Land and Environment Court New South Wales Medium Neutral Citation: Malcolm Smith Pty. Limited v The Hills Shire Council [2019] NSWLEC 1096 Hearing dates: 5 March 2019 Date of orders: 07 March 2019 Decision date: 07 March 2019 Jurisdiction: Class 1 Before: Dixon SC Decision: (1) The appeal is dismissed. (2) The exhibits, apart from Exhibits C and D, are returned. Catchwords: MODIFICATION APPLICATION: conditions of development consent imposed under s 94 (now s 7.11) of the EPA Act requiring monetary contributions – applicable s94 contributions plan – s94 conditions based on repealed contributions plan – development commenced – demand for services and facilities generated by the development – should current contributions plan apply Legislation Cited: Baulkham Hills Local Environmental Plan 1991 Biodiversity Conservation Act 2016 Environmental Planning and Assessment Act 1979 Local Government Act 1993 The Hills Local Environmental Plan 2012 Cases Cited: Arkibuilt Pty Ltd v Ku-ring-gai Council (2006) 148 LGERA 85; [2006] NSWLEC 502 Bangalow Property Investments Pty Ltd v Byron Shire Council [2015] NSWLEC 1262 Fairfield City Council v N&S Olivieri Pty Ltd [2003] NSWCA 41 Monaldo Pty Ltd v Baulkham hills Shire Council [1995] NSWLEC 165 Progress & Securities Pty Ltd v North Sydney Municipal Council (1988) 66 LGRA 236 Category: Principal judgment Parties: Malcolm Smith Pty. Limited (Applicant) The Hills Shire Council (Respondent) Representation: Counsel: M Fernandes (Applicant) S Pritchard SC (Respondent) Solicitors: Fortis Law Group (Applicant) Hall & Wilcox (Respondent) File Number(s): 2018/320957 Publication restriction: No Judgment This decision was given as an extemporaneous decision. It has been revised and edited prior to publication. 1. The applicant, Malcolm Smith Pty. Limited, holds a staged development consent (DA 2587/2004) for the subdivision of land located at 127 Aiken Road, West Pennant Hills and 185 Oratava Avenue, West Pennant Hill (the site), into eight residential allotments (the consent). Facts 1. When the development consent was granted the Baulkham Hills Local Environmental Plan 1991 (LEP 1991) applied. 2. Under the LEP 1991, the land was within the Residential 2 (d) (Protected) zone. The objectives of the zone are set out below: … (a) to provide for the residential development of land within the zone having regard to the special development constraints of that land, and (b) to provide for the preservation of the vegetative, landscape, drainage, scenic and environmental qualities of the land within the zone, and (c) to make provision for the carrying out of necessary environmental protection works to support residential development of the land within the zone. 1. They include objectives which seek to preserve vegetation landscape and environmental qualities of the land. That said, the zoning permits subdivision for the purpose of dwelling house with consent. 2. As it presently stands, the land is now zoned E4 Environmental Living pursuant to the provisions of The Hills Local Environmental Plan 2012 (LEP 2012). The zone objectives are set out below: • To provide for low-impact residential development in areas with special ecological, scientific or aesthetic values. • To ensure that residential development does not have an adverse effect on those values. 1. Again, the development remains permissible with consent. However, it is fair to say that the type of development is now restricted to low impact residential development in areas with special ecological, scientific values and aesthetic values. The objectives also seek to ensure that residential development does not have an adverse effect on those values. 2. The parties agree that the site is heavily vegetated and contains Sydney Blue Gum High Forest which is presently classified as a critically endangered species. The extent of this sensitive vegetation is obvious from the Council's vegetation map (Exhibit 3). 3. The applicant also accepts that any new development of this site would be subject to more stringent controls from an ecological perspective under the Biodiversity Conservation Act 2016 including the requirement for a BADAR assessment before any consent. While the applicant submits that this can be dealt with via the offset/credits opportunity to retain the same yield and development opportunity, the Council believes that this would result in a likely substantial reduction in development scope and lot yield. 4. (Noting that the applicant's position about development yield was not based on any expert assessment but a submission from the bar table on instructions that he did not know the potential yield under the current planning controls and ultimately submitting that it would be the same eight lots). 