Land and Environment Court New South Wales Medium Neutral Citation: Norm Fletcher & Associates Pty Limited v Strathfield Municipal Council [2014] NSWLEC 157 Hearing dates: 28 November 2013 Decision date: 30 September 2014 Jurisdiction: Class 1 Before: Pepper J Decision: Appeal dismissed. Catchwords: APPEAL: s 56A appeal - whether Commissioner failed to give adequate reasons - whether Commissioner's decision was illogical, irrational or manifestly unreasonable - appeal dismissed. Legislation Cited: Environmental Planning and Assessment Act 1979, s 82A Land and Environment Court Act 1979, s 56A Land and Environment Court Rules 2007, r 3.7 Cases Cited: Associated Provincial Picture House Ltd v Wednesbury Corporation [1948] 1 KB 223; (1947) 45 LGR 635 Avon Downs Pty Ltd v Federal Commissioner of Taxation [1949] HCA 26; (1949) 78 CLR 353 Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 Bonim Stanmore Pty Ltd v Marrickville Council [2007] NSWLEC 286; (2007) 156 LGERA 12 Botany Bay City Council v Farnworth Holdings Pty Ltd [2004] NSWCA 157 Brimbella Pty Ltd v Mosman Municipal Council (1985) 79 LGERA 367 Brinara Pty Ltd v Gosford City Council [2010] NSWLEC 230; (2010) 177 LGERA 296 Carstens v Pittwater Council [1999] NSWLEC 249; (1999) 111 LGERA 1 DAA Holdings Pty Ltd v Kiama Municipal Council [2011] NSWLEC 183 Design Power Associates Pty Ltd v Willoughby City Council [2005] NSWLEC 470; (2005) 148 LGERA 233 Goodrich Aerospace Pty Ltd v Arsic [2006] NSWCA 187; (2006) 66 NSWLR 186 Greenwood v Warringah Council [2013] NSWLEC 223; (2013) 200 LGERA 190 Helou v Strathfield Municipal Council [2006] NSWLEC 66; (2006) 144 LGERA 322 Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378; (1983) 53 LGRA 325 Hurstville City Council v Goreski [2011] NSWLEC 188 Keith v Gal [2013] NSWCA 339 Mifsud v Campbell (1991) 21 NSWLR 725 Minister for Immigration and Citizenship v Li [2013] HCA 18; (2013) 249 CLR 332 Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259 Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 Norm Fletcher & Associates Pty Ltd v Strathfield Municipal Council [2013] NSWLEC 1118 Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 Segal v Waverley Council [2005] NSWCA 310; (2005) 64 NSWLR 177 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 Stoker v Adecco Gemvale Constructions Pty Ltd [2004] NSWCA 449 Sydney Water Corporation v Caruso [2009] NSWCA 391; (2009) 170 LGERA 298 Village McEvoy Pty Ltd v Council of the City of Sydney (No 2) [2010] NSWLEC 17; (2010) 176 LGERA 119 Wainohu v State of New South Wales [2011] HCA 24; (2011) 243 CLR 181 Wiki v Atlantis Relocations (NSW) Pty Ltd [2004] NSWCA 174; (2004) 60 NSWLR 127 Ziliotto v Hakim [2013] NSWCA 359 Category: Principal judgment Parties: Norm Fletcher & Associates Pty Limited (Applicant) Strathfield Municipal Council (Respondent) Representation: Mr I J Hemmings SC (Applicant) Mr P R Clay SC (Respondent) Hones La Hood Lawyers (Applicant) Houston Dearn O'Connor (Respondent) File Number(s): 10594 of 2013 Judgment A Brief History of Camden Lodge 1Camden Lodge is a single storey double brick bungalow that was built in 1916 for Mr Robert Trevethan. It was sold to the Rofe family in 1924 (namely, Mr Arthur Camden Rofe, who was at one time an alderman on Marrickville Council, and Mrs Ethel Rofe), where it remained in that family until it was transferred to Mr Arthur Bush, a butcher, of A J Bush & Sons, in 1942. Mr Bush continued to hold the property until it was sold to its present owner in 2009 for $2.5 million. The bungalow is located on large grounds across two lots, with a former tennis court on a third lot. There is a detached billiards room located at the rear of the bungalow. A garage and a shed are also on the property. The garden consists of brick fences, a gateway, a gravel drive, lawn, brick edges and a mature garden of shrubs and trees. 2The Lodge is listed under Sch 9 of the Strathfield Planning Scheme Ordinance 1969 ("the SPSO") as an item of local heritage significance. Development consent is required for its demolition under s 59A(1) of the SPSO. 3In July 2010 the present owner lodged a development application for the demolition of the existing bungalow and associated structures and for the construction of a new single storey dwelling. 4In September 2010 the respondent to these proceedings, Strathfield Municipal Council ("the council"), determined to refuse development consent for the Lodge's demolition. 5On 31 January 2012 the bungalow suffered significant fire damage, particularly to the roof. The building was uninsured. This prompted the council to write to the owner on 6 February 2012, recommending that to protect the fire damaged building, tarpaulins should be placed over the remaining roof structure. 6On 24 February 2012 the council issued a Notice of Proposed Order requiring the owners "to repair and make structural alterations to the fire damaged building 'Camden Lodge'". Details of the required repairs were specified. The basis of the Proposed Order was stated to be that the building "is so dilapidated as to be prejudicial to its occupants or to persons in the neighbourhood". The Notice said that, "it is strongly advised that a temporary cover be provided over the damaged roof of the building to protect the remaining structure from weather damage, as soon as possible." 7The advice was not acted upon. The building remained uninsured. The Council Refuses Consent to Demolish Camden Lodge 8Development Application No 2012/020 was lodged on 28 February 2012, seeking consent for the demolition of the dwelling and associated outbuildings ("the DA"). Included in the documentation provided by the applicant, Norm Fletcher & Associates Pty Ltd ("Norm Fletcher"), was a Structural Report dated 14 February 2012, prepared by Australian Consulting Engineers Pty Ltd, and a report dated 22 February 2012 prepared by Mr Robert Staas, a heritage consultant ("the Staas Report"). 9The council referred the application to Tropman & Tropman Architects for heritage assessment, and to Structural Design Solutions for assessment of the structural condition of the building. 10On 14 August 2012 the council refused to grant consent of the DA. That refusal was affirmed upon review under s 82A of the Environmental Planning and Assessment Act 1979 ("the EPAA"), on 13 February 2013. 11Later that day an appeal against the refusal by the council was filed in Class 1 of this Court's jurisdiction. 12On 5 July 2013, a Commissioner of this Court dismissed the appeal (Norm Fletcher & Associates Pty Ltd v Strathfield Municipal Council [2013] NSWLEC 1118). Norm Fletcher Appeals Against a Decision of a Commissioner Dismissing its Appeal 13These proceedings are an appeal under s 56A of the Land and Environment Court Act 1979 ("the LEC Act") by Norm Fletcher against the decision of the Commissioner dismissing its appeal. 