Verde Terra Pty Ltd & Ors v Central Coast Council & Anor

WARD P: I agree with White JA.

WHITE JA: This is an appeal pursuant to s 58 of the Land and Environment Court Act 1979 (NSW) from an order of the Land and Environment Court by which the primary judge (Pepper J) dismissed the appellant’s application for a declaration that was sought in the following terms:

Section 4.10(1) of the Environmental Planning and Assessment Act 1979 (NSW) (“the Act”) (formerly s 77A) provides that “designated development” is development that is declared to be designated development by an environmental planning instrument or the regulations.

Relevantly, for the purposes of the present appeal, cl 4(1) of the Environmental Planning and Assessment Regulation 2000 (NSW) provided that development described in Pt 1 of Sch 3 to the Regulation was declared to be designated development for the purposes of the Act unless declared not to be designated development by a provision of Pt 2 or 3 of that Schedule.

Part 1 of Sch 3 listed 34 industries, facilities, or activities that were prescribed as designated developments. They included extractive industries (cl 19) and waste management facilities or works (cl 32).

Clause 35 in Pt 2 of Sch 3 provided:

The Mangrove Mountain Memorial Golf Course is a nine-hole golf course at Mangrove Mountain. On 6 October 1998, the then Gosford City Council granted development consent pursuant to s 91 of the Act for the upgrading of the golf course from 9 holes to 18 holes. The development required excavation and backfilling with waste materials so as to remodel existing contours of the land to provide better playing conditions and to increase the capacity of existing water storage.

An application for development approval had been foreshadowed as early as 1991. The Council advised that a development application must be accompanied by a full environmental impact statement. Apparently, this was on the basis that excavation and back-filling with waste materials was characterised as an extractive industry, and hence fell within one of the prescriptions of a designated development.

Development approval was granted on 14 October 1998. The approval was given pursuant to s 91 as integrated development. It is common ground that the development was also designated development. There were conditions of development consent that, amongst other things, the operations of the waste facility were to be carried out in accordance with a Landfill Environment Management Plan (“LEMP”) that had been prepared by Perram & Partners and in accordance with the Environmental Impact Statement except where modified by any conditions of the consent and the requirements of any regulatory authority.

In 2003 and 2009 the Council approved applications to modify the terms of the development consent.

In 2012 the Council commenced proceedings in the Land and Environment Court against, amongst others, the appellant, Verde Terra Pty Ltd (“Verde Terra”). The Council alleged that Verde Terra had breached the terms of the development consent.

The primary judge was told that works began after 5 April 2002 and, from that time up until 31 October 2007, the landfill was operated by GH & Todd Pty Ltd. From 1 November 2007 the landfill had been operated by Verde Terra. Shares in Verde Terra were transferred to the current shareholders on 1 July 2011. Verde Terra admitted to substantive breaches occurring prior to 1 July 2011. It pleaded that, since on or about 1 July 2011, it had carried out development for the purposes of the extractive industry, the waste facility and remodelling of the golf course. It said that it had done so in accordance with the development consent.

The relief sought by the Council in its Further Amended Summons filed on 8 May 2013 included orders requiring Verde Terra to remove excess fill material on the land and grade the land to restore it to the finished land levels in accordance with the development consent to prepare it for its approved use as a golf course.

On 20 September 2013, the Council and Verde Terra entered into heads of agreement with a view to settling the proceedings. They provided a joint submission in support of proposed orders which they invited the Court to make by consent.

The joint submission described the development consent as having three parts, namely, an extractive industry, a waste facility, and golf course remodelling. One of the conditions of the development consent was that the operations of the waste facility be carried out in accordance with a specified Landfill Environmental Management Plan except as modified either by the conditions of the consent or the requirements of any relevant authority. The joint submission stated that there was no dispute between the Council and Verde Terra that there had been a breach of the Act and the parties’ agreement would result in remediation of the site to achieve:

The joint submission concluded:

Condition 43 of the consent had limited truck movements to 14 per day.