5. According to the facts, the Council has invited the applicant to surrender its consent and lodge a new development application if it wishes to have an assessment under The Hills Section 7.12 Contributions Plan (Current Plan). The applicant has declined to take up this opportunity submitting that one reason being the need for further ecological assessment before any consent. 6. The consent, which has been lawfully commenced, was granted by The Hills Shire Council on 27 January 2005. It includes conditions imposed under s 94 (now s 7.11) of the Environmental Planning and Assessment Act 1979 (the EPA Act) which require the payment of a monetary contribution for each stage of the development. 7. The relevant conditions are 54 and 55 of the Stage 1 Consent and conditions 43 and 44 of the Stage 2 consent. They provide as follows: "54. S94 Contribution – Subdivision – Multiple Lots a) A current contribution of $156,346.75 being paid to Council in accordance with Section 94 of the Environmental Planning and Assessment Act, 1979, to provide for the increased demand for public amenities and services resulting from the development. That is, currently $31,269.35 for each of the five (5) additional allotments. Section 94 contribution rates are reviewed quarterly and the amount payable will be at the rate applicable at the time of payment. NOTE:- It is the applicants responsibility to ascertain the correct applicable rate prior to payment. b) The contribution referred to above comprises the following payments:- Per Lot ($) Total ($) Roads & Traffic - Capital 1,621.16 8,105.80 Open Space/Land 27,286.47 136,432.35 Open Space/Embellish 1,402.51 7,012.55 Community Facilities/Land 150.14 750.70 Community Facilities/Capital 809.07 4,045.35 TOTAL $31,269.35 $156,346.75 Note: The total figure for each purpose takes into account the credit for existing lots. 55. Contribution Plan Condition 54 has been imposed in accordance with Contributions Plan No.2 – West Pennant Hills Valley, North West Sub-Precinct. A copy of this plan may be inspected at the Customer Services Centre, Council's Administration Complex, corner of Carrington and Showground Roads, Castle Hill between the hours of 8.30am and 4.30pm weekdays. Prior to payment of the above Section 94 Contribution, the applicant is advised to refer to the Customer Services Centre for completion of the Payment Form. The Cashier will only accept payments that are accompanied with this completed form. …" "43. S94 Contribution – Subdivision – Multiple Lots a) A current contribution of $62,538.70 being paid to Council in accordance with Section 94 of the Environmental Planning and Assessment Act, 1979, to provide for the increased demand for public amenities and services resulting from the development. That is, currently $31,269.35 for each of the two (2) additional allotments. Section 94 contribution rates are reviewed quarterly and the amount payable will be at the rate applicable at the time of payment. NOTE: It is the applicants responsibility to ascertain the correct applicable rate prior to payment. b) The contribution referred to above comprises the following payments:- Per Lot ($) Total ($) Roads & Traffic - Capital 1,621.16 3,242.32 Open Space/Land 27,286.47 54,572.94 Open Space/Embellish 1,402.51 2,805.02 Community Facilities/Land 150.14 300.28 Community Facilities/Capital 809.07 1,618.14 TOTAL $31,269.35 $62,538.70 Note: The total figure for each purpose takes into account the credit for existing lots. 44. Contribution Plan Condition 43 has been imposed in accordance with Contributions Plan No.2 – West Pennant Hills Valley, North West Sub-Precinct. A copy of this plan may be inspected at the Customer Services Centre, Council's Administration Complex, corner of Carrington and Showground Roads, Castle Hill between the hours of 8.30am and 4.30pm weekdays. Prior to payment of the above Section 94 Contribution, the applicant is advised to refer to the Customer Services Centre for completion of the Payment Form. The Cashier will only accept payments that are accompanied with this completed form. …" 1. There is no dispute about the fact that the conditions were formulated in accordance with the Council's section 7.11 Contributions Plan No 2 – West Pennant Hills Valley, North West Sub-Precinct (the Existing Plan), which requires a contribution on a per lot basis to provide for the increased demand for public amenities and services resulting from the development. 2. Nor is it controversial that subsequent to the commencement of the consent, on 1 November 2017 the Existing Plan was repealed and replaced with The Hills Section 7.12 Contributions Plan on 1 November 2017 (the Current Plan). The Current Plan imposes fixed development consent levies pursuant to s 94A (now s 7.12 of the EPA Act). That is monetary contributions based on the value of the total development. 