Land and Environment Court New South Wales Medium Neutral Citation: Meriton Property Services Pty Ltd v Council of the City of Sydney (No 2) [2012] NSWLEC 1320 Hearing dates: 9, 10 October 2012, 16 November 2012 (written submissions) Decision date: 20 November 2012 Jurisdiction: Class 1 Before: Pearson C Decision: Appeal upheld Catchwords: DEVELOPMENT MODIFICATION - Affordable housing contribution - Modification of condition Legislation Cited: Environmental Planning and Assessment Act 1979 South Sydney Local Environmental Plan 1998 Cases Cited: Meriton Property Services Pty Ltd v Council of the City of Sydney [2012] NSWLEC 1308 Swadling v Sutherland Shire Council (1994) 82 LGERA 431 Category: Principal judgment Parties: Meriton Property Services Pty Ltd (Applicant) Council of the City of Sydney (Respondent) Representation: Solicitors Ms K Mihail (Applicant) Mr A Hawkes (Respondent) File Number(s): 10724 of 2012 Judgment 1On 13 July 2012 Meriton Property Services Pty Ltd (Meriton) appealed against the deemed refusal by the respondent Council of an application made on 23 April 2012 under s 96(1A) of the Environmental Planning and Assessment Act 1979 (the Act) to modify development consent D/2010/639 for 8 Defies Avenue Zetland (the VSQ site). 2The modification application D2010/639/L sought to modify conditions 2, 4, 12, 17, 18, 19, 40, 41 and 41A of development consent D/2010/639. On 17 July 2012 the Council approved the modifications of conditions other than conditions 40, 41 and 41A. 3Condition 40 imposed an obligation to pay an affordable housing contribution. The issues in the appeal were whether the affordable housing contribution was to be levied at the rate of 3% or 1% in the application of the provisions of the South Sydney Local Environmental Plan 1998 (the SSLEP), whether the provision of a bank guarantee before obtaining a construction certificate precluded repayment, and whether condition 40 should be modified. 4For the reasons provided in Meriton Property Services Pty Ltd v Council of the City of Sydney [2012] NSWLEC 1308, I concluded that the affordable housing contribution was to be calculated under cl 27P(1)(a)(ii) of the SSLEP at the rate of 1%, that cl 27P(3)(b) did not apply to the contribution required by condition 40, and that condition 40 should be modified. On delivery of the judgment on 2 November 2012 I directed the parties to provide the agreed form of a modified condition 40 with the final agreed total floor area, and to provide a consolidated set of conditions, with the intention that final orders would be made in chambers. 5The consolidated conditions subsequently provided by the Council in accordance with those directions included a further modified version of condition 40, about which the Court had not been informed. The Council advised that this version of condition 40 reflected both the calculation of the total floor area and the application of the rate under cl 27P(1)(a)(ii), and a further modification that had been made in modification application D2010/639/P determined on 5 November 2012. The parties were directed to provide further written submissions. 6The background to modification application D/2010/639/P was provided in Meriton's submissions. On 26 July 2012 the hearing of the appeal in proceedings 10724 of 2012 was set down for 9 October 2012. By September 2012 the VSQ site was approaching occupation stage. Condition 40 required that to obtain an occupation certificate Meriton would be required to pay the affordable housing contribution. In order to maintain the parties' rights pending the hearing, on 12 September 2012 Meriton lodged a further application with the Council to modify condition 40. That application proposed two options for modification of condition 40. On 5 November 2012 the Council modified condition 40 as follows: (40)AFFORDABLE HOUSING CONTRIBUTION - GREEN SQUARE - PAYMENT OF MONEY IN LIEU OF FLOOR SPACE In accordance with Clause 27P of South Sydney Local Environmental Plan 1998 (as amended), and prior to a Stage 1 Construction Certificate being issued, the applicant must provide evidence that a monetary contribution towards the provision of affordable housing has been paid at the office of the Department of Planning or a bank guarantee in favour of the Department of Planning to the value of the required contribution has been lodged. The contribution is $3,665,005.20 $3,962,169.60 based on the in lieu monetary contribution rate for non-residential development at $40.45 per square metre of total non-residential floor area 126sqm, and for residential development at $121.39 per square metre of total residential floor area 30,150sqm 32,640sqm. Contributions will be indexed in accordance with the formula set out below. Prior to an Occupation Certificate being issued or the use commencing, whichever is earlier, the applicant must provide evidence that the bank guarantee referred to above has been redeemed as payment of this contribution. If the contribution is paid after the indexation period in which the consent is granted 1 March 2010 to 28 February 2011, the amount of the contribution will be indexed in accordance with the formula set out below. [DELETED] Buildings L and M: A contribution of $1,750,087.05 based on the in lieu monetary contribution rate for non-residential development at $45.51 per square metre of total non-residential floor area of 38,455sqm. Contributions will be indexed in accordance with the formula set out below. Within six (6) months of the issue of any Occupation Certificate for Buildings L and M, the applicant must provide evidence that the bank guarantee referred to above has been redeemed as payment of this contribution. If the contribution is paid after the indexation period in which the consent is granted 1 March 2012 - 28 February 2013, the amount of the contribution will be indexed in accordance with the formula set out below. Buildings N and O: The payment of the residual contribution amount of $2,212,082.55 is dependent on the judgement of the Land and Environment Court Appeal No. 10724 of 2012. Where this residual contribution is required by this judgement, payment shall be made within six (6) months of the issue of any Occupation Certificate for Buildings N and O. The applicant must provide evidence that the bank guarantee referred to above has been redeemed as payment of this contribution. If the contribution is paid after the indexation period in which the consent is granted 1 March 2010 - 28 February 