A clear distinction: the role of commissioners, parties and objectors in conciliation conferences

Following the recent decision in El Khouri v Gemaveld Pty Ltd [2023] NSWCA 78 (El Khouri) (see our article on this decision here), in McMillan v Taylor [2023] NSWCA 183 (McMillan) the Court of Appeal has further considered the role of commissioners in the context of a conciliation conference and the construction of s 34(3) of the Land and Environment Court Act 1979 (Court Act) .

The case also considers the role of non-party objectors in Class 1 appeals and the extent of the obligation to afford them procedural fairness.

Background

The first and second respondents (Owners) sought approval to demolish an existing dwelling on land in Vaucluse and erect a new dwelling with a swimming pool and sauna. The five applicants (the Objectors), who owned neighbouring properties, lodged objections to the development application (DA). The DA was refused by Woollahra Municipal Council (Council) and the Owners appealed to the Land and Environment Court (LEC).

As part of the mandatory conciliation conference prescribed by s 34AA of the Court Act the Objectors attended the on-site inspection, with their lawyers and experts, and explained their objections to the Commissioner. The conciliation conference then continued in private session between the parties and an in-principle agreement was reached.

Over the course of the next few months, the Owners and Council negotiated the terms of the consent determination, which were agreed on 17 November 2022. The Commissioner accepted that the determination was one that the Court could have made in the proper exercise of the Court’s functions and gave effect to the agreement under s 34(3) of the Court Act. The Objectors, dissatisfied with the determination and having failed in two joinder applications, sought judicial review of the Court’s order under s 69 of the Supreme Court Act 1970 on several grounds including that the Commissioner failed to consider terminating the conciliation conference and denied the Objectors procedural fairness.

Central to the issues for determination was the construction of s 34(3) of the Court Act, which reads (our emphasis added):

34   Conciliation conferences

…

(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.

Role of the Commissioner

In circumstances where an agreement between the parties is reached, under s 34(3) the Commissioner has an obligation to dispose of the proceedings in accordance with the agreement, so long as the decision constituted by the agreement is a decision that the Court “could have made in the proper exercise of its functions”.

The Objectors submitted that the matters for consideration in determining a DA set out in s 4.15(1) of the Environmental Planning and Assessment Act 1979 (EPA Act) must be considered by the Commissioner in determining whether the decision of the parties was one which the Court could have made.

Basten AJA, confirming the decision in El Khouri (see our article on this decision here), held that the Commissioner was not required to carry out the evaluative exercise (that is, the merit assessment) required by s 4.15 of the EPA Act of the matters that the consent authority would have been required to take into account had the matter proceeded to a hearing. At [62] Basten AJA held:

“…it is clear from the text that the issue, as to which the Commissioner must be satisfied, is that the decision “could” have been made by the Court, not that it “would” or “should” have been made by the Court. This language is consistent with the Court having no obligation to assess the evaluative matters which would be required to be addressed if there were a full hearing.”

Did the Commissioner fail to consider terminating the conciliation conference?

Section 34AA(3) of the Court Act provides as follows:

(3)  The Court or the Commissioner may at any time, if the Court or Commissioner thinks it appropriate in the circumstances of the case, determine that proceedings are not to be dealt with or are not to continue to be dealt with under subsection (2). A determination may be made on the motion of the Court or Commissioner or on application by the parties.

The Objectors submitted that under s 34AA(3) the Commissioner was under a duty to consider terminating the mandatory conciliation conference.This argument was rejected by Basten AJA, with his Honour noting that the power under s 34AA(3) would normally be invoked by a party, usually in circumstances where agreement appears beyond reach. In this case, neither party made such an application. Further, where neither party requests termination of the process, “it would be an exceptional step for a commissioner to exercise that power on his or her own motion” (at [31]).

It was also demonstrated that the Commissioner was aware that the Objectors wished the conciliation conference to be terminated and so had considered the possibility of termination. This was because the Commissioner had been forwarded correspondence from the Objectors to Council expressing that desire.

For these reasons, Basten AJA dismissed this ground of the Objectors’ summons.

Were the Objectors denied procedural fairness?

The Objectors argued that they were denied procedural fairness as they ‘legitimately expected’ that the LEC would hear their objections and that they would be taken into account in making a determination on the merits of the case.

Basten AJA held that the duty to afford procedural fairness was derived from an object of the EPA Act “to provide increased opportunity for community participation in environmental planning and assessment”. That object was given effect by putting the DA on public exhibition and allowing the Objectors to make submissions, as well as providing them with the opportunity to participate in the conciliation conference. The Objectors took advantage of both opportunities.

The Court held that the Objectors failed to assert jurisdictional error on the part of the Commissioner in failing to address their objections, and that in substance, they sought to be treated as parties (despite their failed joinder applications).

Evidence

In support of the procedural fairness ground, the Objectors each relied upon an affidavit setting out their subjective expectations as to what would occur during the conciliation process and the adverse impacts of the DA on their respective properties. The Court of Appeal held that the tender of evidence about such matters is irrelevant to an allegation of procedural unfairness and was ruled inadmissible.

The Objectors also sought to tender two expert reports detailing the merits of their objections, but these were rejected on the basis that a merit assessment was not a function of the Court in judicial review.

Basten AJA expressed concern at [18] about the significant expense that must have been incurred by the Objectors in the preparation of such evidence, even though a challenge based on procedural fairness does not allow evidence about such matters (something the legal advisors should have known).

Implications

The Court of Appeal in McMillan ultimately dismissed the appeal and the Objectors were ordered to pay the respondents’ costs.

This decision underscores the importance of ensuring that councils (usually through their solicitors) manage the expectations of objectors and clearly explain the process associated with s 34 conferences (and any hearing that may eventuate). Objectors (unless joined as a party by order of the Court) are not parties to proceedings and are not entitled to participate in negotiations that occur during conciliation.

Objectors must also understand the clear distinction drawn in s 34 of the Court Act between the role of a commissioner presiding over a conciliation conference and the role of a commissioner or judge conducting a hearing on the merits of a development application. As Kirk JA noted in McMillan (at [6]):

“…when presiding over a conciliation conference, the Commissioner is seeking to bring the parties together to reach their own agreed outcome. The agreed outcome is the product of the parties’ decision, as facilitated by the Commissioner; it is not the Commissioner’s decision. In contrast, when conducting a hearing the Commissioner is moving to make an independent determination on the merits of the application.”

As was held in El Khouri, in the context of a conciliation conference, the Commissioner need only be satisfied that that there are no jurisdictional constraints on the power of the Court which would preclude an order of the kind reached in the agreement. The Commissioner is not required to determine the merits of the proposed development.