Casuarina Beach Holdings Pty Limited v Tweed Shire Council [2013] NSWLEC 1214

Land and Environment Court New South Wales

Medium Neutral Citation: Casuarina Beach Holdings Pty Limited v Tweed Shire Council [2013] NSWLEC 1214 Hearing dates: 30 September and 2 October 2013 Decision date: 04 October 2013 Jurisdiction: Class 1 Before: Moore SC Decision: The matter is adjourned until 9 o'clock on Wednesday 9 October to permit the parties to settle conditions to reflect this decision after which orders will be made upholding the appeal and incorporating the revised conditions of development consent. Catchwords: Dilapidation reports; requirement to repair damage Cases Cited: Hillpalm Pty Ltd v Heaven's Door Pty Ltd [2004] HCA 59; (2004) 220 CLR 472 Hornsby Shire Council v Malcolm [1986] 60 LGRA 429 Newbury District Council v Secretary of State for the Environment [1981] AC 578 1643 Pittwater Road Pty Ltd v Pittwater Council [2004] NSWLEC 685 Category: Principal judgment Parties: Casuarina Beach Holdings Pty Limited (Applicant)

Tweed Shire Council (Respondent) Representation: Mr A Gadiel Gadens Lawyers (Applicant)

Mr A Seton Marsdens Law Firm (Respondent) File Number(s): 10645 of 2013

Judgment 1SENIOR COMMISSIONER: Casuarina is a seaside residential development on the far north coast of New South Wales. It is located between the frontal dunes and Cudgen Creek and substantially comprises an area that has been sand mined in the past. 2Casuarina Sands is an element of the development of that new residential area and comprises one of three remaining elements of the Casuarina overall development to be finalised. It is between the Tweed Coast Road and Casuarina Drive on the eastern side of Cudgen Creek. It extends, in part, from Casuarina Drive to the protected area adjacent to the creek and, in part, relevant to these proceedings, behind a number of existing dwellings that have already been constructed on the western side of Casuarina Drive with frontages to that road. Casuarina Sands enfolds those houses - having proposed development in its initial and final stages on either side of and behind those dwellings. 3The proposal that is currently the subject of these proceedings was granted development consent by Tweed Shire Council (the Council) on 30 July 2010. The matter that is currently before the Court deals with the evolution of and what should be the final form of a condition of consent dealing with the potential impact of the development on surrounding public infrastructure or potentially, on one interpretation, of the potential impact on a range of dwellings that are either adjoining or adjacent to the proposed development, many of those words used, in itself, a matter of dispute in these proceedings. 4The July 2010 development consent included two clauses that are relevant to this matter. Those two clauses imposing conditions of consent relate to dilapidation reports required to be prepared by the applicant having the benefit, as it now does, of that development consent. Condition 13 required a dilapidation report detailing current structural conditions of adjoining and adjacent buildings, infrastructure and roads. There was a requirement for a subsequent second dilapidation report to see what damage might have been caused and to deal with rectification of it. 5More controversially, condition 85 required that a further dilapidation report be prepared that dealt with not merely the structural condition of adjoining structures and the like but also referred to, "the current general condition, including the structural condition, of those elements." That condition went on to provide that, in effect, the adjoining owners were given a power of veto over the issuing of a subdivision certificate by requiring that they confirm in writing that either no damage had occurred to their property or that the repairs that had been carried out by the applicant to that property were acceptable to the owners. 6I note, at this point, that there is a third condition not raised in context of conflict in these proceedings, that is condition 83, that requires that any damage to property, including pavement damage, is to be rectified to the satisfaction of the General Manager or his delegate prior to the issue of the subdivision certificate. The implied scope of that clause was the subject of some discussion during the course of the proceedings, but I am satisfied that if that clause is to become a matter of contention in some further fashion, it is a matter that need not detain me in these proceedings. It will be the subject of interpretation, if necessary, in any subsequent dispute as to whether or not it has been satisfied - there being no suggestion that that clause in itself should be amended as a result of these proceedings. I therefore do not propose to address that provision further. 7In December 2012, in response to a modification application, cl 13 was amended but not in a fashion that is presently of controversy and was, in effect, transmuted to cl 13A with the original cl 13 deleted. 8The same happened to cl 85. It was replaced by a cl 85A which, in the context of the present application, retained, in effect, the right of veto for the adjacent or adjoining property owners. It is not necessary, at this time, to analyse the precise wording of what became cl 85A. 9Finally, in response to these proceedings (as is evident from the Council minutes extracted that have been provided to me) and in response to legal advice that has been given to the Council concerning the relevant matters in both cl 85 and cl 85A, a further amendment was made by the Council deleting cl 85A that had been imposed in late 2012 and replacing it with cl 85B. 10It is now, in effect, a dispute concerning the provisions of 85B and what amendments, if any, should be made to it in a number of respects that is before me for final determination in these proceedings. 