3. Noting that the difference in the amount of the monetary contribution required for this development under each Plan is not insignificant (Applicant's Written Submissions (AWS) at [15] – [17]). 4. The applicant now seeks to modify the section 7.11 contribution conditions imposed at the time of the grant of consent to reflect the amount that would be required under the Current Plan. Its primary position is that the conditions are unreasonable on the particular facts of this case and it contends that the Court has the power to amend the contribution conditions imposed on the consent under s 4.55(1A) of the EPA Act. 5. To that end, it wrote to the Council on 8 June 2018 in the following terms: "… a Section 4.55(1A) application is proposed to modify conditions 54 and 55 [(Stage 1)] and [conditions] 43 and 44 (Stage 2) to delete reference to Contributions Plan No 2-West Pennant Hills Valley, North West Sub-Precinct and replace it with The Hills Section 94A Contributions Plan." "No development has occurred on the Property, apart from physical commencement. Demand for services and facilities generated by the development will not occur until dwellings constructed on the land." 1. The Council does not accept the applicant's basis for seeking modification of the conditions and has refused the modification application. 2. The applicant has appealed the decision of the Council to the Court under s 8.9 of the EPA Act. Council's position 1. Put simply, the Council contends that the applicant's approach is misguided having regard to the plain effect of the transitional regime provided in s 7.20(4) of the EPA Act and cl 5 of the Current Plan. The relevant provisions state: 1. Section 7.20(4) of the EPA Act provides that: The amendment or repeal, whether in whole or in part, of a contributions plan does not affect the previous operation of the plan or anything duly done under the plan. 1. Clauses 4 and 5 of the Current Plan provides: "4. Repeal of other contributions plans applying to the land This plan repeals the following contributions plans: … • Contributions Plan 2 – West Pennant Hills Valley … 5. Development to which this plan applies … Where an existing Section 7.11 Plan applies to land and the development proposed is eligible to be levied under that Plan, the development shall be levied in accordance with the applicable Section 7.11 Plan, rather than this plan." 1. With respect to this legislative framework, the Council makes the following submissions (Council's written submissions (CWS) at [40] – [44]): "40. … There could not be a clearer indication of what Parliament requires: Parliament has provided that the Existing Plan continues to govern (as has the [Council] in the Current Plan). In circumstances in which Parliament has plainly said that the Existing Plan applies, it would be incoherent for the law simultaneously to say that it is unreasonable for the Existing Plan to be applied. 41. In light of [s] 7.20(4) of the [EPA] Act (and clause 5 of the Current Plan) the Court could not say that it is unreasonable for contributions to be levied under, and outstanding development contributions payable to Council to be calculated in accordance with, the Existing Plan. It would otherwise completely defeat the transitional regime. The duty of the Court is to apply the law. To the extent the Applicant's complaint is in relation to transitional regime (which applies to all developers), the remedy is political, and not in the Court. 42. Effectively, the consequence of the approach for which the Applicant contends (notwithstanding s 7.20(4) of the [EPA] Act and clause 5 of the Current Plan and its own delay) is that whenever a contributions plan is updated, and lesser contribution amounts result, the contributions conditions imposed under the previous plan become unreasonable. Such an approach produces considerable uncertainty for councils in exercising their statutory planning functions (in accordance with the guiding principles for councils, and principles of sound financial management in ss 8A and 8B of the Local Government Act 1993). 43. In particular, [Council] would be significantly hampered in their ability to plan and budget for the increased demand for public services and amenities resulting from development within [the] area. See, in particular, s 7.11(1) of the [EPA] Act which provides for a consent authority to grant development consent subject to a condition requiring the payment of a monetary contribution if satisfied that development for which development consent is sought will or is likely to require the provision of or increase the demand for public amenities and public services within the area. 44. Such uncertainty has been addressed by Parliament in [s] 7.20(4) of the [EPA] Act [and in this case by the Council (in this case) in cl 5 of the Current Plan]." 