is not a matter for Class 1 proceedings, and my consideration concerns the reasonableness of the condition. 8 At this point it is appropriate to provide or cite the relevant sections of the Act in this matter; that is, s 94(1): "If a consent authority is satisfied that development for which development consent is sought will, or is likely to, require the provision of or increase the demand for public amenities and public services within the area, the consent authority may grant the development consent, subject to a condition requiring the dedication of land free of cost or be the payment of monetary contribution, or both." 9 Subclause (2) reads: "A condition referred to in subs (1) may be imposed only to require a reasonable dedication or contribution for the provision, extension or augmentation of the public amenities and public services concerned." 10 As such, the tests of or the limbs of the monetary contribution must be reasonable. 11 Subsection (3) is that: "The consent authority may grant the development consent, subject to a condition requiring the payment of a monetary contribution towards the recoupment of the cost of providing the public amenities or public services." 12 Subsection (4): "A condition referred to in (3) may be imposed only to require a reasonable contribution towards recoupment of the costs concerned." 13 Section 94A was introduced into the Act, which provides for fixed development consent levies, and a consent authority may impose as a condition of consent a requirement for the applicant to pay a levy of the percentage authorised by a contributions plan. That has often been a practice of a 1% levy. This particular provision is not relevant to these proceedings. There is a s 94 plan in place and the legality of that plan is not in question. 14 Section 94B is: "The consent authority may impose a condition under 94 or 94A, only it is of a kind by, and is determined in accordance with a contributions plan." 15 Subsection (3): "A condition under s 94, that is of a kind allowed by a contributions plan...may be disallowed or amended by the Court on appeal because it is unreasonable in the particular circumstances of that case, even if it was determined in accordance with the relevant contributions plan." 16 This subsection does not authorise the Court to disallow or amend the contributions plan or direction, and as such that is the section which the applicant relies on in terms of the reasonableness in the particular circumstances of this case. 17 Just by way of background in terms of setting out the statutory framework, the imposition of conditions, the provision is under s 80A of the Act, and a condition of consent may be imposed if: "(a) It relates to a matter referred to in 79C(1)..." 18 Moving on to (h): "It is authorised to be imposed under s 80(3) or (5), subs (5) to (9) of this section, or s 94, 94A, 94EF, or 94F." 19 This gives the power to impose a condition for s 94 plans. 20 The council's relevant plan is known as the Manly Section 94 Contributions Plan 2004 as adopted 11 April 2005, and effective from 16 April 2005. It is relevant to put into context the issues such as equity that were raised during the proceedings. 21 Council has a number of principles. There are at least six arguments they state why cost recovery should apply in established areas. These are: "1. Places emphasis only on new services to support new demand; 2. Does not recognise contribution by past development to services already provided; 3. Ignores the benefit to the development because of services already available; 4. Due to the inability to maintain services because of rate pegging, revenue is required from other sources; 5. The loss of integrity of the system leading to additional demand for services at a future date causing a snowballing effect; 6. The history of contributions both in the past and in the future." 22 7.2 of the plan states that: "when it comes to the provision of infrastructure for development that brings additional population to an established urban area, there has been a less than satisfactory and flawed application in terms of equity. This flaw arises from the undue emphasis placed on only new additional infrastructures said to be required to support the additional demand. This ignores the important issue of compensating the existing community to the value of infrastructure already provided, and which has capacity to be used by new residents." 23 The plan then goes on to say: " The principles explained in this s 94 contributions plan is therefore not new, but simply an extension of the principle that the assets of a community should not be diminished as a result of additional demands from new development. Conversely, as a community develops the total value of the infrastructure increases therefore incoming populations, through development charges, can be expected to contribute increasing amounts in order to at least maintain the existing assets of the community. Manly Council, since 1993, has received s 94 contributions for facilities demanded by the existing and future community. The contributions received did not meet the full cost of providing these facilities. As a result, the incoming population should continue to pay for those facilities as well as those proposed by this plan. Beyond this plan future populations will be required to pay for additional facilities which have not been identified. They should, however, also contribute to the facilities now being provided and still have capacity." 24 And it goes further into an explanation in terms of the equity issue, and why council has incorporated into its plan s 94 contributions when there is development of allotments of land. 25 I quote further: "As the legislation supports the recovery of this amount, it is not unreasonable for development to make a contribution towards infrastructure already provided, and without which the new development is unlikely to occur." 26 Council further states: "Based on the equity principle, council would be entitled to recover from each incoming person $51,127. However, rather than requiring that contribution as well as the proportion of the cost of new works and services, council has chosen to impose a contribution based on the full cost of new works that will be noted in chapter 11, that this will lead to a contribution of $12,674 per person, a figure which is significantly lower than $51,000 as calculated above." 27 The Court in its consideration of this matter has determined, and I will state my reasons, that the s 94 contribution of $25,732.50 is not unreasonable in the particular circumstances of this case. The onus is on the applicant to persuade the Court to present evidence as to why, in the circumstances of this case, the contribution is unreasonable and why it should be varied. 