2011, the amount of the contribution will be indexed in accordance with the formula set out below. [INSERTED] Notes: (a)Applicants have two payment options: Option 1 is payment by bank cheque using 'Form B - Receipt to Release Certificate of Construction after payment by Bank Cheque'. Form B must be obtained from the City of Sydney, and then must be lodged with a bank cheque with the NSW Department of Planning. Option 2 is lodgement of a bank guarantee using 'Form A - Receipt to Release Certificate of Construction after lodgement of Bank Guarantee'. Form A must be obtained from the City of Sydney, and then must be lodged with a Bank Guarantee with the NSW Department of Planning. Where Form A has been used, an occupation certificate will not be released until payment by bank cheque using 'Form C - Receipt to Release Certificate of Occupancy after payment by Bank Cheque'. Form C must be obtained from the City of Sydney and then must be lodged with a bank cheque with the NSW Department of Planning. (b)Applicants are made aware that the contribution amount quoted in this condition may not be final and that a correct indexed affordable housing contribution amount can be obtained from the relevant Form A, B or C at time of payment. (c)Forms A, B or C for payment of the affordable housing contribution can only be obtained from the City of Sydney, 456 Kent Street Sydney. Quote the development application number and the relevant Council officer will provide the applicant with an indexed contribution amount which must be paid at the Department of Planning. To arrange payment, contact the Housing Policy Team, NSW Department of Planning on Ph: 9228 6111 or Fax: 9228 6455 to arrange a time for payment. (d)The contribution will be indexed on the basis of the Established House Price Index for Sydney as published by the Australian Bureau of Statistics. (e)Contributions at Time of Payment = C x HPI2 / HPI1, where: (i)C is the original contribution amount as shown above; (ii)HPI2 is the Established House Price Index: All Groups Index for Sydney available from the Australian Bureau of Statistics at the time of the payment; and (iii)HPI1 is the Established House Price Index: All Groups Index for Sydney available from the Australian Bureau of Statistics that applied at the date of the consent 1 March 2010 to 28 February 2011 [DELETED] 1 March 2012 - 28 February 2013 [INSERTED]. The amount of the monetary contribution is calculated on the total floor area (not a percentage of it). Contribution = (total residential floor area sqm) x residential rate ($) + (total non-residential floor area (sqm) x non-residential rate ($) + (total non-residential floor area (sqm) x non-residential rate ($). 7The Council's written submissions state that in addition to modification applications D/2010/639/L (the subject of the appeal proceedings) and D/2010/639/P (approved on 5 November 2012), there have been a further three modification applications, "M", "N" and "O". Only application "P" is relevant to condition 40, and in the Council's submissions was intended to reflect the earlier reasons. Meriton needed to take legal occupation of the VSQ site around 5 November 2012 and the levy was due to be paid prior to occupation certificate. Meriton were concerned that if they paid the full levy at the residential rate of 3% it might not be possible to get a refund if the Court determined that the levy should have been paid at the rate of 1%. Prior to the Court's decision on 2 November 2012 the Council's legal arguments would have prevented a refund or even a reduction in the guarantee. The Council considered that it was reasonable to accede to Meriton's request, thus allowing Meriton lawfully to obtain an occupation certificate prior to the formal judgment on modification application D/2010/639/L. 8The Council submits that the last extant modified consent issued is Amendment "P" on 5 November 2012, pending formal orders in the appeal relating to Amendment "L". The Council submits that the legal representatives had not been briefed on modification application "P" until after the hearing of amendment "L" on 9 and 10 October 2012. 9There would not appear to be an issue with the power of the Council to determine modification application D/2010/639/P: Swadling v Sutherland Shire Council (1994) 82 LGERA 431. The issue is whether the amendment to condition 40 in modification D/2010/639/P is consistent with or requires reconsideration of the reasoning in the judgment delivered on 2 November 2012. 10Meriton submits that the modification made to condition 40 simply enabled stage repayments, updated the indexation amount, and stated the coinciding indexation date. Meriton submits that the affordable housing figure provided in the modification approved on 5 November 2012 is the figure for total floor area and contribution amount at the non-residential rate agreed between Mr Tim Wise and Ms Sandra Robinson in their joint report (exhibit 5), increased to reflect the current indexed amount. The Council submits that the condition as amended was intended to reflect the earlier reasons. 11Having had the opportunity to consider the amendment made to condition 40 in modification application D/2010/639/P, in the context of the background to that application and the two options provided by Meriton to the Council, I accept Meriton's submissions that the version of condition 40 approved by the Council on 5 November 2012 simply amends the staging of the payment of contributions taking into account the provision of the bank guarantee in March 2011 and Meriton's wish to obtain an occupation certificate before payment of the final amount of the affordable housing levy. It does not alter the substantive provisions for provision of a bank guarantee which enabled Meriton to obtain a construction certificate, with final payment of the levy deferred until the occupation certificate stage (discussed at [95] of the earlier judgment). Accordingly, it is appropriate to make the orders foreshadowed in the earlier reasons. 12The orders of the Court are: 1. The appeal is upheld. 2. The application under s 96(1A) of the Environmental Planning and Assessment Act 1979 to modify condition 40 of Development Consent D/2010/639 in relation to 8 Defries Avenue Zetland is approved subject to the conditions in Annexure A. 3.The exhibits are returned. Linda Pearson Commissioner of the Court 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. Decision last updated: 20 November 2012