On 29 August 2014, the primary judge made the orders sought by consent in the 2012 proceedings. The orders were relevantly as follows:

In a number of respects the works the subject of the consent orders differed from the works authorised by the development consent. In particular, “…the scope, scale and size of the waste disposal operation envisaged to be carried out by the 2014 orders exceeds that approved by the 1998 consent…” (J[298]).

It was common ground on appeal that although such works were not authorised by the development consent, the orders were lawfully made and both authorised and mandated the carrying out of the works (Anastasiou v Wallace [2020] NSWLEC 14 at [19]-[23]).

Since the making of the 2014 consent orders, Verde Terra has not accepted further waste on the land (J[120]). The primary judge described various proposed amendments to the amended LEMP 2013 and the LMP 2013 and applications to vary the Environmental Protection Licence between 2014 and 2019 (at [82]-[119]). In short, on 21 December 2018, Verde Terra submitted to the Council a new development application described as a development of a regional landfill, supported by further revised versions of the LEMP and LMP. On 1 April 2019, Verde Terra filed a Class 1 application in the Land and Environment Court appealing from the deemed refusal of that application. On the same day it commenced the Class 4 proceedings that were determined by the primary judge on 25 March 2022. On 1 July 2019, the Council filed a Statement of Facts and Contentions in the Class 1 proceeding, in which it contended that the 2018 development application sought consent for designated development for alterations and additions for a use of the land for which there was no development consent as required (J[117]).

By its Further Amended Summons, Verde Terra sought, amongst other relief:

By Further Amended Cross-Summons, the Council sought, amongst other relief, a declaration that development consent was required to carry out the development referred to in orders 1 to 4 made on 29 August 2014.

The primary judge dismissed the Council’s Cross-Summons and declared that:

Verde Terra appeals against the primary judge’s refusal to make the declaration sought in par [2] of the Summons.

“Mangrove Mountain Landfill & Golf Course” was defined for the purposes of the proceeding as the development the subject of the 1998 Consent as varied and/or required to be carried out in conformity with the 2014 orders.

On the question whether the development was “approved development” within the meaning of cl 35, the primary judge said:

The primary judge rejected Verde Terra’s submission that the development carried out on the land was an “existing” development within the meaning of cl 35 because consideration of the 2018 development application in the Class 1 proceedings was to be carried out without regard to past unlawful works and the unlawful use of land (at [456]).

Her Honour said:

Counsel for Verde Terra explained the perceived utility of the declaration sought. Counsel said that the application in the Class 1 proceedings before a Commissioner will be for approval for a new liner, some alterations to a cut-off trench and other relatively minor matters, that would nonetheless be alterations or additions to a development, whether existing or approved. The question is whether the development which is existing or approved is assessed by reference to the work the subject of the 2014 orders, or by reference to the 1998 development consent. Verde Terra will contend that the alterations and additions do not significantly increase the environmental impact of the development described in the 2014 orders. If the comparison with the approved development is to the development the subject of the 1998 consent (and presumably the 2003 and 2009 modifications to that consent), Verde Terra may face a harder task in persuading a Commissioner that the alterations or additions do not significantly increase the environmental impacts of the total development compared with the existing or approved development.

If the development for which approval is sought in the Class 1 proceedings is designated development, the development application should have been accompanied by an environmental impact statement (Environmental Planning and Assessment Act 1979 (NSW), s 4.12(8)), the application should have been exhibited for a minimum of 28 days (cl 8 of Pt 1 of Sch 1). An objector dissatisfied with the determination of the consent authority could appeal to the court against the determination (s 8.8(2)).

Verde Terra’s primary contention was that the development the subject of the 2014 consent orders was an approved development within the meaning of cl 35. It acknowledged that if it failed on that issue, it could not succeed on its argument in relation to existing development.

Verde Terra submitted that the development the subject of the 2014 consent orders was approved development on one of two grounds. The first ground was that the development was approved by the Land and Environment Court by the making of the 2014 orders which both permitted and required the work to be undertaken. It did not matter, so it was submitted, that the Court was not a consent authority.

