Cando Management and Maintenance Pty Ltd v Cumberland Council

BEAZLEY P: I have had the advantage of reading in draft the reasons of White JA. I agree with his Honour’s reasons and proposed orders.

MEAGHER JA: I agree with White JA.

WHITE JA: This is an appeal under s 58 of the Land and Environment Court Act 1979 (NSW) from a declaration and orders of the Land and Environment Court (Pain J) made on 1 June 2018 (Cumberland Council v Cando Management and Maintenance Pty Ltd [2018] NSWLEC 83).

The appellant, Cando Management and Maintenance Pty Ltd (“Cando”), is the owner of land in Woodville Road, Guildford on which it has caused to be constructed a development of nine partially completed townhouses. Cando purchased the property in 2012. On 23 July 2004 the Parramatta City Council had given development consent, subject to conditions, for the construction of nine townhouses on the land. When consent was granted this was a permissible development. On 7 October 2011 the land was rezoned R2 Low Density Residential and the particular use of the land for nine separately owned townhouses, to be separately owned lots in a strata plan of subdivision, was prohibited. The development would not be prohibited if it were carried out in accordance with a development consent which remained in force (Environmental Planning and Assessment Act 1979 (NSW) (“EPA Act”), s 109B).

The development consent granted by Parramatta City Council on 23 July 2004 lapsed on 23 July 2009, unless building, engineering or construction work relating to the building, physically commenced on the land before 23 July 2009 (EPA Act, s 95(4)).

The respondent to the appeal is the Cumberland Council (“the Council”). It is the successor to the Parramatta City Council. The Council contended that the development consent had lapsed before Cando commenced its development work on the property. The Council accepted that demolition work on the property had commenced prior to 23 July 2009, but submitted that none of that work had been lawful. It also contended that work Cando contended was not demolition work within the meaning of the development consent was also not lawful, or shown to have been lawful, and therefore did not satisfy the qualification to the lapsing of consent on the expiry of five years. The primary judge upheld this latter contention.

Cando caused the townhouses to be built to a state of near completion in egregious disregard of the EPA Act. No principal certifying authority was appointed. No construction certificate for the building work was obtained. The works as constructed contained serious departures from the terms of the development consent, including failures to comply with the Building Code of Australia.

On 2 July 2015 the Parramatta City Council filed a summons seeking, amongst other relief, orders for demolition of the improvements constructed on the land. The parties retained experts and ultimately presented a statement of agreed facts to the primary judge.

By its further amended summons the Council sought relief in the alternative. Its first claim was for a declaration that Cando had carried out prohibited development for which no development consent was in force in breach of s 4.3 (formerly s 76B) of the EPA Act. (On 1 March 2018 amendments were made to the EPA Act that included the renumbering of existing provisions. In these reasons, like the primary judge, I will generally refer to the provisions of the EPA Act as they were in force at relevant times by their numbering before 1 March 2018.)

The Council also sought consequential relief, including either an order for demolition of the nine townhouses (and basement car parking) or an injunction restraining Cando from using the premises until that use was authorised by development consent and the development was the subject of a building certificate issued pursuant to s 149A of the EPA Act.

The declaration and consequential relief sought for the alleged breach of s 76B of the EPA Act was premised upon correctness of the Council’s contention that the development consent had lapsed before the works were done. The primary judge accepted that contention.

The Council’s alternative claim was for a declaration that the works had been carried out in breach of s 76A(1)(b) of the EPA Act in that the development was not carried out in accordance with the development consent. There was no dispute that this was the case. The Council also sought a declaration that Cando had carried out building work in breach of s 81A(2)(a) of the EPA Act by erecting a multi-unit development without first obtaining a construction certificate and had carried out building work in breach of s 81A(2)(b) of the EPA Act by erecting the development without appointing a principal certifying authority. There was no dispute that Cando was in breach of these provisions. Additional relief was sought including an injunction restraining Cando from using the premises or permitting the premises to be used until its use was otherwise regularised.

Cando filed a cross-claim in which it sought a declaration that the development consent had not lapsed. It also sought the following relief:

The declaration and orders of the primary judge were as follows:

The first issue on appeal is whether the primary judge was correct in holding that the development consent had lapsed. The second is whether the Land and Environment Court could, and if it could whether it should, have made orders to the effect that if certain works were carried out, which the parties agreed would rectify the position, Cando’s breaches of the EPA Act should be sanctioned and authorised.

For the reasons which follow I conclude that the development consent did not lapse. I also conclude that Cando is not entitled to the orders sought in its cross-claim, nor the orders sought in its notice of appeal, nor the orders sought during the hearing of the appeal. Instead the substance of the existing injunction against use and occupation of the property should continue until Cando obtains the requisite construction certificate to proceed with rectification works, appoints a principal certifying authority, and thereafter obtains an occupation certificate.

On 23 July 2004 the Land and Environment Court made orders by consent in proceedings between Abstract Group Pty Ltd as applicant and the Parramatta City Council that a development application submitted to the Parramatta City Council and as amended be determined by the granting of consent, subject to conditions contained in an annexure to the Court’s orders.

The conditions of the development consent included:

Mr Joseph Refalo is a director and shareholder of Cando. He is responsible for the day-to-day management of the company. He made an affidavit on which he was not cross-examined. After being informed in June 2012 that the site was available for purchase he was put in contact with an architect, Mr El Dardiry from Architectural Design Studio Pty Ltd. Mr El Dardiry told him that the site was a DA approved site from the Land and Environment Court. He deposed that Mr El Dardiry told him that:

Mr El Dardiry sent Mr Refalo copies of a letter from the Parramatta City Council of 29 November 2010, a quotation and invoices for demolition work dated 7 May and 21 June 2009, and aerial photographs of the site taken on 14 November 2009 that Mr Refalo deposed showed that enough vegetation regrowth had taken place to suggest that any demolition work had taken place well before the photographs were taken. The reproduction of the photograph showing the site as at December 2007 was unclear, but it was common ground at trial that the photograph showed part of the roof as missing and that it was not in dispute that by then some demolition had occurred. The photograph also showed a temporary wire fence, some large trees and also shrubs of a few feet in height, particularly along a driveway.

