Henroth Investments Pty Ltd v Sydney North Planning Panel

1. [1]

   THE COURT: Companies controlled by the appellant, Henroth Investments Pty Ltd, owned three parcels of land near the Warriewood shopping centre on Sydney’s northern beaches. For some years the appellant has been seeking development approval for the land. The proposed development required a rezoning of the land under the relevant local environmental plan. In December 2016, the appellant presented to the Northern Beaches Council (“the Council”) a draft planning proposal incorporating the proposed rezoning. On 22 March 2017, when the Council failed to approve the proposal within 90 days of its submission, the appellant sought review by the Sydney North Planning Panel (“the Panel”).

2. [2]

   On 31 May 2017, the Panel rejected the appellant’s application for review. The appellant then sought judicial review of the Panel’s decision in the Land and Environment Court. On 31 July 2018, the primary judge, Pain J, dismissed the application. [1]

3. [3]

   Although the notice of appeal (and the written submissions of the parties) addressed three grounds, the only issue addressed at the hearing of the appeal related to a joint review undertaken by the Department of Planning and Infrastructure (“the Department”) and what was then the Pittwater Council (the predecessor to the Council) which resulted in a report known as the “Warriewood Valley Strategic Review Report” (“the WVSR Report”). The WVSR Report was “endorsed” by the Director-General of the Department. The issues identified as the grounds of appeal were as follows:

   1. (1)

      Was the Panel obliged to have regard to the WVSR Report?

   2. (2)

      If so, did it fail to do so?

4. [4]

   Each of those questions should be answered “No”; accordingly, the appeal must be dismissed.

Relevant facts

1. [5]

   The facts are not in dispute. The appellant is the owner of all the shares in companies which are the registered proprietors of land at 6 Jacksons Road and 10 and 12 Boondah Road, Warriewood (“the Land”). The Land is zoned RU2 Rural Landscape under the Pittwater Local Environmental Plan 2014. The Land is located in the local government area of the Council.

2. [6]

   In November 2012, the Department and Pittwater Council jointly reviewed undeveloped areas of the Warriewood Valley and prepared the WVSR Report. Part of the WVSR Report addressed an area described as the “Southern Buffer”. The Land is located within the Southern Buffer. Part of the Land was within the area identified in the WVSR Report as developable.

3. [7]

   To address the issue of flooding, the WVSR Report stated that should development proceed in the Southern Buffer, Pittwater Road and Jacksons Road would need to be raised to a suitable level to provide sufficient evacuation time, that a flood warning system would need to be installed, that only commercial and industrial land uses should be permitted in the southern portion of the Southern Buffer and that residential uses may be possible in the northern portion.

4. [8]

   The WVSR Report included a draft concept plan for the Southern Buffer containing both a residential development and a mixed-use centre including retail and civic uses, such as cafes, restaurants and a public square. Following public exhibition of the draft concept plan it was evident that the community was generally opposed to the draft concept plan. The WVSR Report concluded:

5. [9]

   In about May 2013, the Director-General of the Department “endorsed” the outcomes of the WVSR Report.

6. [10]

   On 17 November 2014, the Council adopted the Warriewood Valley Strategic Review Addendum Report (“the WVSR Addendum Report”). The WVSR Addendum Report has not been “endorsed” by the Department. The report revised the recommendations made in the WVSR Report in light of information made available following the completion of the WVSR Report in 2012. The report annexed an updated hydrology report by the same consulting firm which had provided a report for the purposes of the WVSR Report. The WVSR Addendum Report concluded:

7. [11]

   On about 1 November 2016, the Council made an offer to the appellant to purchase part of the Land for approximately $6.6 million. On about 23 January 2017 and 30 March 2017, the Council extended the time for acceptance of its offer to purchase part of the Land. The appellant did not accept the offer.