14Of the three grounds listed in the summons filed 2 August 2013, only two were pressed by Norm Fletcher, namely: (a)first, that the Commissioner erred in law by failing to give reasons or make findings for preferring the evidence of the council's expert witness, Mr David Logan, a heritage consultant, over that of Mr Staas, on the central question before her at the hearing; and (b)second, that the Commissioner's finding (at [70]) that the total cost of the repair and reconstruction work was not, in the context of the continuing heritage significance of the dwelling, an unreasonable burden or impost on the owner, was irrational, illogical and manifestly unreasonable. 15In my opinion, the appeal must be dismissed. The Commissioner's reasons for not accepting the evidence of Mr Staas in her determination of the central question were more than adequately disclosed and there was nothing irrational, illogical or manifestly unreasonable about her decision. The Decision of the Commissioner 16Because the grounds of appeal are confined in scope, it is not necessary to analyse the Commissioner's decision in detail. 17Suffice it to say that the Commissioner described the "central issue" in dispute between the parties as "whether the cost of doing the work would impose an unreasonable burden in the circumstances, such that demolition should be approved" (at [4]). The parties before the Court in this appeal did not cavil with the Commissioner's framing of the question in this manner. 18After listing the expert evidence relied upon by the parties, including the evidence of Mr Logan and Mr Staas, the Commissioner went on (at [20]), relevantly for present purposes, to note two contentions raised by the council, reflected in its Statement of Facts and Contentions. These were that, first, that the demolition would detract from the existing setting, heritage significance and visual curtilage of adjoining and surrounding heritage items, and that it would be inappropriate on heritage grounds to allow demolition of a heritage item in circumstances where it was not unreasonable to require the repair and restoration of that heritage item. And second, that the heritage significance of the item was such that the cost of restoration would be reasonable in the circumstances and that, therefore, demolition was not necessary. 19The Commissioner observed that the evidence and the submissions of the parties were principally directed to the Council's second contention, namely, the heritage significance of the building if reconstructed and repaired versus the cost of the work required and the reasonableness of requiring those repairs rather than allowing demolition (at [22]). In short, it was Norm Fletcher's submission that, if restored, the building would have no or low heritage significance and that the cost of restoration would be an unreasonable impost on the owner. By contrast, the council argued that having regard to the fact that the building was a heritage item at the time of its purchase, the subsequent neglect, the existence of further development opportunities on the site, and the benefit of retaining the heritage item, meant that the cost of restoring the building was not an unreasonable burden in all the circumstances (at [22]). 20The Commissioner recognised that resolving the appeal before her was a balancing exercise "which requires consideration of the heritage value of an item that requires considerable repair and reconstruction and the reasonableness of the financial impost on the private owners of that heritage item" (at [25]). 21The Commissioner then considered the physical state of the bungalow before the fire (at [26]-[30]); the current physical state of the building and the work required to restore it (at [31]-[39]); the heritage significance of Camden Lodge (at [40]-[52]); the cost of undertaking the repair and restoration work required (at [53]-[61]; and finally, whether the work would be an unreasonable burden on the owner (at [62]-[70]). 22The Commissioner summarised the evidence of the heritage experts, Mr Logan and Mr Staas, in their joint report (at [39]). She noted that they disagreed as to whether the building retained heritage significance in its present state, or would only have heritage significance if repaired and reconstructed. It was Mr Staas' view that the local heritage value of the building relied on its aesthetic values and its integrity as a substantially intact building and that reconstruction to the extent required would not provide sufficient authenticity and integrity, thereby obviating its heritage value. Whereas Mr Logan opined that although the fire had some impact on its integrity, it was not to the extent that its heritage significance was removed (at [42]). 23The Commissioner summarised the controversy between the heritage experts in the following way (at [46]): 46 Mr Logan's approach was that demolition of a heritage item should only be undertaken as a last resort, and he and Mr Staas agreed that from a heritage viewpoint the primary objective should be to reinstate the house in a way that respects its heritage values. The dispute between Mr Logan and Mr Staas in essence concerns whether the extent of the reconstruction required would retain the heritage significance of the building, or would result in a loss of authenticity or integrity. 24After considering their evidence, the Commissioner concluded that she was satisfied that the building would continue to have heritage significance and that, unsurprisingly, this would be destroyed if demolition were approved (at [51]). 25Before the Commissioner, it was agreed that (and the Court found: at [61]) in order to restore the building it would cost approximately $1.5 million without underpinning, and approximately $1.7 million with underpinning, based on the evidence of the quantity surveyors. 26In relation to the central question of whether the cost of undertaking the repair and restoration work would be an unreasonable burden, the Commissioner applied, by analogy, the planning principle in Helou v Strathfield Municipal Council [2006] NSWLEC 66; (2006) 144 LGERA 322 per Moore C. That is to say, she identified the reasonableness of the costs of remediation and rectification in determining whether or not restoration was preferable to demolition. 