The quotation from Samaan Demolition and Excavation Pty Ltd addressed to someone presumably associated with the then owner of the land stated:

The invoice of 21 June 2009 was for $9,000 and the description of the works stated “Demolish and remove debris from above address as quote”. It was marked as paid. There were attached receipts indicating payment for asbestos removal and other cartage.

The letter from Parramatta City Council that Mr El Dardiry forwarded to Mr Refalo was addressed to a solicitor, a Ms Bayari, of I and T Solicitors. She evidently was seeking an opinion from the Council as to whether or not, as at 2010, the development consent of 23 July 2004 had lapsed or was still on foot. The letter from the Council referred to the terms of s 95(4) of the EPA Act and noted that it was a condition of the approval that within five working days prior to any demolition work commencing a written notice was to be given to the Parramatta City Council and/or adjoining occupants. The Council stated that it did not hold records that confirmed that demolition or preparatory works commenced on site prior to 23 July 2009. The letter continued:

The reference to the decision in “Smith vs Wyong Council (2008)” was to the decision of Pain J in Smith v Wyong Shire Council [2008] NSWLEC 115. Her Honour there made a declaration that the development consent in question in that case had not lapsed. Her Honour referred to the terms of s 95 of the EPA Act and to the decision of Tobias JA in Hunter Development Brokerage Pty Ltd v Cessnock City Council; Tovedale Pty Ltd v Shoalhaven City Council (2005) 63 NSWLR 124; [2005] NSWCA 169 to the effect that the implementation of preparatory physical survey work on the land was sufficient to prevent the development consent in question in that case from lapsing (at [9])). The judgment also referred to the need for the work to be lawful (at [11]).

Mr Refalo said that he noted from the Council’s letter of 29 November 2010 that if demolition work had been carried out prior to 23 July 2009 that the consent would be considered active. Had he consulted a lawyer he would have been advised of the significance of the phrase “and in accordance with the decision of the Land and Environment Court in Smith v Wyong Council (2008)”. Mr Refalo carried out a Google Street View search of the property which showed that by December 2007 the roof of the existing building on the property had been removed and a temporary fence installed. Mr Refalo formed the view that demolition had occurred before 23 July 2009 and therefore the consent had not lapsed. He said that:

The Council’s letter gave no assurance that the work on the property had been lawfully carried out. Mr Refalo gave no evidence of making any inquiries as to whether the conditions of the development consent had been complied with.

Mr Refalo deposed that Mr El Dardiry told him that if he bought the site Mr El Dardiry could obtain a construction certificate within six weeks. Cando purchased the property on or about 3 July 2012. Within a few days of completing the purchase Mr Refalo asked Mr El Dardiry to prepare a construction certificate for the development. Mr Refalo told Mr El Dardiry that the original plans did not have en suites and Mr El Dardiry said “Would you like me to put them in?”.

Between 5 July and 21 October 2012, Mr Refalo or Cando paid Mr El Dardiry’s company $40,880 in payment of Mr El Dardiry’s company’s fees for obtaining a construction certificate. On or about 8 April 2013, Mr El Dardiry told Mr Refalo that he needed to pay the s 94 contributions and this was the last thing needed before the construction certificate was issued. On 9 April 2013, Mr Refalo paid the s 94 contribution of $42,580.49 and a long service levy of $5,971 on behalf of Cando. He sent the receipts to Mr El Dardiry.

Cando entered into a building contract for the construction of the development on or about 9 July 2013. Excavation for the project commenced “in July 2013”. Mr Refalo deposed that he believed the issue of a construction certificate was imminent and that the only thing to be finalised before a construction certificate could be issued was the builder’s obtaining home warranty insurance. He relied on a statement by the builder, a Mr Younan, that the builder could get started with the excavation and have the insurance before they were too far involved. The insurance certificate was not issued until November 2013.

By September or October 2013, the basement of the ground floor slab had been constructed. No private certifier had been appointed. Mr Refalo met a man introduced to him by Mr Younan as being the private certifier, a Mr Prasade. Mr Younan told Mr Refalo that “The private certifier has said he is not going to be able to issue a construction certificate because we have gone too far with the building”. The structural integrity of the slab was not checked or certified.

Mr Refalo deposed that immediately after being told that the private certifier had declined to issue a construction certificate because works had progressed too far, he saw a building consultant, a Mr Yasine, who told him not to worry about the absence of the construction certificate as it would not be needed, but he needed to apply to the Council for a building certificate. He deposed that Mr Yasine told him to keep going with the building and get it finished as quickly as possible.

Mr Refalo deposed that in about December 2013 he attended a meeting with an officer from the Council as well as a colleague of Mr El Dardiry. He deposed that the Council officer told him that the problem could be fixed and he needed to lodge a building certificate application. He instructed Mr El Dardiry’s colleague to prepare an application for the building certificate. Mr Refalo deposed that there were subsequent delays in preparing that application and he was told in February 2014 that as built drawings needed to be prepared. In August 2014 he engaged a firm of solicitors, Al Legal, to liaise with the Council about whether the building could be lawfully occupied following the issue of a building certificate.

On 28 August 2014, he attended a meeting onsite with representatives of the Council. One of those representatives was a Mr Sertlioglu. Mr Sertlioglu told Mr Refalo to cease work immediately with the exception of doing electrical work to make the building safe. He provided Mr Sertlioglu with a copy of the works as executed plans. In October 2014 he was told that those plans were not accurate. He arranged new drawings to be provided to the Council.

On or about 2 June 2015, Cando lodged a building certificate application for the work and an application to modify the consent. Both applications were rejected on 12 June 2015. According to the Council’s letter of 12 June 2015 the application to modify the development consent was made pursuant to s 96 of the EPA Act. Section 96 concerns modification of consents granted by the consent authority. As the development consent was granted by the Court the application for modification would have been required to be made under s 96AA. In any event, the application was rejected on the grounds that the consent had lapsed as the works the subject of the consent had not lawfully commenced within the five-year limitation period required under the Act, unless Cando could establish otherwise. The Council advised that it did not have power to consider the application and therefore rejected it.