8. [12]

   In December 2016, the appellant submitted to the Council a rezoning review proposal in respect of the Land which sought the rezoning of the Land to partly R3 Medium Density Residential, B2 Local Centre, RE1 Public Recreation and E3 Environmental Management. On 28 March 2017, the Council considered the appellant’s proposal at an ordinary meeting and adopted the recommendation of the Deputy General Manager (Planning and Community) that it not progress the proposal to the Greater Sydney Commission for Gateway determination under s 56 of the Environmental Planning and Assessment Act 1979 (NSW) (“the Planning Act”). [2]

9. [13]

   On or about 22 March 2017, the appellant wrote to the Department seeking a review, the Council not having indicated its support within 90 days after the appellant had submitted its proposal. The Department referred the request to the Panel.

Decision of the Panel

1. [14]

   On 31 May 2017, the Panel determined that the proposal should not be submitted for Gateway determination because the proposal had not demonstrated strategic merit. The decision was unanimous. The Panel gave the following reasons for the decision:

2. [15]

   Schedule 1 to the decision provided, relevantly, as follows:

3. [16]

   On 1 June 2017, the appellant was notified of the decision.

Legislative scheme

1. [17]

   The scheme for amendment of environmental planning instruments under Pt 3 of the Planning Act was considered recently by this Court in Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd. [3] However, that case was concerned with the steps required to be taken by a council, as the relevant planning authority, prior to submitting a planning proposal to the body responsible for making amendments to a local environmental plan. In this case neither the Council nor the Panel put forward a planning proposal. Accordingly, it is necessary to have regard to the earlier stages in the process.

2. [18]

   The appellant’s rezoning application related to land within “the Greater Sydney Region” for which local environmental plans are made by the Greater Sydney Commission (“the Commission”). [4] In relation to a local environmental plan for an area in the Greater Sydney Region, references to “the Minister” in various provisions are to be construed as references to the Commission and, where relevant, those provisions will be set out below in terms appropriate to the present case.

3. [19]

   Prior to making, or varying, a local environmental plan, the “relevant planning authority” is required to forward a “planning proposal” to the Commission. [5] Planning proposals are provided for in s 55:

4. [20]

   Although no “planning proposal” had been prepared by a relevant planning authority in the present circumstances, the appellant’s case was that the Panel, in undertaking its review function, was obliged to comply with “requirements with respect to the preparation of a planning proposal” issued by the Secretary under s 55(3). However, before turning to that aspect of the submissions, it is necessary to identify which was the “relevant planning authority” for present purposes.

5. [21]

   Identification of the relevant planning authority is to be undertaken in accordance with s 54 which, so far as material, provides:

6. [22]

   Until the Commission otherwise directs, it is therefore the Council which is the relevant planning authority under s 54(1). The Panel was not, in undertaking the review function the subject of the present appeal, the relevant planning authority.

7. [23]

   The Panel was established in accordance with the following statutory regime. The power to constitute panels and confer functions on them was found in s 18 of the Greater Sydney Commission Act 2015 (NSW): [6]

8. [24]

   The power under s 18(1) was exercised by publication of the Greater Sydney Commission (Planning Panels) Order 2016 (NSW) which established, relevantly for present purposes, “Sydney North Planning Panel for the North District of the Greater Sydney Region”. [7]

9. [25]

   Functions were imposed on the Panel pursuant to s 23G of the Planning Act, which was taken to apply to the Panel pursuant to s 18(3) of the Greater Sydney Commission Act and which relevantly provides:

10. [26]

    It was not suggested that the Panel exercised a function as a “consent authority” within subs (2)(a) in this case, nor that it exercised functions under par (b). Although there had been reference to s 23G(2)(c) in the court below, the appellant relied only upon subs (3) as the source of the Panel’s power in this case. This approach was understandable in that proceedings by way of judicial review would not usually lie with respect to an advisory function. However, it raised the question as to what function was conferred or imposed on the Panel under the Planning Act or any other Act.