11There are a range of matters that arise with respect to 85B as adopted by the Council that require consideration. 12In addition, I also raised with the parties the question of what would happen if a relevant landholder whose property might be required to be inspected or whose property might require to be rectified denied access for the purposes of inspection or rectification. The parties were requested by me to consider how such a matter might be resolved and they have agreed on a form of words to be provided for in the conditions of consent (that is, an agreed form of words subject to two matters remaining to be resolved). The two matters are whether such an additional provision should incorporate damage other than structural damage or whether it should be confined solely to structural damage and, second, the period of time that should be permitted to a landholder prior to the, if you like, exculpatory provision being triggered - the differences in that regard being the suggestion by the applicant that a 14 day period should be appropriate whilst, for reasons advanced by Mr Seton on behalf of the Council, a period of 60 days was suggested as relevant. 13This is a matter in my view that needs to be considered in conjunction with what might be the consequences of such inspection and resulting requirements for rectification, if any. It goes to the timing, in essence in my opinion, as to whether the requirement for reporting and rectification should precede or be permitted to follow the issuing of a relevant subdivision certificate (save for the final one which is the subject of a further specific discussion in light of the High Court's decision in Hillpalm Pty Ltd v Heaven's Door Pty Ltd [2004] HCA 59; (2004) 220 CLR 472, to which I will return). 14Mr Anderson gave evidence on behalf of the applicant concerning what might generally be described as a suite of various versions of dilapidation reporting conditions that have been imposed, in his experience, in Tweed Shire over many years - he being a former employee of the Council responsible for subdivision matters for many years. He also gave evidence concerning the provision that is generally applied by the Department of Planning in its conditions on such matters. 15Whilst I found his evidence informative, given the conclusions that I have reached as to the structure of an appropriate regime to be incorporated in a revised condition 85B, presumably now to become 85C, and the form of that which is in exhibit 4 which, with the deletion of the word "however" at its commencement, should become in my view condition 85D, I do not need to canvass Mr Anderson's evidence in depth. 16I had the advantage of evidence from Mr Adam Poole, a structural engineer, who gave evidence on behalf of the applicant and who had, through his employer, been commissioned to undertake the dilapidation reporting process that was undertaken in late 2012. He provided, as documents forming part of the supplementary material to his affidavit, two documents that became exhibits in the proceedings, which were referred to as AP1 and AP3, that set out the nature of the dilapidation reports that he had provided as the initial results of his inspection of the properties in late 2012. At p 6 of his affidavit he set out a number of matters at paras 31-35: 31. I have not, so far, observed any structural damage. Damage that I would consider to be structural damage in dwellings would be subsidence in structural footings/slabs, causing cracks in concrete floors placed into a damage category of 2, 3 and 4 or cracks in walls placed into a damage category of 3 and 4.1 rely on Australian Standard 2870-2011 Residential Slabs and Footing (AS 2870) to establish damage in residential dwellings. 32. I have seen some non-structural damage to adjoining properties. In my opinion, some of this non-structural damage is similar to the original damage noted, and is caused by ongoing thermal expansion and contraction in buildings material finishes and can not necessarily be attributed to by the subdivision works. However, in my opinion, some non-structural damage may have been caused by the subdivision works. 33. Examples of damage that I have observed that might be attributed to the development, but would not, in my opinion, be structural damage, would be the cracking of kitchen bench tops and grout between tiles or the cracking of joins in cladding materials, plaster cornices and/or separation of timber skirting boards from plaster walls. 34. It is difficult to determine what change in a building should be thought of as damage, when you are talking about non-structural changes. AS 2870 indicates that in walls, cracks placed into damage categories of 0, 1 and 2 are considered to either not need repairing (damage category 0 and 1) or easily filled (damage category 1 and 2) and should be regarded as part of the normal maintenance of buildings on reactive clays. While these dwellings are on sand and not reactive clays, AS2870 does indicate that some minor cracking and movement will occur in a significant proportion of buildings, particularly on reactive clays. 35. For example, in instances an existing crack may be slightly wider because of the subdivision works. However, when I apply AS 2870 I may conclude that it is in a category (0 or 1 for walls) that deems it not needing repair. 