The Council rejected the application for a building certificate and advised that it proposed to take steps to order that the building be demolished, altered, added to or rebuilt, or to take proceedings for an order or injunction requiring the building to be demolished, altered, added to or rebuilt.

As noted above, the Parramatta City Council commenced proceedings on 2 July 2015. On 8 February 2016, following a mediation before Commissioner Dickson, the parties agreed that Cando would lodge a development application for the use of the property as a boarding house. Cando undertook to the Court not to carry out any further work without consent of the Council or to occupy or permit the premises to be occupied until further order.

Cando lodged a development application to change the use of the property from a new townhouse construction to a boarding house on 31 March 2016. Further information on that application was sought and provided. On 6 October 2016, Cumberland Council determined to refuse the development application for the change of use to a boarding house.

The application was for a change of use of an as-built multi-dwelling housing development to a boarding house development containing 29 rooms, a manager’s room, communal areas and basement car parking pursuant to State Environmental Planning Policy (Affordable Rental Housing) 2009. The development application was refused on a number of grounds, including that the development would not be considered to be a low-density development, the proposed development exceeded the maximum floor space ratio prescribed for the site, the proposed development exhibited an excessive variation to the maximum floor space ratio, the proposed development did not meet the requirements for boarding house development prescribed in cl 29 in State Environmental Planning Policy (Affordable Rental Housing) 2009, the boarding rooms did not meet the minimum accommodation size requirements for single lodgers, the proposed development was inconsistent with provisions set out in s 5.1-Boarding Houses as set out in the Parramatta Development Control Plan 2011 for various reasons, and insufficient detail had been provided to demonstrate that it would be an appropriate use of the site and would result in unreasonable levels of impact to adjoining properties.

The parties had engaged stormwater experts, town planning experts and structural engineering experts who provided joint reports. Those reports were not tendered. Instead, their content was reflected in a Statement of Agreed Facts.

The Statement of Agreed Facts was not tendered merely as a statement of facts agreed by the experts. There was no discussion about the matter when the document was tendered. I read the exhibit as a statement of facts agreed by the parties. It was agreed that under the Parramatta Local Environmental Plan 2011 multi-dwelling housing was prohibited on land zoned R2, which includes the site of the property. It was agreed that:

It was agreed that the building was almost complete. It was agreed that the Building Works were not carried out entirely in accordance with approved plans as required by condition 1 of the Consent, or the Building Code of Australia as required by condition 2 of the Consent.

It was agreed that there were numerous disconformities between the works as built and the plans approved by the development consent, and between the works as built and the requirements of the Building Code of Australia.

They were agreed facts following expert investigation that, amongst other things:

It was agreed that if works set out in Annexure A to the Statement of Agreed Facts were carried out then:

As the Council submitted, the extent of strengthening works and whether they will be successful is presently unknown.

In its written submissions the Council summarised the effect of the agreed facts as follows:

Cando did not dispute the accuracy of this summary. It disputed the Council’s submission that Cando demonstrated a wholesale disregard of the planning and certification process and stripped out of the building many of its architectural features in the interests of its own economy, chanced its arm, was the author of its own misfortune and was guilty of egregious breaches of the law. Cando submitted that Mr Refalo had frankly explained how these circumstances came about and he never said that what occurred was as a result of his wishing to save on construction costs. He was not cross-examined on his affidavit. For present purposes it suffices to note the seriousness of the breaches. Not only was no principal certifying authority appointed and no construction certificate issued, but the building as constructed had numerous and serious defects and its structural integrity is yet to be determined.

The agreement in paras 34-40 of the Statement of Agreed Facts quoted in [44] above and the concern of the town planners recorded in para 41 of that Statement, is the evidence on which the relief in paras 2-5 of Cando’s cross-claim was based.

Section 95(1) and (4) of the EPA Act (now s 4.53(1) and (4)) provided:

It was common ground that “construction work” had been physically carried out within the five years from the date on which the development consent operated. It was common ground that for such work to come within the phrase “relating to the building, subdivision or work ... to which the consent applies” it had at least to be in accordance with or not prohibited by the consent (Iron Gates Developments Pty Ltd v Richmond-Evans Environmental Society Inc (1992) 81 LGERA 132 at 135; Coalcliff Community Association Inc v Minister for Urban Affairs & Planning [1999] NSWCA 317; 106 LGERA 243; Green v Kogarah Municipal Council [2001] NSWCA 123; (2001) 115 LGERA 231; Detala Pty Ltd v Byron Shire Council [2002] NSWCA 404; 133 LGERA 1; Hunter Development Brokerage Pty Ltd v Cessnock City Council (2005) 63 NSWLR 124; [2005] NSWCA 169 (“Hunter Development Brokerage”); K & M Prodanovski Pty Ltd v Wollongong City Council [2013] NSWCA 202; 195 LGERA 23). The Council contends that the work must also otherwise be lawful.

It was common ground that the demolition work done did not comply with the consent. Cando submitted that the work described in the quotation of Samaan Demolition and Excavation Pty Ltd of removing trees and shrubs, water disconnection and site fencing (see [21] above) was not demolition work within the meaning of the conditions of the development consent and was not done, or had not been proved by the Council to have been done, in breach of the conditions of the consent. The Council argued that site clearing, fencing, and water disconnection, if not demolition, could not be building or construction work relating to the consent because of non-compliance with conditions of the consent. It said that Cando bore the onus of proving that the conditions of the consent had been complied with, rather than its bearing the onus of establishing non-compliance.

Cando’s principal position was that it was unnecessary for the Land and Environment Court to decide whether consent had lapsed. If the consent had lapsed Cando was in breach of s 76B of the EPA Act. Section 76B (now s 4.3) provided:

Section 109B of the EPA Act (now s 4.70) provided:

If the consent had not lapsed, nonetheless Cando was in breach of s 76A of the EPA Act (now s 4.2). It relevantly provided:

Cando submitted that the Land and Environment Court had power under s 124 of the EPA Act (now s 9.46) to make the declarations and orders set out in the cross-claim so as to give effect to the conclusions in paras 34-41 of the Statement of Agreed Facts. Cando agreed to carry out the works described in Annexure A. Although Cando sought a declaration that the development consent had not lapsed, its primary position was that it was unnecessary for the court to decide that question because the orders it sought would regularise the position on the completion of the works, whether the consent had lapsed or not.