11. [27]

    The answer to this question was said to lie in s 54(2)(c), set out above. The logic of this proposition was by no means straightforward. Section 54 identifies the “relevant planning authority” in respect of a proposed instrument. The “relevant planning authority” is the Council unless the Commission had made a direction under subs (2) appointing some other person or body: s 54(1)(b).

12. [28]

    At some stage in the proceedings it appears to have been considered that the Panel could be a “relevant planning authority”, although it was not appointed as such and may not have been an available body. [8] In this Court, the appellant relied on the fact that one circumstance engaging the Commission’s power to direct that another prescribed body be appointed as the relevant planning authority was a recommendation by the Panel to the Commission pursuant to s 54(2)(c). The specified recommendation was that the proposed instrument “should be submitted for a determination under section 56 … or that the proposed instrument should be made”. No such recommendation was made by the Panel in the present case, but par (c), by implication, was said to confer a function on the Panel, namely the function of considering a proposed instrument. How that consideration came about in practice depended on the power of the Secretary (or the Minister or the Commission, the precise mechanism was not addressed) to provide by administrative directions for the Panel to review or otherwise consider a proposed instrument, presumably being one which had been presented to the Council as the relevant planning authority, although that may not necessarily be the case.

13. [29]

    Accepting that the implied power so identified is a function conferred under the Planning Act, for the purposes of s 23G(3), the next issue is to identify the obligations which attach to the exercise of the power. Critical for the appellant’s case was the proposition that the Panel was required to comply with any requirements issued by the Secretary pursuant to s 55(3). The relevant requirements were said to arise from a NSW Department of Planning and Environment document made under s 55(3) entitled “Planning Proposals – A guide to preparing planning proposals” (“the Planning Proposals Guide”).

14. [30]

    There are four reasons why that proposition should not be accepted. First, as submitted by counsel for the Panel, the implied power conferred by s 54(2)(c) is circumscribed by its purpose. Its purpose is not the preparation of a planning proposal to which the requirements under s 55(3) may apply; rather, its purpose is a recommendation to the Commission which, if acted upon, would lead to the appointment of a relevant planning authority other than the Council. That is the sole function of s 54(2), to which the power conferred, implicitly, under par (c), is directed.

15. [31]

    Secondly, whatever may be required to be considered with respect to the preparation of a planning proposal, that activity can only be undertaken by the relevant planning authority: s 55(1). The underlying hypothesis as to the operation of the power conferred on the Panel in the present case is that it is not the relevant planning authority and the purpose of the power is to allow the Commission to decide whether it should appoint a body other than the Council as the relevant planning authority.

16. [32]

    Thirdly, while, as discussed in Moorebank, the preparation of a planning proposal is an essential step in the process of making or amending a local environmental plan, a direction under s 54(2) is not such a step.

17. [33]

    Fourthly, it would be curious if the steps required with respect to the preparation of a planning proposal operated in relation to the implied power conferred on the Panel under par (c), but not with respect to the conditions set out in the other paragraphs of s 54(2). The proposition that the requirements do so apply is untenable. For example, par (a) identifies an opinion of the Commission (or the Minister) that the proposed instrument relates to a matter of State or regional significance. Paragraph (b) refers to an opinion of the Commission (or the Minister) that the proposed instrument is consequential on another step in the planning process. Paragraph (c1) refers to recommendations by the Secretary to the Commission (or the Minister) under s 15(b). Paragraph (d) again relates to an opinion of the Commission (or the Minister) that the council has failed to comply with its obligations satisfactorily. Although the last matter might well be assessed by reference to the Secretary’s requirements with respect to the preparation of a planning proposal, those requirements would not in any sense be a mandatory consideration governing the formulation of an opinion by the Commission (or the Minister).

18. [34]

    In the end, the appellant accepted that the relevant mandatory consideration for which it contended might only apply to the exercise of the power impliedly conferred by par (c) of s 54(2). Such a construction would be inconsistent with the legislative structure and the purpose of s 54 itself. That construction should not be adopted. Rather, it should be accepted that any requirements issued by the Secretary under s 55(3) govern the conduct of the relevant planning authority in preparing a planning proposal.

