Court of Appeal dismisses challenge to development consent despite proven non-compliance with Local Environment Plan height control

In El Khouri v Gemaveld Pty Ltd [2023] NSWCA 78 (El Khouri), the Appellants challenged the validity of a development consent granted by the Land & Environment Court on neighbouring land on the basis of evidence (which was not before the Court) that the development exceeded a height restriction applicable to the land. 

The development consent granted by the Land & Environment Court

The Respondents had applied for approval of a development comprising demolition works and the construction of a four-level dwelling house, swimming pool, front fence, landscaping, and site works. 

The land was subject to cl 4.3(2) of the Kogarah Local Environmental Plan 2012 (Kogarah LEP), which provides:

(2) The height of a building on any land is not to exceed the maximum height shown for the land on the Height of Buildings Map.

The LEP’s Height Buildings Map showed a height of nine metres applicable to the land the subject of the challenge.

The Georges River Council (the Council) refused development consent and a Class 1 appeal was commenced by the Respondents. 

A section 34 conciliation conference was conducted and agreement was reached between the Respondents and the Council. Section 34(3) of the Land and Environment Court Act 1979 (LEC Act) provides (our emphasis added):

(3) If, either at or after a conciliation conference, agreement is reached between the parties or their representatives as to the terms of a decision in the proceedings that would be acceptable to the parties (being a decision that the Court could have made in the proper exercise of its functions), the Commissioner—

(a) must dispose of the proceedings in accordance with the decision, and

(b) must set out in writing the terms of the decision.

In April 2022, Commissioner Horton satisfied himself in accordance with s 34(3) that the agreed decision was one that the Court could make in the proper exercise of its functions and accordingly, made orders granting consent.  In particular, Commissioner Horton was satisfied that “[t]he proposed development complies with the height of building standard of 9m at cl 4.3 of the [Kogarah] LEP”.

The challenge to the development consent

Following the grant of the development consent, in May 2022 the Appellants obtained survey evidence, which established that a small portion of the approved development exceeded the nine metre height control.  The Appellants subsequently commenced proceedings challenging the validity of the Commissioner’s decision. 

The basis of the challenge was that the Court had no power to make the decision to grant consent because it was not a decision that the Court could have made “in the proper exercise of its functions” within the meaning of s 34(3) of the LEC Act.  The rationale given was the height of the proposed development exceeded the relevant height control in the Kogarah LEP and there was no request to vary that standard, as required by cl 4.6 of that LEP.

The proceedings were initially referred to the Supreme Court’s Equity Division, where White J determined that the proposed development — based on the Appellants’ survey evidence which was not before the Commissioner when making the decision under s 34(3) of the LEC Act — did in fact exceed the height control contained in cl 4.3(2) of the Kogarah LEP.

The question for the Court of Appeal to determine on appeal was whether this non-compliance gave rise to a “jurisdictional fact” that rendered the development consent susceptible to review.  As Leeming JA explained (at [20]):

…the issue may be framed as whether a non-negligent error resulting in a development application which in fact breaches cl 4.3 of the Kogarah LEP is a jurisdictional fact entitling this Court, on different evidence, to set aside the decision of the Land and Environment Court. 

A jurisdictional fact is one that must objectively exist before a statutory power can be exercised by a decision-maker. The judicial review of a jurisdictional fact, being objective by necessity, allows for a normally impermissible merits review of a decision. In such a case, evidence not before the original decision-maker can be considered by the Court.

The Court of Appeal’s decision

In summary, Leeming JA (with whom Adamson JA and Gleeson JA agreed) held as follows:

• Following the reaching of the section 34 agreement between the parties, the Commissioner had an obligation under s 34(3) of the LEC Act to dispose of the proceedings in accordance with the agreed decision.  This disposal was subject to the pre-condition to the exercise of that power, in that the agreed decision was a “decision that the Court could have made in the proper exercise of its functions” (citing the Court of Appeal’s decisions in Al Maha Pty Ltd v Huajun Investments Pty Ltd (2019) 233 LGERA 170; AQC Dartbrook Management Pty Ltd v Minister for Planning and Public Spaces (2021) 105 NSWLR 152).
• It was therefore necessary for the Commissioner to ask whether the decision to which the parties had agreed was one that the Court could have made in the “proper exercise of its functions” as a consent authority under the Environmental Planning & Assessment Act 1979 (EPA Act).
• As a consent authority, the Court was required to have regard to the matters set out in s 4.15(1) of the EPA Act, which includes the “provisions of any environmental planning instrument” that apply to the land.  The Commissioner was therefore required to consider, among other matters, cl 4.3 of the Kogarah LEP.
• Applying the reasoning of the majority of the Court of Appeal in Ross v Lane [2022] NSWCA 235, compliance with cl 4.3 of the Kogarah LEP required consideration in accordance with s 4.15(1)(a) of the EPA Act but, did not give rise to a jurisdictional fact. 
• The Commissioner had regard to cl 4.3 of the Kogarah LEP and expressly formed the opinion that the proposed development did not exceed the nine-metre height limit and did so properly based on the evidence before him at the time of making the decision.  That decision was not impaired because the Applicants could establish, by evidence unavailable to the Commissioner, that there was non-compliance with that clause.
• The conclusion that compliance with the environmental planning instrument was not a jurisdictional prerequisite to the power to grant development consent is equally applicable to development consents granted “on the merits” (whether by the consent authority or by the Land & Environment Court after a hearing an appeal) and a development consent granted under s 34(3) following a successful conciliation.  Leeming JA observed (at 74) that in both instances:

…environmental planning instruments are a mandatory consideration by reason of s 4.15(1)(a).In the case of a determination on the merits, that occurs at the time the power is exercised.In the case of a successful conciliation conference, that occurs when the Court forms the opinion required by s 34(3) that the agreed decision is one which the Court could have made in the proper exercise of its functions.

The Court of Appeal dismissed the proceedings and the Appellants were ordered to pay costs.

Implications of the decision

The Court of Appeal’s decision in El Khouri confirms the complexities and adverse costs consequences that can arise when challenging the validity of a development consent.  

The net result of the decision is that compliance with a development standard set by an environmental planning instrument has been held to not involve a genuine jurisdictional fact. This means that a determination made by a consent authority that a development complies with a development standard cannot be reviewed by a court by way of merit review, even if it is later discovered to be based on incorrect evidence. This position applies whether the consent is granted by a consent authority or the Land & Environment Court after an appeal or successful section 34 conference.