The primary judge held that she should determine the issue of whether the development consent had lapsed (Judgment [50]). Her Honour said that any exercise of the Court’s discretion to make a declaration and consequential orders was vitally informed by the nature of the breach of the EPA Act and this could not be resolved unless the issue of the lapsing of consent is considered. That conclusion is plainly correct.

The primary judge held that Cando bore the onus of proof of establishing that the consent had not lapsed and this required it to establish that the conditions of the consent had been complied with (Judgment [84]). The primary judge concluded that the development consent lapsed in 2009 and as a result the development resulted in a breach of s 76A(1)(a) of the EPA Act and as a result of changes in the Parramatta Local Environmental Plan the development became prohibited development under s 76B (Judgment [93]).

The primary judge noted that Cando appeared to accept during the hearing that the demolition work was not lawful as required conditions of the consent had not been complied with before it was carried out (Judgment [56]). Her Honour observed that during the hearing Cando identified further work it relied on to demonstrate that the consent had not lapsed, being the disconnection of water, erection of safety fencing, clearing of the site, and the clearing of shrubs and trees (Judgment [58]).

The primary judge rejected the Council’s submission that condition 29 of the development consent (requiring the appointment of a principal certifying authority prior to “commencement of work”) was engaged in relation to the further work relied upon by Cando as identified above (Judgment [86]). Her Honour said that “work” in condition 29 meant “building work”. Section 109E(1)(a) required the appointment of a principal certifying authority in respect of “building work involved in the development”. The full terms of condition 29 (quoted at [18]) show that this construction is correct.

The primary judge dealt with the “further work” relied upon by Cando, being the clearing of trees and shrubs, water disconnection and erection of fencing as follows:

The conclusion at [92] of the judgment, that the further works did not “relate to” the commencement of the building the subject of the development consent is to be understood in the sense that work carried out otherwise than in accordance with the consent does not “relate to” the development to which the consent applies (see [50] above).

The primary judge turned to the question of what declarations or orders should be made under s 124 of the EPA Act. Her Honour held that s 124 did not give the court power to make the orders and declarations sought by Cando in its cross-claim. To do so would give rise to further breaches of the EPA Act (Judgment [96]). Her Honour said (at [96]):

The primary judge elaborated on this in addressing Cando’s submission relying on s 22 of the Land and Environment Court Act. That section provides:

The primary judge said of this submission (at [112]):

The order in prayer 1(c) to which the primary judge referred was the injunction sought by the Council restraining use of the premises until such time as the use was authorised by a development consent and was subject to a building certificate pursuant to s 149A of the EPA Act as set out at [10] above.

Although the primary judge said at [96] of the judgment that she could not consider Cando’s case that in the exercise of its jurisdiction under s 124 she could make the declarations and orders sought in the cross-claim, the primary judge went on to address the orders sought by the Council and, in so doing, rejected the arguments raised by Cando in support of the relief it had sought in its cross-claim.

It is not obvious why the primary judge said that the relief sought by Cando in its cross-claim could not be considered, as distinct from saying that the relief claimed could be considered, but should be rejected. The Council accepted that this was an error. It is of no significance.

In determining that an injunction should be granted in the terms set out in order 2 (at [14] above), the primary judge, at [98] of the judgment, rejected Cando’s submission that there would be no practical utility in the orders being made. Her Honour declined to order demolition. She addressed Mr Refalo’s evidence as to how the sorry situation had come about (concluding that he was apparently poorly advised, but nonetheless the architect of his own predicament: at [104]) and observed (at [109]):

Her Honour said (at [111]) that there were other avenues for Cando to explore if demolition were not ordered without making any specific findings on any particular avenue of that kind.

In its notice of appeal Cando sought a declaration that the development consent had not lapsed. It also sought the following orders to similar effect to the declarations and orders sought in its cross-claim:

During the hearing senior counsel for Cando submitted a form of alternative orders sought by it that relevantly included the following:

Cando submitted that these orders could be made pursuant to the powers conferred on the Land and Environment Court by s 124 of the EPA Act. It submitted that this section gave the Land and Environment Court (and on appeal, this Court) wide discretionary powers to make orders permitting and authorising the use and occupation of the premises as separate residential townhouse premises, notwithstanding s 109M of the EPA Act which prohibits the occupation of new premises unless an occupation certificate has been issued and s 109H which prohibits the issue of either an interim or final occupation certificate unless, relevantly, there is a development consent in force with respect to the building and a construction certificate has been issued.

The relief claimed in para 3 of the cross-claim to the effect that a “strata certificate” for the building could be issued, notwithstanding the absence of a construction certificate, an occupation certificate or a development consent currently in force, was not repeated in the notice of appeal or the orders proposed during the course of submissions. Nor was the relief claimed in para 5 of the cross-claim, namely that the Council issue a “strata certificate for the Building”, pressed on appeal. I assume the reference to a “strata certificate” was to a strata certificate to be issued under s 54 of the Strata Schemes Development Act 2015 (NSW). Section 54(1)(b) makes it a condition for the issue of a strata certificate by a Council that a construction certificate has been issued and occupation of the proposed lots in the plan would not contravene the EPA Act (s 54(1)(b)(i) and (iv)).

In its notice of appeal Cando contended that the judge was in error in not determining its claim to discretionary relief in its cross-claim and in only determining Council’s application and, so it was contended, refusing to resolve whether she had the power under s 124 to make any order sought in the cross-summons. Cando also contended that the primary judge thereby denied Cando procedural fairness.

This last contention had no substance. It was not pressed on appeal. It should never have been made. It is clear from the transcript of the proceedings below and the primary judge’s reasons that her Honour was scrupulous in providing procedural fairness to both parties.

Contrary to this first ground of appeal, on a fair reading of the primary judge’s reasons, her Honour did find that she had no power to make the orders sought by Cando under s 124 of the EPA Act (Judgment [95] and [96]). For the reasons which follow this finding was correct. Moreover, even if there were such power, it would not have been appropriate for the power to be exercised.

Nonetheless, as noted above, the primary judge was in error in not dealing with Cando’s cross-claim. For the reasons below, her Honour ought to have dismissed the relief sought in paras 2-5 of the cross-claim.