28 The applicant raised the issue of equity, in that the adjoining property at No. 36 required a contribution of $6,500. This was under a previous plan and therefore it is of little weight in my consideration of this matter. Just as we have an LEP that might require a zoning change, if someone submits a development application after that plan is made or without a savings provision, then in fact one cannot allow the development that is prohibited under the new plan. I have to assume, and it is assumed and not challenged, that the plan has been legally made as such. 29 On the question of equity the applicant maintains and provided a table of a number of developments that have occurred in the area with the erection of dwelling houses, where the contributions were much lower. However, the tables 1 and 2 that were provided to the Court indicate that many of those properties were prior to or would appear to be prior to the amendment of the s 94 plan as of 16 April 2005. By the same token it is also noted that there were examples cited where in fact the contribution was assessed or determined in accordance with the plan. 30 Similarly, there were other applications provided that showed a lesser amount, but at the same time the Court does not have the benefit of understanding the particular circumstances in all those other cases. Whilst the approvals were provided to the Court, that is the determinations and the conditions attached to same, that does not indicate to the Court whether in fact there may have been works in kind or other such matters. 31 It is questionable whether the consistency to which council has imposed its s 94 contributions plan is a matter for me in these proceedings, but even if I assume that it is, I do not have complete knowledge or an adequate assessment of facts and circumstances for each individual case. That is the applicant has not been demonstrated to the Court on the analysis that would lead me to the conclusion that council's decisions are greatly inconsistent or even marginally inconsistent that would warrant the Court varying it in the circumstances of this case. 32 It is noted that from the documentation provided by the applicant, in particular the resolution of the council to halve the contribution by 50% in this precinct, it would appear that there were works in kind undertaken at the subdivision stage, as I stated earlier, but once again the extent and whether in fact how far that went to the requirement in terms of the s 94 is not something that can be clearly defined. 33 It is accepted that the s 94 contributions can be imposed at both the subdivision and the dwelling house application stage, and in terms of dwelling applications it is based on the number of bedrooms/occupants and demand of the infrastructure in the area. 34 The applicant requested the Court to impose instead 1% which it considered to be more reasonable. However, there is no nexus or justification for the Court imposing 1%. 35 I must give central consideration to the contributions plan, as in force, to my consideration of whether it is reasonable in the circumstances of this case. I cannot merely set aside and use another formula or another method, or indeed another provision of the Act that is not applicable in law to this particular development application and the levying of the s 94 contribution for the subject site. 36 The Court in its deliberations has had regard to the fact that there may not have been complete consistency, but once again, as I stated, this is not something that would warrant me in this particular circumstance varying the contribution as established. 37 Council has determined by resolution that the contributions plan be reduced by 50% in terms of the contribution per bedroom, and that is how the $25,732.50 was arrived at. There has been no evidence produced to the Court which persuades me that it should be varied, amended or changed in the circumstances of this case. The fact that there is under s 94A, as I stated, the provision for a levy is not relevant to this matter. 38 In terms of unreasonable and unfair, the parties took the Court to a decision, which is that of Lake Macquarie City Council v Hammersmith Management Pty Ltd [2003] NSW CA 313, a decision of 29 October 2003, and in particular I was referred to certain paragraphs in this judgment by the applicant. 39 I have in fact read the complete judgment and the need for the reasonable test and the Newbury principle, and the concept of unfair and reasonable in terms of s 94 plans. The requirements or the authorities set out in this judgment, which refers to a number of previous judgments including Stein J's judgment in Peterson and Stein's judgment in Stocklands are as follows: 40 Paragraph 52 of this judgment, and I quote: "In my opinion, a condition can only be validly imposed pursuant to s 94(1) if: (a) One or other of the limbs of the statutory phase is satisfied;" which I cited earlier-- "(b) The condition satisfies the Newbury test of being-- (i) For a planning purpose. (ii) Fairly and reasonably relating to the development. (iii) Not being so unreasonable that no authority would have imposed." 41 The application by the Land and Environment Court of the Newbury test to s 94 was confirmed by the Court of Appeal (Beazley, Priestley, Sheller and Green in Russo v Burwood Municipal Council CA 25 November 1996 unreported). 42 The third Newbury test is: "A statement of the tests of the reasonableness in the special sense expressed...is a test going to the validity of a condition and is not to be confused with the merit requirement of reasonableness mandated by s 94(2)." 43 Paragraph 54: "So far as the first Newbury test is concerned, it would generally be satisfied if one or other of the limbs of the statutory phase was satisfied." 44 The same comment applies at least in most cases to the second Newbury test, and the concept of fair and reasonable is also articulated within this judgment. 45 I am satisfied that the s 94 contribution, as set out in condition 87, is one that should be confirmed in the circumstances of this case. That is, it is not unreasonable in the particular circumstances of the case and in terms of s 94B(3) the Court confirms the amount. 46 I indicated earlier this afternoon when I commenced judgment that the Court would issue the formal orders, that is, in terms of the appeal under s 97, including the merits and including the s 94 determination. 47 The applicant submitted that the developer or the applicants are suffering twice in terms of this parcel of land because of the constraints of the land. That is not a relevant consideration for my determination in terms of the s 94. Similarly, as I indicated, the amount paid by number 36 under a different plan is of little weight. 48 The question of equity, the narrowness in terms of number 36 and the fairness to these applicants must also be looked at in terms of the wider community, in terms of the equity enunciated in the plan that I referred to earlier. As I stated, I must determine this s 94 matter in accordance with the relevant section of the Act. 49 Having now determined the s 94 contribution at $25,732.50 and in accordance with my previous judgment on the merits the Court can now issue the final orders in this appeal. Accordingly the formal orders are: 1. The appeal in respect of the property known as number 40 Gurney Crescent, that is lot 2 Seaforth, is upheld. 2. The development application number 6407 submitted to Manly Council and as amended and shown in exhibits 0 and P is determined by the granting of consent, subject to the conditions contained in annexure A. 3. The exhibits are returned to the parties, with the exception of exhibits 11, 12, L, N, O and P. ___________________ J S Murrell Commissioner of the Court ljr 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.