Availability of judicial review

1. [35]

   Even if the preceding analysis were wrong, it would have been necessary for the appellant to explain how its legal interests might be affected by the failure of the Panel to take a particular matter into account. There is no legal right conferred on the proponent of an amendment to an environmental planning instrument to have it considered otherwise than in accordance with the provisions of the Planning Act. The extent to which a court will set aside an administrative decision which merely provides a recommendation to a decision-maker at a preliminary stage of the decision-making process is controversial. As explained by Brennan CJ, Gaudron and Gummow JJ in Hot Holdings Pty Ltd v Creasy, [9] for an order in the nature of certiorari to be made, “it must be possible to identify a decision which has a discernible or apparent legal effect upon rights. It is that legal effect which may be removed for quashing.”

2. [36]

   The present matter arose well before any determination of whether the rezoning application should be accepted. The statute identified the relevant planning authority, subject to a constrained power conferred on the Commission to appoint a different authority. Only one basis for such an appointment was identified by the appellant as potentially available; it depended upon the formation of an opinion by the Panel and the making of a recommendation pursuant to that opinion. No such recommendation was made. Had it been, there would have been a live issue as to whether a court would intervene to quash such a recommendation which merely permitted the Commission to exercise a discretionary power to appoint a relevant planning authority to consider the application made by the appellant. That procedural step, being conferred on a statutory Commission (or the Minister), permitted the exercise of power by reference to policy considerations and should have had no direct legal effect on the ultimate determination of the appellant’s application. The case for judicial review in circumstances where no such recommendation was made is weaker. It is not necessary, however, to resolve this case on that basis.

3. [37]

   It remains only to refer to the note to s 54 which in turn identifies s 117 as a power conferred on the Minister to give directions to a public authority or other person having functions under the Planning Act and, specifically, to relevant planning authorities under Pt 3, Div 4: s 117(2) and (2B). It was not submitted that any directions had been given under this provision governing the exercise of the power impliedly conferred on the Panel under s 54(2)(c).

Did the Panel consider the relevant document?

1. [38]

   The Planning Proposals Guide identifies 11 questions as “[q]uestions to consider when demonstrating the justification” of a planning proposal. The appellant contends that the Panel, in making a s 54(2)(c) recommendation, was required to take into account a particular component of question 3(a) within the Planning Proposals Guide, “Does the proposal have strategic merit?”, and in particular whether the request was “[c]onsistent with a relevant local strategy that has been endorsed by the Department”. In circumstances where the obligation to consider the document has not been established, this matter may be dealt with briefly.

2. [39]

   Assuming that consideration of a particular component of question 3(a) within the Planning Proposals Guide is capable of amounting to a mandatory consideration, the factual proposition that the Panel did not consider the WVSR Report should be rejected. There was no evidence to support a failure to consider the WVSR Report.

3. [40]

   The first issue is to identify the scope of the proposed obligation. The WVSR Report comprised some 140 pages; most of it was not relevant to the appellant’s application. In an affidavit by the Group Project Manager for the appellant, which the parties agreed could be relied upon for this purpose, the appellant identified fewer than 10 pages of the WVSR Report which were relevant to its application. These passages were addressed in a document identified by the Panel as before it and described by the Panel as the “Rezoning review request documentation”. [10] That document was the proposal submitted by the appellant’s planning consultant; it covered more than 100 pages and gave detailed consideration to the WVSR Report in a number of contexts. There was no contention that the Panel did not have regard to that document. It therefore follows that the Panel is not shown to have failed to have regard to any aspect of the WVSR Report which was relevant to the matter before it.