1. And, with respect to the merits of this application, putting aside the issue of statutory construction, the Council submits that the applicant has not put forward any proper basis to support a finding that the conditions in this case are unreasonable. In addressing the evidence and grounds relied upon by the applicant as outlined in the applicant's oral and written submissions, the Council submits that the following matters are not relevant – that is matters such as: * the timing and extent of the demolition works undertaken onsite being as recent as 1 August 2018 - and after the repeal of the Existing Plan (AWS at [20]); and * the relatively small size of this development for an eight lot subdivision; in circumstances where there is an anticipated increase in the population in the Local Government Area of 40,0000, as identified in the Current Plan (AWS at [33]); and an assumption that the resulting demand or likely demand for amenities and services from this development will be accommodated under the Current Plan (AWS at [33]); * the fact that demand from this development has not arisen because the dwellings have not been built; or * the reliance on the Court's decision in Bangalow Property Investments Pty Ltd v Byron Shire Council [2015] NSWLEC 1262 (Bangalow) which can be distinguished on its facts - being a consent which had not been commenced. 1. Put simply, the Council's case is that the Existing Plan applies at law and in the circumstances. The Court could not on the evidence as presented approve of the modification sought by the applicant. Such a decision would be contrary to the relevant legal framework. Furthermore, it would allow the applicant to take the benefit of the consent (approving a yield of eight lot subdivision assessed and approved under a different LEP and biodiversity controls) but relieved of one of the burdens of that grant. In support of this proposition, the Council relies on the decisions of Progress & Securities Pty Ltd v North Sydney Municipal Council (1988) 66 LGRA 236; Monaldo Pty Ltd v Baulkham hills Shire Council [1995] NSWLEC 165 (noting the observations of Cripps AJA (Spigelman CJ and Santow JA agreeing); Fairfield City Council v N&S Olivieri Pty Ltd [2003] NSWCA 41 at [82]-[84] and also the observations made by Jagot J in Arkibuilt Pty Ltd v Ku-ring-gai Council (2006) 148 LGERA 85; [2006] NSWLEC 502 (Arkibuilt) at [69]-[70]. 2. Lastly, the Council submits that an approval of the application is not in the public interest as it is likely to result in a shortfall of development contributions impacting upon the provision of public amenities and services. Developers cannot avail themselves of likely lesser yields under repealed local environmental plans and lesser contribution amounts under current contribution plans. Applicant's position 1. The applicant has tendered a Preliminary Bill of costs prepared by FRIEND CIVIL, which estimated that the development would cost $429,618.30 (Exhibit B). 2. Under the Current Plan, the contribution would be in the order of $8,144.15 as reflected in the Council's draft conditions (Exhibit 5). 3. While the Current Plan has repealed the Existing Plan: (cl 4 of Current Plan), the applicant contends that the Court has power in this case on appeal under s 4.55 to disallow or amend unreasonable conditions imposed by the Council under s 7.11 of the EPA Act by operation of the power set out in s 7.13(3), formerly s 94B(3): Arkibuilt at [22]. 4. The applicant then also relies on s 4.55(8) which provides: (8) Modifications by the Court The provisions of this section extend, subject to the regulations, to enable the Court to modify a consent granted by it but, in the extension of those provisions, the functions imposed on a consent authority under subsection (1A) (c) or subsection (2) (b) and (c) are to be exercised by the relevant consent authority and not the Court. to submit that I have power to remove the condition if I am satisfied that the condition is unreasonable in the circumstances of this case: AWS [29] and [30]. 1. The applicant further submits that s 7.11(2) is expressly limited by a reasonableness standard (AWS at [26]). Therefore, the Council can only impose a condition for the provision, extension or augmentation of the public amenities and public services concerned (AWS at [27]). 