Ground 2 of the Notice of Appeal challenged the exercise of the primary judge’s discretion to grant the injunction restraining Cando from using the property. The substantive grounds are dealt with below in addressing Cando’s submissions. The grounds alleged not only that the primary judge erred in what was said to be the exercise of her discretion to grant or withold the relief claimed in Cando’s cross-claim and gave inappropriate weight to various considerations, but that her approach and conclusions were irrational.

In their submissions in reply counsel for Cando said that this contention addressed the ground on which an administrative decision may be set aside in judicial review proceedings. How this could be relevant to an appeal on fact and law under s 58 of the Land and Environment Court Act was not explained. There was no substance to the contention that the primary judge acted irrationally. No such submission was made on appeal, nor could it have properly been made. Again, this contention should not have been made.

Ground 3 of the Notice of Appeal challenged the primary judge’s finding that the development consent had lapsed. Cando challenged the primary judge’s finding that it bore the onus of proving that the development consent had not lapsed, that the relevant conditions of development consent had been complied with when the construction work was carried out, and in particular that tree removal as contemplated in condition 44 was carried out by a qualified arborist. It also challenged the primary judge’s finding that it bore the onus of proving that water disconnection satisfied the carrying out of physical work relating to the building. It challenged the primary judge’s finding that the erection of a temporary safety fence was not proven by it to have been approved by a principal certifying authority and challenged the primary judge’s finding that none of the work of clearing trees and shrubs, water disconnection, or safety fencing “related to the physical commencement of the building the subject of the development consent in the relevant period”.

The Council filed a Notice of Contention in the following terms:

Notwithstanding that Cando submitted that it was not necessary to determine whether or not the development consent had lapsed, like the primary judge, I consider it is necessary to do so. If the development consent had lapsed as the primary judge found, then there are additional considerations relevant to whether or not the Court can, and if it can, whether it should, make the orders sought by Cando on appeal. The Council submits, in my view correctly, that if the consent has lapsed so that the development is of a kind prohibited by the current Local Environmental Plan, the effect of the orders sought by Cando would be that the Court authorise a specific site rezoning, thereby bypassing the provisions in the now Pt 3 of the EPA Act for the making of planning decisions and public consultation in that connection. These issues will not arise if the development consent did not lapse, although other issues will arise.

Cando submitted that the primary judge erred in not following Drummoyne Municipal Council v Lebnan (1974) 131 CLR 350. It submitted that the primary judge was bound to apply Lebnan, but failed to do so.

Lebnan concerned s 315 of the Local Government Act 1919 (NSW) which provided that a building approval would be void “if the building work to which it refers is not substantially commenced within 12 months after the date of approval”. The majority of the High Court (Barwick CJ, Gibbs, Stephen and Mason JJ, Menzies J dissenting) held that the “date of approval” was the date on which approval was communicated to the applicant. Relevant development work was substantially commenced during the last week of October 1972 (at 361). Gibbs J, with whom Barwick CJ, Stephen and Mason JJ agreed, said (at 360) that the Council:

The High Court’s decision in Lebnan does not resolve the issue of where the onus of proof lies in the present case in determining whether or not building or construction work “relating to the building, subdivision or work” was “physically commenced on the land to which the consent applies before the date on which the consent would otherwise lapse ...”

In relation to both ss 76A and 76B, the ultimate onus of proof of breach of the section rests with the Council that asserts the breach. The correct approach, which is consistent with Lebnan, is that indicated in Vines v Djordjevitch (1955) 91 CLR 512 at 519; [1955] HCA 19; Director of Public Prosecutions v United Telecasters Sydney Ltd (1990) 168 CLR 594 at 611 (“United Telecasters”); [1990] HCA 5; and Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249; [1990] HCA 41 (“Chugg”). In Chugg, Dawson, Toohey and Gaudron JJ said (at 257):

The Council’s primary case was that there was no development consent in force. Its primary case was that Cando was in breach of s 76B. The Council discharged the initial onus on it by establishing that the development being carried out by Cando was of a kind that could not be carried out on the land, with or without development consent, under the current local environmental plan. Subject to s 109B, that was not in issue. The onus then was on Cando to satisfy the qualification in s 109B that the development being carried out was being carried out in accordance with a development consent that had been granted and was in force.

There was no question but that Cando was in breach of s 76A. Questions of onus of proof in relation to s 76A do not arise.

It was common ground that the application of s 109B(1) depended upon whether or not the development consent had continued in force after 23 July 2009. The Council did not submit that for s 109B(1) to apply it was necessary not only that the development consent had continued in force, but that the building, engineering or construction work had been carried out in accordance with the conditions of the consent.

The onus being on Cando to establish the matter in s 109B(1), it was necessary for Cando to demonstrate that notwithstanding the lapsing of the five-year period specified in s 95(1) the terms of s 95(4) were satisfied. Prima facie, and applying only the express words in s 95(4), it could do this readily. It was common ground that demolition work (which would fall within “construction work”) had been carried out before the expiry of the five-year period from the granting of consent. Had that work been done in accordance with the conditions of the development consent, no problem would arise. Cando would have discharged its onus.

The question of where the onus of proof lies in establishing that work was or was not done lawfully and in accordance with the conditions of the consent arises because of the judicial interpretation placed upon s 95(4) rather than the express words used. Nonetheless, the principle in Vines v Djordjevitch, United Telecasters and Chugg applies. If that interpretation explains something impliedly inherent in the requirement that the “... building, engineering or construction work [relate to] the building, ... or work ... physically commenced on the land to which the consent applies” then the onus of establishing that the work is done in accordance with the conditions of consent rests with Cando. On the other hand, if the judicial interpretation is a matter of answer or qualification to what would otherwise be the meaning of the subsection, then the onus of establishing that the conditions of consent were not complied with would lie with the Council.