4. [41]

   Secondly, it was submitted that the Panel focused on the WVSR Addendum Report, a document which had not been “endorsed” by the Department. One factor (by no means the only one) militating against acceptance of the appellant’s proposed rezoning was that the land in question was prone to flooding. The WVSR Addendum Report provided an updated hydrological study (prepared by the same consultants who had prepared the hydrology report for the WVSR Report) identifying additional concerns with respect to possible flooding. There was an implied criticism of the Panel for taking that material into account as the focus of its consideration, rather than relying upon the original WVSR Report. (Counsel was careful to eschew the proposition that the WVSR Addendum Report was an impermissible consideration.)

5. [42]

   These circumstances bear some similarity to those considered in the leading case on legal error in failing to have regard to mandatory considerations or in having regard to impermissible considerations, Minister for Aboriginal Affairs v Peko-Wallsend Ltd. [11] In that case, a statutory authority, the Aboriginal Land Commissioner, had prepared a report for the Minister recommending that certain lands be granted to traditional owners. In making his report the Commissioner was required to take into account evidence of detriment to those with existing interests in the land. He did so, but on the basis of incomplete information. Following publication of his report, the respondent, a mining company with interests in the area, made further submissions to the Minister who had the power ultimately to grant or refuse the grant of the lands. The High Court concluded that the Minister was obliged to have regard to the later submissions as providing “the most recent and accurate information that the Minister has at hand”. [12] As Mason J noted: [13]

6. [43]

   Thirdly, the Panel gave brief reasons for rejecting the application to “review” the refusal of the Council to adopt the proposed rezoning amendment. There was no suggestion that the Panel was required to give more detailed reasons, but it was said that the reasons nevertheless contained no reference to what was said to be an important document, consideration of which was mandatory in carrying out the review.

7. [44]

   That submission provided no basis for satisfaction that the Panel did not have regard to the relevant material. On one view, the WVSR Report, so far as relevant, did no more than state that parts of the Land were capable of development. The Panel was entitled to consider, as it found, that the Land was “flood-prone land” and that the proposal was “inconsistent with s 117 Direction 4.3”. In other words, on the basis of a more up-to-date hydrology report, the capacity of the Land for development was more limited than that which might have been inferred from the WVSR Report.

8. [45]

   This was one of eight brief propositions identified by the Panel as reasons for rejecting the review application. None of them was said to be an impermissible consideration. There was no criticism of the finding that the proposal was inconsistent with the direction as to how a relevant planning authority would deal with an application regarding flood-prone land, in accordance with a direction given under s 117.

9. [46]

   The Panel’s reasons for rejection of the proposal address other criteria identified in the questions in Part 2.3.1 of the Planning Proposals Guide. For example, question 6, “[i]s the planning proposal consistent with applicable Ministerial Directions (s 117 directions)?” was answered by the Panel in its finding that “[t]he proposal is inconsistent with s 117 Direction 4.3”. Question 4, “[i]s the planning proposal consistent with a council’s local strategy or other local strategic plan?” was answered by the Panel in its finding that “Council’s planning strategies, including … the Addendum Report to the Strategic Review … have identified the majority of the site for future active open space”. Questions 9, “[h]as the planning proposal adequately addressed any social and economic effects” and 10 “[i]s there adequate public infrastructure for the planning proposal” were each addressed by the Panel in the findings about the adverse traffic impacts of the proposal and the inconsistency of the proposal with the scale of the local neighbourhood.

10. [47]

    In the final analysis, the argument by reference to the reasons was one which inferred that certain weight had not been given to the WVSR Report, rather than one that had not been considered at all. There was no express articulation of such a ground and, to the extent that it depended upon the unreasonableness of the decision, it was patently untenable. Otherwise, it is not for the reviewing court to identify the weight a decision-maker gave to particular factors. Nor, indeed, can any assessment of weight properly be inferred from the reasons of the Panel.

Orders

1. [48]

   There remains the question of costs. The appellant accepted that if the appeal were dismissed it should be ordered to pay the costs of the Panel as the principal protagonist in this Court. It was submitted, however, that only a single award of costs should be made. The Council sought a separate award of costs in its favour.