17He also indicated that he had not prepared any detailed report setting out his further opinions except to the extent that they were in the two documents exhibited to his affidavit. He also indicated expressly in para 31 that he had not so far observed any structural damage. 18The private residential properties that were the subject of his dilapidation reports, in AP1, comprise lots 198-223 Casuarina Way - they being the elements of the development to the west of Casuarina Way whose rear property boundaries and, with respect to the end properties at each end, their side boundaries abut directly, in an adjoining, contiguous fashion, the development that is the subject of these proceedings. 19The properties that are covered in AP2 are those at 23 Riberry Drive and 273-287 Casuarina Way - those being ones that are directly over Casuarina Way at a point where the development itself at its northern end directly contiguously abuts Casuarina Way. 20One of the matters that was the subject of considerable argument and discussion during the course of the hearings was whether or not there should be a change to the current conditions of consent, in effect to impose a retrospective requirement on the applicant to produce a complete nonstructural dilapidation report of those various properties as at the time of Mr Poole's original inspection - considerable work having been undertaken on the subdivision's bulk earthworks during the intervening period of time. 21Because a number of concerns that I had, I asked Mr Gadiel, who appeared for the applicant, if he would seek from the applicant instructions as to whether a voluntary undertaking concerning the disclosure of information would be made. Mr Gadiel was given instructions and subsequently gave this undertaking: The applicant gives an undertaking on a voluntary basis that it will commission Icon, the employer of Mr Poole, to prepare a further version of AP1 and AP3 to include any additional information on the general condition of the subject properties at the time of the preparation of those reports that Mr Poole can reasonably provide. The applicant is not privy to what information Mr Poole may be able to provide so it cannot itself give any assurances to the extent and nature of this information. By giving this undertaking, the applicant does not concede or agree that such a condition can be inserted into the development consent. 22Although it was not expressly dealt with in the discussion that I had from the bench with Mr Gadiel, it is my expectation, I consider a reasonable one, that the information that will be obtained as a result of such further reporting by Mr Poole will be made available to the Council and to the relevant residents, as has happened with either the totality of or the extracts from AP1 and AP3. 23Even if that were not to be the case and there was to be future litigation, I am satisfied that such documents are at least potentially discoverable in any event. 24There are three constraints, in my assessment, on whether I could impose, in effect, that which has been the subject of the voluntary undertaking by way of condition of consent. They arise, first, as to whether such a condition would satisfy any or all of the tests in Newbury District Council v Secretary of State for the Environment [1981] AC 578, particularly, in my view, given the retrospective nature of the obligation that would be imposed, whether it would be reasonable to do so. 25The second constraint arises from whether or not the power lies to do so consequent on the consideration of matters raised by the former Chief Judge of the Court, McClellan CJ, in 1643 Pittwater Road Pty Ltd v Pittwater Council [2004] NSWLEC 685, particularly at paras 52-54. 26Finally, a matter to which I will return, whether it would be appropriate to do so as a matter of general law, given what is at least potentially the impossibility of compliance with the imposition of a retrospective obligation springing into existence for a time now comparatively long past. 27I am satisfied that the appropriate response to obtaining such baseline data concerning adjoining properties as might be possible to be ascertained is to rely on the undertaking given by Mr Gadiel on behalf of the applicant and not to seek to impose some form of retrospective amendment to the conditions of consent, as I am significantly troubled as to whether I would have jurisdiction to do so and, in the context of these proceedings and the giving of that undertaking, it would seem merely to invite unnecessary litigation to go further than relying on that undertaking proffered. 28It seems to me that that undertaking provides to both the Council and to the relevant residents all relevant and presently ascertainable information about the past state of affairs concerning their properties and public infrastructure. 29There, then, remain a number of matters arising out of the present version of the relevant clause, that is condition 85B, that require my determination. I have had the advantage of a marked-up clause that shows the competing positions. The first of those relates to whether the words "phase of bulk earthworks and/or stage" should be deleted and replaced with the word "component" as proposed by the applicant. It seems to me in the overall consideration of these matters that that may well be a distinction without a difference. It does however provide some flexibility for the applicant as the applicant undertakes the staging of this single staged development, and I am therefore prepared to accede to the applicant's proposal that the word "component" should be adopted. 