As a matter of principle, applying orthodox principles of statutory interpretation, the former must be the position. And so it is. The leading authority is Iron Gates Developments Pty Ltd v Richmond-Evans Environmental Society Inc (1992) 81 LGERA 132, which concerned the proper construction of the then s 99 of the EPA Act. Section 99(1) provided that a consent to a development application lapsed unless “the development the subject of that consent” was commenced within two years (extendable to three years with the consent of the authority). Section 99(2) provided:

Handley JA, with whose reasons Mahoney JA and Rogers AJA agreed, said (at 135):

In Green v Kogarah Municipal Council [2001] NSWCA 123; 115 LGERA 115, Giles JA (with whom Mason P and Ipp AJA agreed) referred to amendments to the EPA Act in 1999 which introduced s 95(4) in materially the same terms as those applicable to the present case in substitution for the previous s 99. Giles JA said (at [55]):

In K & M Prodanovski Pty Ltd v Wollongong City Council [2013] NSWCA 202; 195 LGERA 23, Meagher JA (with whom Leeming JA and Sackville AJA agreed) summarised the effect of the decisions on s 95(4) insofar as they concern work done not in accordance with the development consent as follows (at [15]):

I do not accept Cando’s submission that non-compliance with the conditions of consent was a qualification or an additional or special matter (Vines v Djordjevitch at 519) which the Council had the onus of establishing. Rather, the judicial interpretation of s 95(4) is that compliance with the conditions of consent is a necessary element of a party’s establishing that the work “relates to” the development for which consent has been given.

A fortiori, Cando had the onus of establishing that water disconnection amounted to the carrying out of a building, engineering or construction work and not merely the turning off of a tap.

I have set out at [60] above the primary judge’s reasons for concluding that the “further work” relied upon by Cando, being clearing of trees and shrubs, water disconnection, and erection of fencing, had not been shown to be construction work that “related to” the building the subject of the development consent that had been physically commenced on the site. In upholding the primary judge’s conclusion that the onus of proof of compliance with the conditions of consent lay with Cando, I accept her Honour’s findings that Cando’s reliance on water disconnection and erection of fencing was not shown to be work that prevented the consent from lapsing.

In relation to the clearance of trees and shrubs, the primary judge concluded that there was no evidence that condition 44 had been complied with and therefore Cando could not rely on the “tree clearing” as work “relating to” the consent.

Condition 44 said that pruning works and tree removals were to be carried out by a suitably qualified tree surgeon/arborist in accordance with the provisions of AS4373-1996 Pruning Amenity Trees and The Tree Works Industry Code of Practice (WorkCover NSW). The Australian Standard AS4373-1996 Pruning Amenity Trees was not tendered at trial. It was tendered by Cando on appeal (MFI-C). The WorkCover Amenity Tree Industry Code of Practice 1998 was also tendered by Cando on appeal (MFI-B). The Council accepted that the WorkCover Code of Practice 1998 entitled “Amenity Tree Industry” was in force at the date of consent and that judicial notice could be taken of it as it has effect as a Code of Practice under s 274(1) of the Work Health and Safety Act 2011 (NSW). The same concession was not made in respect of document AS4373-1996.

Cando submitted that the standard AS4373-1996 Pruning Amenity Trees described only methods for pruning trees and did not apply to the removal of trees and did not require tree removal to be carried out by a qualified arborist. It submitted that the WorkCover Code did not require tree removal to be carried out by a qualified arborist. Therefore, Cando submitted that notwithstanding the terms of Condition 44, neither standard referred to in that condition of consent was applicable to the work of removal of trees, let alone the removal of shrubs.

The Australian Standard AS4737-1996 can only be received as additional evidence on appeal if there are “special grounds” to do so (Supreme Court Act 1970 (NSW), s 75A(8)). Generally, but not always, three conditions must be satisfied before further evidence can be admitted on appeal, namely: that the evidence be credible, that it could not have been obtained for use at the trial with reasonable diligence, and that there is a high degree of probability that there would be a different result (Harrison v Schipp (2002) 54 NSWLR 612; [2002] NSWCA 78 at [195]). Different considerations will come into play depending upon the consequences of admitting the further evidence. If the consequences of doing so would be to require a new trial, the observations of Dixon CJ in Greater Wollongong Corporation v Cowan (1955) 93 CLR 435; [1955] HCA 16 would be applicable. His Honour said (at 444) that the discovery of fresh evidence could rarely, if ever, be a ground for a new trial unless it were reasonably clear that if the evidence had been available at the first trial a different result would have been produced, and reasonable diligence had been exercised to procure the evidence for the trial. There may be a difference of approach if the evidence is not merely credible, but undisputed, so that no prejudice can arise from its admission on appeal, and its admission would not result in a new trial.

Hence, in Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64, Spigelman CJ held that there was no absolute requirement that each of the three “conditions” be satisfied before further evidence could be admitted on appeal and that:

Campbell JA said (at [136]) of the requirement to identify “special grounds”:

The reference to the Akins “tests” is to what Clarke JA said in Akins v National Australia Bank (1994) 34 NSWLR 155 at 160 (with the agreement of Sheller JA):

In the present case the evidence sought to be admitted is not in any sense “fresh”. It could have been obtained with reasonable diligence for use at the trial. The evidence is not only credible, it is undisputed. The Council does not point to any prejudice if it were admitted. Cando did not submit that there was a high degree of probability that admission of the evidence would result in a different verdict. I infer that this was because it had confidence in its other submissions. That depends on Cando’s success, or lack thereof, on other issues. There is a sufficient possibility that the admission of the evidence may be determinative of the appeal (either in this court or in the High Court) that the evidence should be admitted.

The issue of whether work was done on the site that was not illegal demolition work, but was sufficient to prevent a lapsing of the development consent, only arose during the course of the trial. In response to Cando’s reliance upon such work the Council relied on the terms of condition 44. There was a substantial dispute on the question of on whom the onus of establishing compliance or non-compliance with condition 44 lay. The Council does not submit that Cando made a forensic or tactical decision not to tender the documents referred to in condition 44. There is no dispute about the terms of the documents. The Council does not point to any prejudice if the documents are admitted on appeal. Admission of the documents will not require a further hearing. In my view, notwithstanding that with reasonable diligence the documents should have been tendered before the primary judge, there are special circumstances that justify their being admitted into evidence on appeal.

Cando submits, and the Council does not deny, that Australian Standard AS4373-1996 relates only to the pruning and not to the removal of trees.