2. [49]

   The first question concerns the role of the Council in this Court. It was joined to the amended summons (judicial review) in the Land and Environment Court, although there was no challenge to any decision of the Council, nor was any relief sought against it. It was also joined as a respondent to the proceedings in this Court in the same circumstances, namely that there was no challenge to anything it had or had not done and no substantive relief was sought against it. All that can be said in favour of its joinder to the appeal is that the appellant, having been ordered to pay the Council’s costs in the Land and Environment Court, sought to have that order set aside. The orders sought in the notice of appeal also included an order that each respondent pay the appellant’s costs of the proceedings both in the Land and Environment Court and in this Court.

3. [50]

   Because there was no cause to join the Council in the proceedings in the Land and Environment Court, it should also have been unnecessary and therefore inappropriate to join the Council in this Court. Rectifying an adverse costs order in circumstances where the Council should not have incurred costs provides no justification for continuing to pursue proceedings against an inappropriate party.

4. [51]

   It was said in this Court that the Council was “in the same interest” as the Panel and therefore should not receive an order for its costs of appearing on the appeal. That statement was not entirely accurate; the Council had no legal interest in the proceedings at any stage. However, it followed that it should merely have submitted, on the usual terms, namely that it might wish to be heard with respect to any order as to costs.

5. [52]

   The Panel, which was the maker of the decision under challenge, adopted an active role in defending its decision. No objection was taken to that course, but it should not go unremarked in that it appears to contravene established principle. In The Queen v Australian Broadcasting Tribunal; Ex parte Hardiman [14] the High Court stated at the end of its judgment: [15]

6. [53]

   The so-called “Hardiman principle” has been directly addressed in relation to proceedings in the Land and Environment Court. In Oshlack v Richmond River Council [16] Gaudron and Gummow JJ stated:

7. [54]

   The issue in Oshlack was whether the primary judge had erred in declining to order costs against Mr Oshlack, who had been the unsuccessful applicant in proceedings in the Land and Environment Court. He had relied upon an open standing provision in the Planning Act to challenge a development consent in a matter in which he had no personal interest. The third member of the majority in the High Court, Kirby J, addressed the role of the council in such litigation in the following terms:

8. [55]

   On a broad reading of the Hardiman principle, it is more honoured in the breach than the observance in this jurisdiction. However, there was an important underlying factor which operated in both Hardiman and Oshlack. In each case, the administrative decision-maker sought to take an active role in proceedings in which the beneficiary of its decision was well able to defend the decision. That is not always the case. For example, when an objection to a development application is upheld by a council, the objector will often have neither the resources nor the commitment to defend the decision in litigation brought by a developer. The present case takes that difficulty a step further: although in the course of consultations, members of the community had expressed opposition to the proposed development, there was no individual to be an active respondent to the appellant’s proceedings in the Land and Environment Court, or in this Court.

9. [56]

   It would not have assisted the disposal of these proceedings in accordance with s 56 of the Civil Procedure Act 2005 (NSW) (namely the need to facilitate the just, quick and cheap resolution of the real issues in the proceedings) had the appellant taken objection to the Panel’s active opposition to the proceedings. Further, it could hardly be said that a decision-maker necessarily endangers its appearance of impartiality by taking an active role in proceedings where no other party is available to do so. That risk would be significant if it sought to cross-examine witnesses or call evidence; to take the more limited role in judicial review proceedings of arguing points of law is unlikely to create any material risk. Particularly is that so where the decision-maker is represented by independent counsel.

10. [57]

    It is not necessary to consider further a broader operation of the Hardiman principle: it is sufficient to note that there was no impropriety in the Panel taking an active role in the present appeal. The Panel is entitled to its costs of the appeal.

11. [58]

    The following orders should be made:

    1. (1)

       Appeal dismissed.

    2. (2)

       The appellant to pay the first respondent’s costs of the appeal.

    3. (3)

       The appellant to pay the second respondent’s costs of the appeal, not including the costs of the preparation for the hearing of the appeal and appearance at the hearing on 4 April 2019.