30The next two changes that deal, in one instance, with the striking out of the word "the" and the insertion of the word "a" instead, and the other being the insertion of the word "a," seem to me to be minor, inconsequential, trivial and certainly not detaining matters, and there is no reason why the applicant's changes should not be adopted. 31The first substantive issue is, in effect, whether the Council should have the right of veto over the appointment of the structural engineer. In this case I have had the advantage of the written and oral evidence from Mr Poole. The only criticism, if indeed it were appropriate to regard it as a criticism, that might be made of Mr Poole has been the extent and thoroughness of the activities that he has undertaken on behalf of the applicant - going beyond that which might have been appropriate had he adopted a less comprehensive attitude to his role than he has taken. 32Given that, as I earlier remarked, in para 31 of his affidavit he indicated that he has ascertained no structural damage so far as a result of his inspections, he could have, in lieu of the preparation of AP1 and AP3, simply provided a report that said no structural damage is observable. He has, I think in a quite proper fashion, gone further than that. 33I do not see both in terms of not reflecting on Mr Poole (whose qualifications are set out on pp 2 and 3 of his affidavit, seem to me to be eminently sensible, together with the matters that are the subject of his reports in AP1 and 3) and the fact that the applicant proposes to continue to have him undertake at least the preparation of the baseline material, that there is any reason why I should make the potentially implied criticism of Mr Poole by making his continuing engagement by the applicant subject to approval by the Council. 34I invited Mr Seton to get instructions as to whether or not Mr Poole would be acceptable. Instructions, had they been given, that Mr Poole was acceptable would have obviated the necessity for me to make this decision. He was not able to obtain those instructions and, as a consequence, I am not prepared to grant the Council the right of veto over the applicant's choice of structural engineer. 35If there be any defect in the work of the structural engineer at some time in the future, that will undoubtedly be dealt with elsewhere in the jurisprudential food chain if it is necessary to do so. 36I now turn to the question of the requirement that the structural and general condition reporting be of all adjoining/adjacent buildings. 37In Hornsby Shire Council v Malcolm [1986] 60 LGRA 429, Kirby P, at p 433 discussed the word "adjoining" and, in that case, determined that it should be given a wider meaning and that the word did not require, in a contemporary context, geographic contiguity. 38Although Mr Seton put the proposition to me that that decision, which was in the context of a Seniors Living development and dealt with a zoning interface, might not have the breadth of application that I consider it might have, I am satisfied that the question of whether "adjoining" should be married with the word "adjacent" or not should in fact be rendered a nugatory consideration. The appropriate way, as I foreshadowed to the parties I would consider during the course of the proceedings, is to say that the private properties that are to be the subject of inspection should be nominated either in the condition or in a schedule to the conditions of consent. That way there is complete certainty for both the Council and for the applicant as to what is encompassed by it. 39I am satisfied that, adopting an approach consistent with that in Hornsby v Malcolm, it is appropriate to incorporate in that list those properties that were the subject of inspections in both AP1 and AP3 so that the conditions of consent should apply to and be confined to those dwellings together with buildings and sites, to use the word in the condition, and to the other elements of infrastructure and roads that are there. 40A matter that was not raised by the parties arises out of the first bullet point of condition 85B which simply refers to ascertaining if any structural damage (proposed by the applicant) or structural and/or incidental damage (as proposed by the Council) is required. It would seem to me for abundant clarity that the word "ascertain" should say "ascertain and report upon," simply to make it clear that that is the case. 41Because I propose to insert a qualifying dot point between the first and the second dot points, it is not appropriate in my view to confine that reporting process to structural damage so that the words "structural and/or incidental" should be retained rather than a confining to the structural, but that later in that dot point where the words "any adjoining and adjacent building/site" appear, that should be transmuted to be referable to the list of properties contained in AP1 and AP3 as is in the main body of the first paragraph of the condition. 42At the present time, the condition in the general regime of the conditions of consent imposes an obligation on the applicant to repair structural damage. It was, as I understood the position adopted by Mr Gadiel, conceded that such a requirement was an appropriate requirement to be provided for in the conditions of consent. I agree. I do not however agree that it is appropriate to impose an absolute requirement on the applicant to rectify all incidental damage that may be a consequence of the development as some of that may be either de minimus, to use the expression adopted by Mr Seton, or otherwise be so trivial as to not warrant rectification. 43I consider that it is appropriate to give the structural engineer undertaking the inspection of the properties a role to make recommendations to the applicant as to what non-structural damage warrants rectification. To do so might occasion disputes between the private landholders and the applicant where a recommendation is not made for rectification, but that, as Mr Gadiel has submitted, in my view is an appropriate matter for a private dispute resolution process. 44To provide what I consider to be an appropriate balance there should be an additional dot point inserted between the first and second that says "recommend what non-structural damage warrants rectification and what non-structural damage does not warrant rectification having regard to the nature and location of the damage." As a consequence of requiring the insertion of that provision, it is then necessary to add some words to the end of what is presently the second dot point and those words should be in the following terms, after the word "occurred", "where that damage is structural or, for non-structural damage, has been identified as warranting rectification." 45I now turn to exhibit 4 which contains two matters relating to timing and access. First, as a purely grammatical matter, as I indicated earlier, it should in my view become a separate condition of consent which, as 85B will have become transmuted into 85C, should become 85D with the word "however" deleted at its commencement. 46The first of the matters requiring determination has, in effect, been overtaken by my earlier determination about the scope of the inspections and repairs so that the word "structural" in the fourth line of the handwritten draft is to be deleted. 47The second matter of contention during the course of the proceedings was how long should be permitted before the default position potentially triggered by this clause was effected, the positions being the applicant suggesting that it should be 14 days and the respondent 60 days. 48I am satisfied that it is appropriate that the Council's position should be adopted for the reasons that Mr Seton outlined - given the possibility that residents will be absent, as this appears to be a predominantly retirement area from the evidence of those residents who gave evidence, and that in the case of at least one of those residents had recently been absent for a significant period. 49However, it seems to me that the sting, to the extent that that might be a sting for the applicant, is appropriate to be cured by requiring that the report be provided not prior to the issue of the subdivision certificate, save with the exception of the final stage for reasons to which I will refer briefly in a minute, but to provide that the report for all but the final stage is to be supplied to the Council no later than 65 days after the issue of the relevant certificate. That, it seems to me, is the appropriate balance to strike for the reasonable and responsible consideration of the orderly economic development of land issues raised by the applicant through the affidavit of Mr Johnson and the appropriate protective mechanisms that the Council seeks to have provided for the residents. 50It is, however, to be a requirement that with respect to the final certificate for the development that the report has to be provided prior to the finalisation of that final stage and the issue of a subdivision certificate, for that arises because of the necessity to which I earlier adverted to avoid the problems that were required to be dealt with by the High Court in Hillpalm v Heavens Door. 51There remain a small number of other matters arising out of the proposed condition 85B and the final elements that are in contention between the parties. The first of those, and in this instance I am working from the form of words proposed by the applicant in the proceedings, that the certification to be provided by the engineer being submitted to the principal certifying authority should be accompanied by a requirement that it be provided to the Council. Although it was not confirmed that the Council may well be the principal certifying authority and thus the provision is redundant, it is an appropriate 'belt and braces' measure to take. The certification should not be confined to structural damage as proposed in the third line (for the reasons earlier enunciated) and the descriptor of adjacent or adjoining dwellings should be made referable to the list of dwellings to which I have earlier referred. 52It seems to me that this provision, which is currently cast as having two alternatives, should require three, so, in the second-last line, the word "alternatively" should be removed. In the last line, after the words "damage has occurred," the words "and was recommended for repair or was structural damage". Then after the word "undertaken" at the end of that sentence, the further option should be incorporated in the following terms, "or if such repair has not been affected, the provisions of condition 85D apply to remove the obligation to repair." 53The matter is adjourned until 9 o'clock on Wednesday 9 October to permit the parties to settle conditions to reflect this decision after which orders will be made upholding the appeal and incorporating the revised conditions of development consent. Tim Moore Senior Commissioner 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: 14 November 2013