The WorkCover Code of Practice specifies procedures to be followed in both the pruning and removal of trees for the purposes of work safety. It does not require the employment of a qualified arborist.

The Council submitted that although AS4373-1996 did not require the employment of a qualified arborist for the removal of trees, condition 44 did impose that requirement. I agree that this is the preferred construction of condition 44. The condition should not be construed as requiring the employment of a qualified arborist only in so far as the standards referred to required. The condition required both that tree removals be carried out by a suitably qualified tree surgeon/arborist and that tree removals be carried out, relevantly, in accordance with the Tree Works Industry Code of Practice (WorkCover NSW).

Cando has not discharged the onus that lies on it to establish that this was done.

Cando submits that the removal of shrubs was a sufficient commencement of work to prevent the consent from lapsing and that there was no condition of the development consent that required shrubs to be removed by a suitably qualified tree surgeon/arborist. I agree.

The photograph taken in December 2007 referred to at [25] above shows the presence of both large trees on the property and bushy shrubs of a few feet in height, particularly along a driveway. The trees as well as the shrubs had to be removed for the development to be undertaken. The Council submitted that shrubs were simply small trees, but the difference is well understood and there would be no reason for the Council to impose as a condition of the development consent that shrubs of a few feet in height be removed by a qualified arborist or tree surgeon.

The Council submits that the removal of both shrubs and trees was part and parcel of demolition which, it submitted, included site clearing. Condition 21, relating to requirements to be satisfied before the commencement of demolition work; condition 24, also addressing things to be done before demolition commenced; and conditions 25 and 26, relating to the carrying out of demolition works, were all listed under a heading “Prior to Work Commencing”. Condition 44, relating to tree removals, was listed under a different heading, namely “During Work”.

That is to say, the development consent did not treat the removal of trees as part of demolition work. There is no reason that the removal of shrubs should be considered differently. It is not a natural use of language to talk of the removal of shrubs as being demolition. No doubt it is site-clearing, but the development consent did not impose separate conditions relating to site-clearing generally. The clearance of shrubs before 23 July 2009 was not a breach of the condition of consent.

The primary judge accepted that the clearing of trees and shrubs was “construction work” if it were a genuine attempt physically to commence a consent and an initiatory step in that process. As there is now not a requirement that work be “substantially” commenced, provided that the physical activity is not merely a sham or notional or equivocal, it can be work relating “in a real sense” to that which has been approved (Hunter Development Brokerage at [86]). The removal of shrubs independently of the removal of trees satisfies this requirement. In Hunter Development Brokerage, Tobias JA rejected the notion that building engineering or construction work that has physically commenced on the land to which the consent applies will be insufficient to prevent the lapsing of the development consent if it is preparatory to the main work (at [106]). In so concluding, his Honour (at [93]-[94]) applied the views of the majority of the High Court in Owendale Pty Ltd v Anthony (1967) 117 CLR 539 where Barwick CJ and Taylor J held that the work of preparing a site by levelling trees marked the commencement of the work of erecting the building, and McTiernan J referred to work which consisted of clearing away trees and shrubs and levelling of the site “preparatory to building” was sufficient to satisfy a condition of a lease requiring the commencement of the erection of a building on the land within a prescribed time.

The Council did not submit that the carrying out of the work of clearing trees or shrubs was not “construction work”. The primary judge noted (Judgment [87]) that the clearing of trees and shrubs had the potential to satisfy physical commencement and that “construction work”, which is not defined in the EPA Act, has a wide meaning. It is clear that the primary judge accepted that the work of clearing trees and shrubs would be sufficient to satisfy the definition of “construction work”. The Council did not contend to the contrary. If the work of clearing trees and shrubs can be construction work, then so can the work of clearing shrubs.

On this very narrow basis I conclude that the primary judge erred in finding that the development consent had lapsed. It follows that the declaration made by the primary judge should be set aside. In lieu thereof the alternative declaration sought by the Council in its further amended summons should be made that Cando carried out its development in breach of s 76A(1)(b) of the EPA Act.

The consequences of this may be significant. Cando will be entitled to apply for a modification of the development consent under the former s 96AA of the EPA Act and for a construction certificate to enable the carrying out of the works the subject of Annexure A to the Agreed Statement of Facts.

Cando submits that no such steps should be necessary because this Court should make orders as set out above in the exercise of the powers conferred by s 124 of the EPA Act.

Section 124 of the EPA Act relevantly provides:

It is an offence to do things that are forbidden by the Act, or not to do things required to be done (EPA Act, s 125(1)).

Section 124(1) gives the Court a discretion as to whether or not to make an order restraining a breach of the Act if such a breach has been established. Thus, in Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335, this Court dismissed an appeal from a refusal by the Land and Environment Court to grant an injunction to restrain a long-standing beneficial, but unlawful, use of land. In a passage relied upon by Cando, Kirby P said (at 340):

The “discretion” there referred to is the discretion conferred under s 124(1) to withhold injunctive relief.

In F Hannan Pty Ltd v Electricity Commission of NSW (No 3) (1985) 66 LGRA 306, Street CJ said (at 311) that if for valid reasons the Court does not think that any order is fit to remedy or restrain a breach then relief will be withheld. He said (at 313):

Cando would point to three of the objects now set out in s 1.3 of the EPA Act, being the promotion of the orderly and economic use and development of land and the promotion of the delivery and maintenance of affordable housing, as well as the promotion of the proper construction and maintenance of buildings (s 1.3(c), (d) and (h)) as weighing in favour of its claimed relief.

In Great Lakes Council v Lani [2007] NSWLEC 681; 158 LGERA 1 the parties reached agreement as to injunctive orders to be made that would restrain future breaches and remedy past breaches. These included the carrying out of works agreed between the parties that would be appropriate to remedy the breaches (at [13]-[15]).

There is no doubt that the power under s 124(1) extends to the ordering of a party in breach to carry out rectification works.

In the present case if Cando were to carry out the works in Annexure A to the Agreed Statement of Facts without first obtaining a construction certificate and appointing a principal certifying authority it would commit further breaches of the Act.