27In this regard, the Commissioner referred to the evidence of the heritage experts as follows (at [64]-[65]): 64 That was the approach adopted by the heritage experts, who agreed that the costs of reconstruction need to be balanced against the resulting heritage significance of the item. Mr Staas was of the opinion that $500,000 would be at the upper limit of what might be reasonable to expect an owner to spend, given his assessment of the heritage significance of the building after reconstruction. Mr Logan put the figure at around $2million, based on his assessment of a higher heritage significance after reconstruction. That figure differed from the figure of $1million referred to in his statement of evidence (exhibit 5), and the amount of $800,000-$900,000 that in oral evidence he stated he had had in mind at the time of preparing his statement of evidence. Notwithstanding that difference, Mr Logan maintained his opinion that the costs now identified by the quantity surveyors as likely to be required would not be unreasonable to expect the owner to pay to retain the heritage item. 65 A factor in Mr Logan's consideration of this issue was the agreed position of the heritage experts that there is substantial potential for additional development on the site. In their joint report, they agreed that sympathetic infill development on the eastern-most lot (the former tennis court) would be acceptable as a means of defraying the cost of conserving the historic dwelling, and that if the existing dwelling is retained, there is potential to carry out sympathetic additions at its rear without detracting from the heritage value of the property. Mr Logan was of the opinion that the sale of the tennis court lot could return around $1million, and additions at the rear could add $300,00-$500,000 [sic] in value to the dwelling. 28The Commissioner agreed with the submission of Norm Fletcher that there were difficulties in accepting that the amount that the council suggested would be available to defray the costs of repair and reconstruction, however, she was nonetheless of the view that it was "not necessary" to do so. This was because, she found, there was no legal barrier to selling one of the lots comprising Camden Lodge, and that although any proposed development on that lot would need to be assessed having regard to the effect of the proposed development on the adjoining heritage items, the heritage experts nevertheless agreed that sympathetic infill development would be possible and that therefore some of the cost of remediating Camden Lodge could be recouped (at [66]). 29The Commissioner accepted the submission of the council that "the balancing exercise is not solely based on an arithmetical process, and that the social value of the retention of a heritage item is relevant" (at [67]). In this regard she observed that (at [69]): 69 It is relevant to the balancing exercise that Camden Lodge was listed, and therefore subject to the constraints provided by the SPSO, many years before its purchase by the present owner in 2009. The reports from early 2010 confirm that at that time the building required significant work, including substantial repairs to the roof and front verandah and remediation of internal water damage, work that was required regardless of the later fire. The present owner acquired the property in its then physical condition and subject to the constraints of cl 59A of the SPSO. It is also relevant that since that acquisition there has been a failure to maintain the property and its landscaped features, coupled with removal of vegetation. That, and the failure to insure the house, together with the failure to take the step recommended by the Council shortly after the fire of covering the building with a tarpaulin, has increased the costs required to conserve the dwelling and consequently the financial burden on the owner. 30While the Commissioner accepted that the cost of restoration would be substantial, she was nonetheless not persuaded that the cost was an unreasonable burden on the owner (at [70]): 70 I accept that the cost of repair and reconstruction is considerable. However, regardless of the reason why the building was not insured so that the cost of repairing the fire damage could be recovered, some of the financial burden of repairing and reconstruction of the building and its garden is attributable to the failure to maintain, before and since the fire, and to the active neglect of the building since the fire through its continued exposure to the elements. To that extent there are similarities with the position in David Road v Hornsby Shire Council [2008] NSWLEC 1461, where the Court noted (at 36]) that if recent deterioration is a justification for demolition, it would signify that in order to be allowed to demolish a heritage item an owner needs only to neglect it. Even if I were to accept, contrary to my finding above, that the cost of underpinning should be included so that the total cost of the repair and reconstruction work is in the order of $1.7million, and also to accept that a possible sale of Lot 13 would defray at best little of that cost, on balance, in the context of the continuing heritage significance of the dwelling, I am not persuaded that that is an unreasonable burden or impost on the owner. Legal Principles Applicable to the Determination of a s 56A Appeal 31The principles according to which this appeal falls to be determined have been often stated and may be summarised as follows: (a)first, the appeal is only concerned with errors of law and not errors of fact (Village McEvoy Pty Ltd v Council of the City of Sydney (No 2) [2010] NSWLEC 17; (2010) 176 LGERA 119 at [25]; Brinara Pty Ltd v Gosford City Council [2010] NSWLEC 230; (2010) 177 LGERA 296 at [28]-[30] and Hurstville City Council v Goreski [2011] NSWLEC 188 at [50]-[52]); (b)second, the Commissioner must give adequate reasons for her decision refusing consent. This means that she must refer to evidence that is important or critical to the determination of the principal issues in the case (Village McEvoy at [26] and the authorities referred to thereat). However, as was cautioned in Segal v Waverley Council [2005] NSWCA 310; (2005) 64 NSWLR 177, this does not mean that every argument advanced by a party in support of these issues must be considered by the Commissioner and reasons given for accepting or rejecting it (at [93]). A Commissioner's duty to give reasons is confined to the essential grounds upon which the decision rests and does not include a requirement to deal with a submission or contention that is otherwise unnecessary to the decision arrived at, provided that the Commissioner's reasoning process is articulated and relevant findings made (Segal at [93]); (c)third, an overly critical examination of the Commissioner's decision for errors of law should not be employed (Brimbella Pty Ltd v Mosman Municipal Council (1985) 79 LGERA 367 at 368; Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259 at 291; Carstens v Pittwater Council [1999] NSWLEC 249; (1999) 111 LGERA 1 at [76]; Bonim Stanmore Pty Ltd v Marrickville Council [2007] NSWLEC 286; (2007) 156 LGERA 12 at [6]-[7]; Village McEvoy at [28]-[31] and Goreski at [53]); and (d)fourth, if the decision of the Commissioner reveals an error of law, the decision is only vitiated if the error is material to the decision made (Design Power Associates Pty Ltd v Willoughby City Council [2005] NSWLEC 470; (2005) 148 LGERA 233 at [34]; Goreski at [53]-[56] and Sydney Water Corporation v Caruso [2009] NSWCA 391; (2009) 170 LGERA 298 at [133]-[136]). An error will not be material to the decision made if the matter complained of on appeal was a matter that was not the subject of submissions made to the Commissioner below in a way that called for a reasoned consideration of that matter (Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378; (1983) 53 LGRA 325 at 385-386 and at 332, respectively). 32It will be necessary to analyse further the second principle articulated above. The Scope of the Duty of a Commissioner to Give Reasons 33A duty to give reasons has been described as "a necessary incident of the judicial process" (Keith v Gal [2013] NSWCA 339 at [109]), the necessity for which has been emphasised by the High Court (Wainohu v State of New South Wales [2011] HCA 24; (2011) 243 CLR 181 at [54]-[58] and [92]). Failure to comply with this duty denies "both the fact and the appearance of justice having been done" and will result in not only a miscarriage of justice (Mifsud v Campbell (1991) 21 NSWLR 725 at 728 and Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 at 442 per Meagher JA, both quoted in Gal at [109]), but is an error of law (Beale at 444). 34A summary of the applicable general legal principles in respect of the duty to give reasons was compiled by Biscoe J in Greenwood v Warringah Council [2013] NSWLEC 223; (2013) 200 LGERA 190. It is respectfully endorsed and adopted here (at [23]): 23 The legal principles in relation to the duty to give reasons may be stated along the lines submitted by the appellant, as follows: (a) a judge or commissioner has an obligation to provide reasons for the judgment: Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 441; Housing Commission of NSW v Tatmar Pastoral Co Pty Limited [1983] 3 NSWLR 378 at 386. (b) The extent and content of reasons depends upon the particular case under consideration and the matters in issue: Keith v Gal [2013] NSWCA 339 at [110]. Reference should be made to important or critical evidence: at [117] - [119]. (c) In Segal & Anor v Waverley Council [2005] NSWCA 310, (2005) 64 NSWLR 177 at [43]-[44] the Court of Appeal said in the context of a Land and Environment Court appeal, that it was not sufficient for a Commissioner to only set out the subjective thought process in coming to a decision, but that the Commissioner is bound to address the principal contested issues joined between the parties. (d) Commissioners have no less onerous a duty to give reasons than judges: Botany Bay City Council v Farnworth Holdings Pty Ltd [2004] NSWCA157at [11]. (e) A failure to provide reasons or inadequate reasons has generally been assumed to be an error of law: Beale at 444 per Meagher J A. (f) As stated in Beale, there are three fundamental elements of an adequate statement of reasons: (i) A judge should refer to the relevant evidence. There is no need to refer to the relevant evidence in detail, especially in circumstances where it is clear that the evidence has been considered. However, where certain evidence is important or critical to the proper determination of the matter and it is not referred to by the trial judge, an appellate court may infer that the trial judge overlooked the evidence or failed to give consideration to it. Where conflicting evidence of a significant nature is given, the existence of both sets of evidence should be referred to. (ii) A judge should set out any material findings of fact and any conclusions or ultimate findings of fact reached. Where one set of evidence is accepted over a conflicting set of significant evidence, the judge should set out his findings as to how he comes to accept the one over the other. (iii) A judge should provide reasons for making the relevant findings of facts and conclusions and reasons in applying the law to the facts found. 35As to the level of scrutiny that should be afforded to the reasons of a commissioner on a s 56A appeal, in Brimbella Kirby P said (at 368): ...I believe that it is undesirable in an appeal from a lay tribunal where the appeal court is confined to a question of law, that it should examine too narrowly the words used in the decision, at least unless the words are central to the decision involved ... Here, the parliament has specifically envisaged a tribunal which included lay assessors. It would be quite wrong, in my opinion, for this court to examine their decisions as if they were written by a lawyer. I am not, by these comments, suggesting double standards; simply that the Court should take into proper account the composition of the tribunal, as it has been created by the parliament. 36Such an approach has been endorsed in subsequent cases (Carstens at [68] and Bonim Stanmore at [6]-[7]). Thus in DAA Holdings Pty Ltd v Kiama Municipal Council [2011] NSWLEC 183 Biscoe J said (at [3]): 3 Consideration of the judgment of a commissioner who is not a lawyer (as in the present case) exercising a merits review jurisdiction should not be examined as if it were written by a lawyer: Brimbella Pty Ltd v Mosman Municipal Council (1985) 79GERA 367 at 368 (NSWCA). Consideration of such a judgment should not be pernickety nor should the judgment be examined with a fine tooth comb, against the prospect that a verbal slip will be found warranting the inference of an error of law: Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30, 206 CLR 323 at [153]; Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 291; Coles v Woollahra Municipal Council (1986) 59 LGRA 133 at 138 (which has often been cited in decisions of this Court)... 37By this comment I do not, however, understand his Honour to be prescribing a different or lesser standard of scrutiny to commissioners of this Court who are not legally qualified but who nonetheless exercise the same powers and engage in the same merits based functions as those who are. 38Arguably there exists a tension between, on the one hand, the Court of Appeal's statement in Brimbella that consideration of the judgment of a commissioner who is not a lawyer exercising a merits review jurisdiction should not be examined as if it were written by a lawyer and, on the other, the pronouncement by that Court in Botany Bay City Council v Farnworth Holdings Pty Ltd [2004] NSWCA 157 (at [11]) that commissioners have no less onerous a duty to give reasons than judges. It is not necessary in this appeal to resolve this apparent conflict, but I note it in passing. 39Relevantly for present purposes, with respect to the extent to which reasons should deal with evidence, sometimes "the need for coherent and tolerably workable reasons sometimes require truncation of reference and expression" (Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 at [2]). The test is one of relative adequacy (see Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [56]-[66] per McColl JA and Gal at [113] per Gleeson JA). 40Although a failure to refer to only some of the evidence does not indicate that a commissioner has failed to discharge his or her duty, for a commissioner to ignore evidence critical to an issue in a case and contrary to an assertion of fact made by one party and accepted by the commissioner may result in breach of the duty (Mifsud at 728). 41Furthermore, it is imperative that a commissioner refer to evidence that is critical or important to the proper determination of the matter. This does not mean that the evidence must be referred to in turgid and lengthy detail (Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 280), especially where it is clear, either explicitly or implicitly, that the evidence has been considered (Beale at 443). Nor does the duty call for all conflicts of fact to be resolved or an express description of every step in the chain of reasoning (Stoker v Adecco Gemvale Constructions Pty Ltd [2004] NSWCA 449 at [41]). However, if critical evidence is not adverted to, an appellate court may infer that the commissioner has overlooked the evidence or has failed to consider it (Beale at 443). 42Bald statements simply preferring one piece of evidence to another should be avoided. The reasoning process on a critical evidential contest between the parties should be exposed. As Ipp JA stated in Goodrich Aerospace Pty Ltd v Arsic [2006] NSWCA 187; (2006) 66 NSWLR 186 (at [28]): 28 It is not appropriate for a trial judge merely to set out the evidence adduced by one side, then the evidence adduced by another, and then assert that having seen and heard the witnesses he or she prefers or believes the evidence of the one and not the other. If that were to be the law, many cases could be resolved at the end of the evidence simply by the judge saying: "I believe Mr X but not Mr Y and judgment follows accordingly". That is not the way in which our legal system operates. I hasten to add that this is not what the trial judge did in this case. Her Honour gave detailed reasons as to why she preferred Mr Arsic's testimony. 43These remarks were further reinforced by the observations of McColl JA in Pollard (at [66]): 66 Because a primary judge is bound to state his or her reasons for arriving at the decision reached, the reasons actually stated are to be understood as recording the steps that were in fact taken in arriving at that result. Where it is apparent from a judgment that no analysis was made of evidence competing with evidence apparently accepted and no explanation is given in the judgment for rejecting it, it is apparent that the process of fact finding miscarried. This is because, so far as the reasons reveal, no examination was made of why the evidence which was accepted was to be preferred to that of other witnesses: Waterways Authority v Fitzgibbon; Mosman Municipal Council v Fitzgibbon; Middle Harbour Yacht Club v Fitzgibbon [2005] HCA 57; (2005) 79 ALJR 1816 (at [130] - [131]) per Hayne J (with whom McHugh J (at [26]) and Gummow J (at [27]) agreed)); see also Najdovski v Crnojlovic [2008] NSWCA 175 (at [21]) per Basten JA (Allsop P and Windeyer J agreeing). 44These principles are particularly apposite in the case of contests between expert witnesses. In Wiki v Atlantis Relocations (NSW) Pty Ltd [2004] NSWCA 174; (2004) 60 NSWLR 127 Ipp JA stated the content of the duty in this regard as follows (at [61]): 61 But, where the issue in dispute involves differences between expert witnesses that are capable of being resolved rationally by examination and analysis, and where the experts are properly qualified and none has been found to be dishonest, or misleading, or unduly partisan, or otherwise unreliable, a decision based solely on demeanour will not provide the losing party with a satisfactory explanation for his or her lack of success. A justifiable grievance as to the way in which justice was administered will then arise. 45The principles were more recently reiterated by Basten JA in Ziliotto v Hakim [2013] NSWCA 359 (at [2]-[6]). However, as his Honour noted in that case (at [9]): 9 The virtues of transparency and the importance of the losing party understanding the reasons for the result must be balanced against the values of concinnity and expedition. Judgment writing should not be "a process that is oppressive and that produces unnecessary prolixity": Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 at [2] (Allsop P, McColl JA agreeing) repeated in MM Constructions (Aust) Pty Ltd v Port Stephens Council [2012] NSWCA 417 at [135], being a sentiment with which I expressed agreement at [228], Bergin CJ in Eq agreeing with both statements; see also Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [55]-[58]. There Was No Failure to Give Reasons by the Commissioner 46The asserted deficiency in the Commissioner's reasons is said to arise from the Commissioner's failure to articulate why the council's case was preferred over that of Norm Fletcher's. And in particular, why the evidence of Mr Logan (the council's expert heritage consultant) was preferred over that of Mr Staas (Norm Fletcher's expert heritage consultant). 47On the question of the reasonableness of the costs of restoring Camden Lodge, there was plainly conflict between the two heritage experts. Their divergent positions were summarised in their joint experts' report dated 20 June 2013, as follows: The reasonableness of the estimated costs of restoration in relation to the heritage significance of the item Mr Logan considers that the damage suffered by Camden Lodge both during, and in the period following, the fire has had some impact on its integrity. Nevertheless, as discussed in paragraphs 3.4 to 3.21 of his Evidence, this impact is not at a level that has removed its heritage significance. Heritage significance is assessed under the seven criteria in the NSW Heritage Assessment guidelines, only one of which needs to be satisfied to establish heritage significance. In Mr Logan's assessment, the property satisfies at least four of the seven criteria. It retains most aspects of its previously identified heritage significance, including its historic significance to the local government area, its historic associations, its key aesthetic attributes and social value to the local community. Other values, including its representative significance, could be recovered through reconstruction. It would not be reasonable to allow the demolition of Camden Lodge in the current circumstances. The dwelling is readily able to be reconstructed and there are options available to the owner to defray the costs of reconstruction and bringing the dwelling back to a habitable condition. Mr Staas considers that the assessment of heritage value is subjective in nature though it can be assisted by the Guidelines of the NSW Heritage Office Publication, assessing heritage significance. In his experience it is rare for heritage experts to agree fully on the level of significance or the relevance of certain criteria based on the inclusion / exclusion guidelines of that publication. Based on his experience of the repair and maintenance of Federation era structures and in the reconstruction involved in severely fire damaged buildings, there are substantial costs involved because of the specialised tradesmen required which when combined with the remediation of poor foundation conditions and the need to provide for acceptable levels of finish commensurate with the economic value of the building would be unreasonable in the present circumstances. In his opinion the more esoteric values associated with historical evolution and associations are not readily represented by the remaining damage fabric of the bungalow or that, because they are well documented, these would necessarily be lost through the demolition process. Much of the local value of the building relied strongly on the aesthetic values of the place and its integrity as a substantially intact building of the early 20th century in a substantially intact garden setting. Reconstruction to the extent required in these circumstances does not in his opinion provide any degree of authenticity or integrity, as a large amount of the publicly perceived fabric would be a recreation of the original design and the interiors would be substantially modified. This situation coupled with the probable cost to recreate the former appearance and setting of the house and provide for an acceptable degree of amenity and finish are not reasonable in the circumstances and do not result in any substantial social benefit to the wider community. 48In his expert statement of evidence dated June 2013, Mr Logan had noted that Norm Fletcher's quantity surveyor had estimated the cost of restoration to be in excess of $2 million, while the council's quantity surveyor considered that the cost would be less than $1 million. It was Mr Logan's opinion that the actual cost would, consistent with the council's quantity surveyor's evidence, be substantially less than $1 million in the "current economic climate". Furthermore, while even the latter amount would appear "prohibitive in most situations", it was his view that there were opportunities to recover all or most of the costs. Finally, he noted that had the property been insured, some or all of the cost of repairing the damage caused by the fire might have been recovered. Equally, he opined that the decision not to secure the roof with a tarpaulin, contrary to the requests of the council, was likely to have resulted in further deterioration of the fabric of the dwelling, and therefore, further contributed to an augmentation of the repair costs. 49During the hearing, however (as is recorded in the Commissioner's decision at [64]), Mr Logan's evidence with respect to the reasonableness of the restoration costs increased to $2 million based on his assessment of a higher heritage significance for Camden Lodge after reconstruction (elaborated upon by the Commissioner at [65]). He said (T116.28-116.41): WITNESS LOGAN: No. Yeah. It's hard to know how to balance this and hard to know how to do the financial equation but I would have thought that if it's possible to get more than $1 million for the tennis court site and I don't know what one could get for that but is what was in mind, it might be $1 million and that could be sold, and it would also be possible to construct an addition at the rear that might add another, I don't know, three, four, $500,000 to the value of the reconstructed house. I think in those circumstances that a cost in the order - if the reconstruction cost was say $2 million, I think that would be reasonable because there are opportunities to recover a substantial amount of that. I would also say that if this house was reconstructed and the garden reconstructed it would attract a premium in terms of its resale value. There are people who would queue up to buy a place like this once reconstructed to its former appearance and that might actually realise more value than a new house of the same size. So in other words it might attract a premium. 50Understandably, Mr Logan's change of position from $800,000-$900,000 to $1 million, and subsequently to $2 million, as an estimate of what would constitute reasonable restoration costs, attracted strident criticism by Norm Fletcher during the course of the hearing before the Commissioner (T141.25-155.32) and during the course of this appeal. 51As a consequence, Norm Fletcher submitted that, "there was [a] need for the Court to consider the change of position [of Mr Logan] and then to determine the difference between the experts (T13.17-13.19)." Likewise the contention that, "it was an important part of the decision making required of the Commissioner to resolve the dispute therefore that arose... between Mr Staas' $500,000 and Mr Logan's either $2 million or if the criticism of that was accepted, substantially less than $1 million (T14.28-14.33)." 52The submission must be rejected for a number of reasons. First, it is clear from the Commissioner's reasons that she in fact accepted the complaints made by Norm Fletcher of Mr Logan's evidence (at [66]). However, she proceeded to opine that the deficiencies in his evidence were, in her view, immaterial because it was "not necessary... to quantify the amount potentially available to defray the cost of repair and reconstruction" (at [66]). The Commissioner gave reasons for this conclusion, namely, first, her acceptance of the evidence of both Mr Staas and Mr Logan that a sympathetic infill development of the site was legally possible, and that therefore, some of the costs of repair and reconstruction could be defrayed (at [66]); second, that the balancing exercise necessary to determine the reasonableness of the repair costs was not a purely arithmetic exercise (at [67]); third, that the social value or public interest in the retention of the heritage item was relevant (at [68]); fourth, that (relevant to the balancing exercise) the present owner acquired the dwelling with all its physical limitations and heritage constraints. That is to say, with knowledge that the building required "significant work"; and fifth, that the owner's failure to maintain and insure the property had increased the cost of restoration (at [69] and [70]). None of these matters were the subject of challenge by Norm Fletcher. 53Second, the Commissioner took into account the quantum of the cost of the repairs and reconstruction and found that although they would be "considerable", they would not, for the reasons enumerated above, impose an unreasonable burden on the owner in all the circumstances (at [70]). The Commissioner was, in my opinion, neither required to quantify what those costs were likely to be, nor was it necessary for her to resolve in monetary terms the contest between the two heritage experts, and therefore, to explain further why, or even if, she preferred the evidence of one expert over the other. It was sufficient, given the principal contested issue (namely, whether or not the repair and restoration costs were reasonable), for her to acknowledge that the restoration costs were likely to be significant and to then turn her mind to the question of whether or not they were reasonable. This is precisely what she did. There was no paucity in her articulation of her reasons in doing so. 54Third, contrary to the submissions of Norm Fletcher, the principal contested issue between the parties was not to accurately determine how much the restoration costs were likely to be, thereby requiring adjudication of the evidentiary dispute between the heritage experts. This posited the ultimate question too narrowly. Rather, as Norm Fletcher initially stated, the central issue for determination by the Commissioner was whether the repair and reconstruction costs would pose an unreasonable burden on the present owner of Camden Lodge. The Commissioner found, having regard to all of the factors to be weighed in the balancing exercise that she was required to undertake, including the "considerable" restoration costs, that it would not. As the consent authority in a Class 1 merits appeal she was entitled to make this finding. It was reasonably open on the evidence before her. 55Fourth, the Commissioner did not resile from her conclusion even accepting Norm Fletcher's case at its highest, that is to say, even accepting the evidence that the total cost of the repairs would be approximately $1.7 million and that the sale of part of Camden Lodge would defray "at best little of that cost". It was her opinion that given the heritage significance of the building, this cost was, in any event, not an unreasonable burden on the owner (at [70]). 56Thus while it is true that the Commissioner does not specifically say that she rejects the evidence of Mr Staas of $500,000 as a maximum of reasonable cost and thereafter expressly articulate why, she has done so implicitly, by an explicit reasoning process. 57In my opinion, the Commissioner's thought processes in dismissing the appeal were more than adequately exposed and it cannot reasonably be said that Norm Fletcher was left with any real doubt as to why it was unsuccessful. Having found no breach by the Commissioner of her duty to give reasons for her finding that "in circumstances where the building can be repaired and reconstructed so as to retain its heritage significance, and the costs of doing that work do not impose an unacceptable burden on the owner", and therefore, "demolition should not be permitted" (at [71]), this ground of appeal must be dismissed. The Commissioner's Decision Was Not Illogical or Manifestly Unreasonable 58The council conceded, correctly, in my opinion, that this ground of appeal was, for the purpose of s 56A of the LEC Act, a question of law. 59The gravamen of this ground of appeal was summarised by Norm Fletcher as follows (T3.34-3.43): HEMMINGS: I'm just giving some background to then go back. To suggest that the expenditure of $1.7 million to bring up to a standard that is then liveable in of [sic] the existing house on the property for which he had originally paid $2.5 million is in our submission of itself a conclusion which is irrational and illogical. HER HONOUR: Is that the high water mark of your submission on that ground? HEMMINGS: Yes. 60The ground was argued uniquely on the basis of unreasonableness in the sense articulated in Associated Provincial Picture House Ltd v Wednesbury Corporation [1948] 1 KB 223; (1947) 45 LGR 635 (which requires the almost intolerably high threshold of the exercise of discretionary power in making a decision to be so unreasonable that no reasonable decision-maker could make it) and was not rooted in any broader abstraction of the concept as espoused in the judgment of Dixon J in Avon Downs Pty Ltd v Federal Commissioner of Taxation [1949] HCA 26; (1949) 78 CLR 353 (at 360). 61In Minister for Immigration and Citizenship v Li [2013] HCA 18; (2013) 249 CLR 332, the High Court directed attention to the need for reasonableness in exercising a statutory discretion in order to render the exercise lawful. French CJ stated the principles in the following terms (at [26]): 26 The rationality required by "the rules of reason" is an essential element of lawfulness in decision-making. A decision made for a purpose not authorised by statute, or by reference to considerations irrelevant to the statutory purpose or beyond its scope, or in disregard of mandatory relevant considerations, is beyond power. It falls outside the framework of rationality provided by the statute. To that framework, defined by the subject matter, scope and purpose of the statute conferring the discretion, there may be added specific requirements of a procedural or substantive character. They may be express statutory conditions or, in the case of the requirements of procedural fairness, implied conditions. Vitiating unreasonableness may be characterised in more than one way susceptible of judicial review. A decision affected by actual bias may lead to a discretion being exercised for an improper purpose or by reference to irrelevant considerations. A failure to accord, to a person to be affected by a decision, a reasonable opportunity to be heard may contravene a statutory requirement to accord such a hearing. It may also have the consequence that relevant material which the decision-maker is bound to take into account is not taken into account. 62But the Chief Justice sounded this note of caution (at [30]): 30 The requirement of reasonableness is not a vehicle for challenging a decision on the basis that the decision-maker has given insufficient or excessive consideration to some matters or has made an evaluative judgment with which a court disagrees even though that judgment is rationally open to the decision-maker. Gleeson CJ and McHugh J made the point in Eshetu that the characterisation of somebody's reasoning as illogical or unreasonable, as an emphatic way of expressing disagreement with it, "may have no particular legal consequence." As Professor Galligan wrote: "The general point is that the canons of rational action constitute constraints on discretionary decisions, but they are in the nature of threshold constraints above which there remains room for official judgment and choice both as to substantive and procedural matters. In other words, within the bounds of such constraints, different modes of decision-making may be employed." A distinction may arguably be drawn between rationality and reasonableness on the basis that not every rational decision is reasonable. It is not necessary for present purposes to undertake a general consideration of that distinction which might be thought to invite a kind of proportionality analysis to bridge a propounded gap between the two concepts. Be that as it may, a disproportionate exercise of an administrative discretion, taking a sledgehammer to crack a nut, may be characterised as irrational and also as unreasonable simply on the basis that it exceeds what, on any view, is necessary for the purpose it serves. That approach is an application of the principles discussed above and within the limitations they would impose on curial review of administrative discretions. 63Similarly, in the joint judgment of Hayne, Kiefel and Bell JJ, their Honours said (at [66]): 66 This approach does not deny that there is an area within which a decision-maker has a genuinely free discretion. That area resides within the bounds of legal reasonableness. The courts are conscious of not exceeding their supervisory role by undertaking a review of the merits of an exercise of discretionary power. Properly applied, a standard of legal reasonableness does not involve substituting a court's view as to how a discretion should be exercised for that of a decision-maker. Accepting that the standard of reasonableness is not applied in this way does not, however, explain how it is to be applied and how it is to be tested. 64Gageler J also discussed the implied obligation on decision-makers to act reasonably (at [90], emphasis in original): 90 Implication of reasonableness as a condition of the exercise of a discretionary power conferred by statute is no different from implication of reasonableness as a condition of an opinion or state of satisfaction required by statute as a prerequisite to an exercise of a statutory power or performance of a statutory duty. Each is a manifestation of the general and deeply rooted common law principle of construction that such decision-making authority as is conferred by statute must be exercised according to law and to reason within limits set by the subject-matter, scope and purposes of the statute. 65Equally, however, his Honour emphasised the very tangible constraints on the application of this ground of review (at [108]): 108 Judicial determination of Wednesbury unreasonableness is constrained by two principal considerations. One is the stringency of the test that a purported exercise of power is so unreasonable that no reasonable repository of the power could have so exercised the power. The other is the practical difficulty of a court being satisfied that the test is met where the repository is an administrator and the exercise of the power is legitimately informed by considerations of policy. 66He therefore reiterated the stringency of its successful application (at [113]): 113 Yet the stringency of the test remains. Judicial determination of Wednesbury unreasonableness in Australia has in practice been rare. Nothing in these reasons should be taken as encouragement to greater frequency. This is a rare case. 67The decision of the Commissioner in the present case was not concerned with any alleged defective procedure, rather, an asserted flaw in the final conclusion reached by her, premised on her finding that to expend up to $1.7 million to repair a heritage item having only local heritage significance was not an unreasonable impost (at [70]). As discussed above, the focus of the Commissioner's decision was not purely quantitative, but was qualitative, concerning, as it did, a balancing exercise that had regard to the public interest of the retention of Camden Lodge as a heritage item, and the neglect of the present owner as a contributing factor in the considerable cost of restoration and repair. The Commissioner's judgment is replete with reasons for her finding that the burden of the cost of the repairs, which, in my opinion, have been articulated rationally, logically and reasonably. There is nothing in the content of either Wednesbury or Li that justifiably impugns the approach taken by the Commissioner. Neither the outcome nor the process of the Commissioner's decision is demonstrative of unreasonableness in the relevant sense. As the council pithily put it, "minds may differ. The Appellant may disagree. That is not enough." 68It follows that this ground of appeal must be rejected. Costs 69Although the council sought its costs in its written submissions, these are proceedings in Class 1 of the Court's jurisdiction and, pursuant to r 3.7 of the Land and Environment Court Rules 2007, ordinarily there would be no order as to costs. If, however, either party seeks a different costs order, then it must do so within 14 days of the publication of this judgment, by way of notice of motion, together with any accompanying affidavit evidence in support of the application. Orders 70The orders of the Court are therefore that: (1)the appeal is dismissed; (2)each party is to bear their own costs of the proceedings, unless within 14 days either party applies to the Court by way of notice of motion for an alternative costs order; and (3)the exhibits are to 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. Decision last updated: 30 September 2014