The second ground (presented in oral submissions as the preferred ground) on which it was contended that the development was an approved development, was that the development provided for by the 2014 consent orders was within the scope of the 1998 consent, which had been approved by a consent authority. The Council had alleged breaches of the 1998 consent but the issues raised by those allegations had merged in the 2014 consent orders which defined the activity permitted to be carried out under the 1998 consent. The primary judge so held at pars [374], [375] and [416] in dismissing the Council’s claim that a fresh development consent was required for the carrying out of the works the subject of the 2014 orders.

The primary judge said:

Verde Terra submitted that because the development referred to in the 2014 consent orders had been determined to fall within the scope of what was approved by the 1998 consent, it constituted “approved” development for the purposes of cl 35.

The primary judge was careful to say at [416] that the effect of the 2014 consent orders was to operate as a res judicata as between Verde Terra and the Council. I do not agree with her Honour’s observation at [375] that the orders operate as a judgment in rem.

Certain orders of the Land and Environment Court under the former s 124 and current s 9.46 of the Environmental Planning and Assessment Act will operate in rem, as well as in personam. That is, they will bind the parties and the whole world (PE Bakers Pty Ltd v Yehuda (1988) 15 NSWLR 437 at 445-446). Had the 2014 orders been made by the Court after a contested hearing, rather than by consent, they would have operated in rem. But, contrary to the submissions of Verde Terra, orders made by consent will not give rise to a judgment in rem (K R Handley, Spencer Bower and Handley: Res Judicata (5th ed, 2019, LexisNexis) at [2.19]; PE Bakers Pty Ltd v Yehuda at 446).

In Yehuda, Hope JA, with the concurrence of Samuels and McHugh JJA, concluded that orders of the Land and Environment Court in earlier contested proceedings between the Council and the appellant precluded the appellant from contending in proceedings brought by Mr Yehuda that conditions of consent were invalid. This was because the orders operated in rem. Hope JA said:

The Duchess of Kingston’s Case (1776) 1 Leach 146; 168 ER 175, was authority for the second of Hope JA’s propositions and not authority that no res judicata arises from an order in rem made by consent.

Nonetheless there is clear authority cited in Spencer Bower and Handley, Res Judicata that, subject to statute, “There cannot be a judgment in rem by consent, although the parties may be estopped inter se” (Goucher v Clayton (1865) 11 LT 732; Wytcherley v Andrews (1871) LR 2 P&D 327 at 329; and see also Halsbury’s Laws of Australia, 190 - Estoppel, at par 190 (online at 22 May 2023) citing Yehuda).

There is no contrary statute applicable to this case.

Verde Terra submitted that Justice Handley departed from this view in an article published in the Australian Bar Review in 1999 (K R Handley, “Res Judicata: General Principles and Recent Developments” (1999) 18 ABR 214 at 215). Justice Handley there said that judgments by default or by consent are decisions of courts for the purpose of creating res judicata estoppels. His Honour was not there specifically referring to judgments in rem.

Accordingly, I would dismiss this ground of appeal. But the fact that the 2014 orders do not operate to bind the world is relevant to the construction of the words “approved development” in cl 35. The word “approved” is not defined. In one sense, the development the subject of the 2014 orders is approved, because the Land and Environment Court has mandated and directed it. This would satisfy a dictionary definition of “approved”.

But “approved development” in cl 35 is to be read in its context of stipulating when potential third party objectors will not be entitled to be further heard in opposition to a proposed development because proposed modifications will not significantly increase the environmental impact of what has already been approved.

I do not accept that “approved” necessarily means approved by a consent authority. I would accept that if the 2014 orders had been made by the judge after a contested hearing so that they operated in rem, the development “approved” by the orders would fall within cl 35. That is not because the Council’s cause of action merged in the judgment so that the development is to be taken to be within the 1998 development consent, but because the development approved by the orders would be binding on the world.

A prior approval of designated development by a consent authority is binding on the world (unless overturned on appeal). An approval by the Land and Environment Court of designated development after a contested hearing is binding on the world (again, subject to appeal). Either would fall within the words “approved development” in cl 35. But as cl 35 affects third parties’ rights, the “approved development” against which the environmental impact of the total development is to be assessed, is a development whose approval is binding on third parties.

For these reasons I would dismiss the appeal, with costs.

KIRK JA: I agree with White JA.