2. In that regard, the primary position of the applicant is that the conditions are unreasonable because they were imposed under a repealed plan and by the time any non-minor construction work was done that could possibly require increased public amenities or services (such that the contributions actually were referable to real demand) the plan was already repealed and replaced with a new plan at a time when the Council's own budget and plans for that real demand were being determined by the Current Plan. As a result, it submits it is unreasonable for the condition to apply the Existing Plan rather than the Current Plan. The earliest time any real demand for public amenities and services could have been created, when civil works commenced in August 2018, there was no longer any plan in force that would impose contributions on the particular circumstances of the development (AWS at [32]). 3. In summary, it submits that the Existing Plan is redundant, the subdivision is small and no additional demand that what the Council's budget and plans based on the Current Plan already provided for. 4. The applicant contends that the case is factually identical to Bangalow and the Court should follow that decision in this case at [15]. (Noting that in that decision the Court on those facts noted that the consent had not commenced and therefore the demand for services and facilities had not been generated). 5. According to the applicant, all that s 7.20(4) does is ensure that the conditions remain valid, but that does not mean that they are reasonable. Nor does it affect the Court's power on appeal to assess their reasonableness under s 7.13(3). Consideration and Decision 1. The conditions at issue in this case were imposed by the Council in accordance with the Existing Plan under s 7.11. 2. Section 7.13(3) refers to a condition imposed under s 7.11 and in my opinion empowers me on appeal to disallow or amend such a condition if it is unreasonable in the particular circumstances of this case. The section provides: (3) A condition under section 7.11 that is of a kind allowed by a contributions plan (or a direction of the Minister under this Division) may be disallowed or amended by the Court on appeal because it is unreasonable in the particular circumstances of that case, even if it was determined in accordance with the relevant contributions plan (or direction). This subsection does not authorise the Court to disallow or amend the contributions plan or direction. 1. While the section makes plain the fact that I cannot disallow or amend a plan, I am not asked to do so in this case. 2. That said s 7.13(4) precludes the Court on appeal from disallowing or amending a condition imposed under s 7.12. As I said, the conditions under review were imposed under s 7.11 and are not caught by s 7.13(4). Section 7.13(4) states: A condition under section 7.12 that is of a kind allowed by, and determined in accordance with, a contributions plan (or a direction of the Minister under this Division) may not be disallowed or amended by the Court on appeal. 1. Accordingly, I am satisfied that I have power under s 4.55(3) of the EPA Act to modify the consent the subject of this appeal made to the Court under s 8.9 of the EPA Act: Arkibuilt. 2. In coming to this view, I note that the Council has not raised any issue of concern about the precondition in s 4.55(2)(a), (b) and (c) and I consider this precondition has been met – (noting, the modification application was notified as required to adjoining owners and affected owners and one submission was received and has been considered). 3. Relevantly, s 4.55(3) of the EPA Act provides that in determining an application for modification of a consent under this section, the Court must take into consideration such of the matters referred to in s 4.15(1), as are relevant to the development the subject of the application. This includes in my assessment any relevant environmental planning instrument and the public interest. 4. There is no dispute that by operation of s 7.20(4) of the EPA Act, the contribution conditions were validly imposed. However, the applicant contends that they are unreasonable in circumstances where since 1 November 2017 such contributions are no longer being imposed by the Council. 5. I cannot accept this as basis to argue that the conditions are unreasonable in circumstances where cl 5 of the Current Plan provides that the Existing Plan applies and s 7.20(4) provides that the Existing Plan is valid in this case. That fact alone does not make the conditions unreasonable. For, as the Council submits, there could be no clearer intention from the Parliament by operation of s 7.20(4) of the EPA Act and cl 5 of the Current Plan that the Existing Plan continues to govern. In circumstances where the Parliament has plainly said that the Existing Plan applies, it would be incoherent for the law to simultaneously hold that by reason of that fact alone the condition is unreasonable. 6. As far as the merits go, it is also my considered opinion that it could not be reasonable for the applicant to be permitted to take up the consent and seek contributions under the Current Plan in circumstances where the LEP and biodiversity laws have changed as they have in this case. Although still a permissible use, the likely development potential of the site and lot yield is for the reasons submitted by the Council likely to be less. The ecological assessment of the land that would be required today under the current biodiversity legislation is on the evidence before me different to that operating at the time of the grant of the consent in 2005. The applicant has not provided any satisfactory evidence to contradict this and instead relies on submissions from the bar table as to potential yield and the current development potential of the land. 7. And, while the Council was cautious in responding to this issue its view about the development potential of the site under current laws is entirely reasonable in my assessment. It is likely to be more difficult to develop this site with an eight lot subdivision based on the Council's mapping of the site which makes it plain that the site contains extensive tracks of Sydney Blue Gum Forest which is likely to limit the development potential today even accounting for credits. Also relevant to the development potential of the site today are the zone objectives which in my assessment are as the Council submits more restrictive of development (i.e. seeking to provide for low impact residential development and to ensure that residential development does not have an adverse effect on special ecological, scientific and aesthetic values). 8. The applicant has not produced any evidence to displace the mapping of the Sydney Blue Gum on this site and therefore it is reasonable to assume that its yield would be less. If the conditions were modified as the applicant suggests, it would have the benefit of consent for an eight lot subdivision without the burden. As the Council submits, it is not reasonable in this case to permit the applicant to take up the consent and avail itself of more favourable yield and also seek up to date contributions. It cannot be that whenever a contributions plan is updated and lesser contribution amounts result that the contributions conditions imposed under the previous plan become unreasonable. Such an approach does produce considerable uncertainty for councils in exercising their statutory functions and financial management (CWS at [42]). A modification on that basis would as the Council submits be contrary to the public interest (which is a relevant consideration under s 4.15(1)) as it would likely result in a shortfall of development contributions which were calculated to meet the demands for services and amenities generated by this development. 9. Moreover, there is no satisfactory evidence before me to support a finding that the demands of this development have been taken into account in the new section 7.12 Current Plan; or that it is reasonable to modify because of the relatively small demand for services and amenities likely to be generated by the size of the development. I do not believe that s 7.13(3) anticipates this evidence that the condition is unreasonable in the particular circumstances of the case. 10. The applicant also seeks to argue that the conditions are unreasonable because development consent has not yet generated any demand for services given the limited extent of the site works to date. However, the amount or extent of works is not the issue - the fact is that the consent has been taken up and thereby based on the evidence before me that the demand underlying the conditions at issue are likely to be generated by this development. Contrary to the applicant's submission, the facts of Bangalow are not identical – the consent had not been commenced and the Council did not oppose the modification. For those reasons the decision can be distinguished on that basis. 11. The applicant has sought and obtained a construction certificate for subdivision and engineering. This work was carried out over two years ago at a time when the conditions were clearly in place. Clause 7.5 of the Existing Plan makes appropriate provision for delays in commencement of development works by indexing process. 12. Accordingly for the above reasons, I have decided to refuse the application. 13. The orders of the Court are: 1. The appeal is dismissed. 2. The exhibits, apart from Exhibits C and D, are returned. ……………………….. S Dixon Senior Commissioner of the Court Amendments 14 March 2019 - Correction made to typographical errors at [22] and [25]. 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 March 2019