In Grace v Thomas Street Cafe Pty Ltd [2007] NSWCA 359; 159 LGERA 57, Beazley JA (as her Honour then was) with the concurrence of Spigelman CJ and McClellan CJ at CL, held that the discretion to refuse relief under s 124(1) could be exercised on terms (at [139] and [157]).

This is clearly correct. It is not the relief sought by Cando.

By the orders sought in its Notice of Appeal Cando did not merely propose that there be no injunction against the use or occupation of the site on condition that the works in Annexure A to the Statement of Agreed Facts be carried out. It sought a declaration that on the carrying out of those works, if certified by an independent expert, the site could be occupied without an occupation certificate (at [70]).

Section 109M of the EPA Act provides that a person must not commence occupation or use of the whole or any part of a new building unless an occupation certificate has been issued in relation to the building or part thereof (s 109M(1)). That prohibition does not apply to the occupation or use of a new building after the expiration of 12 months after the date on which the building was first occupied or used (s 109M(2)(b)).

Section 109H(2) (now s 6.9) provides than an occupation certificate must not be issued unless preconditions to the issue of the certificate specified in the development consent had been met. Neither an interim occupation certificate, nor a final occupation certificate, can be issued to authorise a person to commence to occupy or use a new building or part thereof, unless, in the case of a building erected pursuant to a development consent, a construction certificate has been issued with respect to the plans and specifications for the building (s 109H(3)(b) and (5)(b)).

When questioned as to how orders permitting occupation of the townhouses could be made in the absence of an occupation certificate, counsel for Cando frankly pointed to the qualification in s 109M(2)(b) that the prohibition did not apply if the building had been occupied for a year. As I understood the submission, it was that the court should endorse illegal occupation for a year so that the townhouses could then be lawfully occupied. Cando submitted that if the orders it sought were made, they would displace the statutory prohibitions.

In the absence of a construction certificate no occupation certificate could be issued and use or occupation of the building would be prohibited by s 109M(1). The orders sought in the Notice of Appeal, like the orders sought in the cross-claim that were pressed before the primary judge, if made, would have purportedly sanctioned and authorised breaches of the Act. Such orders would be antithetical to the power conferred by s 124(1) for the Court to make orders restraining or remedying a breach of the Act. They could not be justified on the ground that the Court has a wide discretion in deciding whether or not to grant injunctive relief under s 124, nor in imposing conditions on which injunctive relief might be refused.

The orders ultimately sought as set out at [71] above sought to avoid this problem by restraining Cando from using the premises or permitting occupation of the premises on conditions, the conditions being that Cando carry out the works in Annexure A to the Agreed Statement of Facts within six months, and that an independent expert certify that the works had been properly carried out.

For the Court to direct Cando to carry out the works in Annexure A to the Agreed Statement of Facts when Cando does not have a construction certificate that it requires in order lawfully to carry out the works and has not appointed a principal certifying authority would be to direct Cando to carry out work in breach of s 81A(1) and (2) of the EPA Act. It is one thing for a court to exercise its discretion not to grant injunctive relief to restrain a breach of the Act. It is altogether a different thing for a court to order parties to carry out work in breach of the Act. The latter course is not authorised by s 124.

The primary judge was right to reject the claims for declarations and orders that had been sought in paras 2-5 of the cross-claim. Neither the orders sought in paras 4-5 in Cando’s Notice of Appeal, nor the orders sought during the course of the hearing can, or should be made.

It should be declared that the development consent has not lapsed. It will be open to Cando to seek a modification of the terms of the development consent and the issue of a construction certificate to permit it to carry out the works identified in Annexure A to the Statement of Agreed Facts. Prima facie, as the Council has agreed on the matters in paras 34-39 of the Statement of Agreed Facts, it may reasonably be expected that a modification to the development consent and the issue of a construction certificate for the remaining works to complete the development would be issued. However, that is not a question presently before us.

The Council submitted that on this scenario the issue of a construction certificate for the remaining works to be done would satisfy the requirement for the issue of an occupation certificate under s 109M. Again, that is not a matter presently before us.

If the Land and Environment Court had the power to make the orders sought by Cando, nonetheless, there would have been no error in the primary judge’s refusal to exercise that power. Contrary to Cando’s Notice of Appeal that the primary judge’s reasons were irrational, her Honour’s reasons for concluding that Mr Refalo was the author of his own misfortune were not only rational, but correct. He relied on advice of his builder and a “building consultant” (whose expertise was unexplained) in reckless disregard of the conditions of the development consent.

For these reasons the primary judge’s declaration that the development was prohibited development for which no development consent was in force should be set aside. Instead, it should be declared that the development consent has not lapsed.

The substance of the injunction granted by the primary judge should not be disturbed. However, that injunction was framed in accordance with the relief sought by the Council in para 1(c) of its further amended summons. Relief in those terms is not appropriate. There is no reason that Cando should be restrained from using the premises until a building certificate has been issued pursuant to s 149A of the EPA Act. A building certificate issued under s 149A (now s 6.26) merely prevents a council, relevantly, from making an order requiring a building to be repaired, demolished, altered, added to or rebuilt (s 149E (now s 6.25(4))).

The appropriate form of injunction is that Cando be restrained from completing the erection of the building on the Premises until a construction certificate for Cando’s building work has been issued by the Council (s 81A(2)(a) (now s 6.7)) and it has appointed a principal certifying authority (s 81A(2)(b) (now s 6.6)). It should also be restrained from occupying or permitting the occupation of the building until an occupation certificate has been issued pursuant to s 109M (s 6.9) of the EPA Act.

Cando has had some success on the appeal. There is no reason to disturb the order for costs made in the Land and Environment Court. Had the Council obtained the success in the Land and Environment Court to which I think it is entitled it would still have been entitled to its costs.

On appeal the question of whether the development consent had lapsed was the more prominent issue. On that issue, although not for many of the reasons advanced, Cando has been successful. It has not been successful on the ground which it advanced as its primary ground in the court below. Having regard to the Council’s success on appeal on most of the sub-issues and that if the question of costs were determined on an issue by issue basis, the Council would be entitled to its costs against Cando on the issues on which it succeeded, but having regard also to Cando’s having substantially improved its position on appeal, I consider that Cando should receive one-third of its costs of the appeal.

For these reasons I propose the following orders: