In the Zone - March 2024 Update

Welcome to the first edition of Sparke Helmore’s new quarterly environment and planning law update – In the Zone.

Each quarter in 2024 we will bring you the most significant court decisions and legislative updates in NSW from the past three months. We will explain their significance so that you can be confident that you’re keeping abreast of the industry updates that affect you.

If any recent developments spark your interest or raise a potential legal question for your workplace or clients, please reach out to our team and we would be happy to discuss the matter further with you.

Court of Appeal

Court of Appeal overturns decision about delegated authority

Filetron Pty Ltd v Innovate Partners Pty Ltd atf Banton Family Trust 2 and Goulburn Mulwaree Council [2024] NSWCA 41 (29 February 2024).  Access the case here.

In this case a development consent granted by a Council sub-delegate was the subject of a judicial review challenge by an objector to the development. The relevant instrument of delegation provided that the delegate could not determine a development application where there was an “unresolved submission by way of objection”. The Council’s adopted “Development Assessment & Decision-Making Policy” also provided that a development application was required to be referred to the Council for determination where it was subject to a “reasonable and unresolved objection resulting from the neighbour notification/exhibition process”.

At first instance, the Land and Environment Court held that the phrases within the delegation “submission by way of objection” and “resulting from” referred only to submissions made during the public exhibition period. On this basis, because the objection in question was provided outside of that period, it was not to be treated as a submission.

The Court of Appeal did not agree with this particular finding. It was held on appeal that a submission is a “submission by way of objection” within the meaning of the instrument of delegation even in circumstances where it is provided outside of the public exhibition period (see at [110-111]). Furthermore, it was held that the submission in question was an objection “resulting from” the neighbourhood/exhibition process (see at [122] and [228]). Justice Ward acknowledged the difficulties confronting Councils in construing the delegation in this way. At [107], her Honour observed that the practical dilemma for Councils is that:

….if a submission by way of objection extends to any submission that is lodged at whatever time before the determination of the development application, then the delegate will not know whether he or she is able to exercise delegated authority until the very last moment and the Council will potentially be put to the practical administrative inconvenience of having to determine development applications that are wholly unmeritorious or spurious (or where the objections are of that ilk) simply because the submission has been lodged late.

Nevertheless Justice Ward held at [108] that the alternative construction of the delegation would involve reading words into the instrument by reference to a temporal limitation which was not permissible.

It was also argued by the appellant that the phrase “unresolved objection” within the delegation had the consequence that an objection can only be resolved if the objection was withdrawn or the objector had confirmed that their concerns had been satisfied.

A majority of the Court of Appeal agreed that, at the time of granting the development consent, the objection in question was “unresolved”. At [240] Justice White held (and Gleeson J agreed) that “unless there had been an antecedent resolution of Filetron’s objections, Mr Hedges had no authority to determine the development application”. It was acknowledged that the consequence of this construction of the delegation was that an objector could insist on having the development application heard by the Council by maintaining their objection however unreasonable that objection might be (at [243]). If the result is that the Council is deluged by a flood of applications that are subject to unresolved objections, then Justice White noted [at 248] that “the remedy lies in its own hands by amending the Instrument of Delegation”.

Implications: This judgment serves as a reminder to Councils to ensure that determinations of development applications made under delegation fall within the scope of the instrument of delegation.  Councils that have instruments of delegation in similar terms to those considered by the Court of Appeal may need to consider amending that instrument to minimise the risk of legal challenge to determinations made under delegation.

Court of Appeal confirms LEC’s characterisation of production of hemp infused products as requiring development consent

The Court of Appeal has handed down its judgment in an appeal against Justice Pain’s judgment in Class 4 civil enforcement proceedings: Tweed Shire Council v Cooke [2023] NSWLEC 73, which you can access here.

Sparke Helmore acted for the Council in both the Class 4 proceedings and the subsequent Court of Appeal proceedings.  At issue on appeal was whether the Land and Environment Court had correctly characterised the use of the appellant’s land use as a “rural industry” which, within the RU2 Rural Landscape zone, was a form of development requiring development consent under the Tweed Local Environmental Plan 2014 (Tweed LEP).  “Rural industry” is defined in the Tweed LEP to mean the “handling, treating, production, processing, storage or packing of animal or plant agricultural products” and relevantly includes “agricultural produce industries”.  “Agricultural produce industries” are in turn defined to mean “a building or place used for the handling etc…for commercial purposes of produce from agriculture”.

The land use in question involved not just the growing of low THC hemp, but also the harvesting, processing, infusing and packaging of hemp infused products which were then sold to the public either on-line or from a shop at a different location. The appellant argued that the land use should have been characterised as either “extensive agriculture” or “intensive plant agriculture”, both of which were permissible without development consent in the RU2 Landscape zone of the Tweed LEP.  It was contended that the handling, processing and packing of hemp infused products aspects of the land use were “ancillary” to either “extensive agriculture” or “intensive plant agriculture” which were permitted without development consent.

Justice Basten (with whom Ward J and Gleeson J agreed) rejected the appellant’s arguments.  At [43] His Honour stated:

…the implication relied on by the appellant is inconsistent with the definition of “rural industry” which is broad and includes the processing of plant agricultural products for commercial purposes.  The instrument would be incoherent if it expressly required development consent for such activities, but also permitted them without consent because they could be described as “ancillary to” a form of extensive agriculture which did not require consent.

While His Honour [at 50] accepted that the growing of hemp alone may fall within the definition of “extensive agriculture” (namely, “the production of crops…for commercial purposes”), the language of that definition did not include the result of processing the crop. As Basten J noted “[a] rice farmer produces rice, but not chocolate coated rice bubbles”.  His Honour held (at [52]) that the Tweed LEP demonstrated a clear intention that ancillary activities involving the processing of hemp leaves were not within the concept of “production of a crop”.  Rather any “handling, treating, production, processing, storage or packing of…plant agricultural products for commercial purposes” fell within the definition of “rural industry”. 

The Court of Appeal ultimately upheld the LEC’s decision at first instance that the growing of hemp and its subsequent processing were part of a single integrated purpose – namely the selling of hemp-infused products.  The appeal was dismissed with an order made that the appellant pay the Council’s costs of the proceedings in the Court of Appeal.

Implications: The decision highlights the need to carefully consider statutory definitions contained within an environmental planning instrument when characterising a particular development and to look at the definitions in the context of the whole instrument.  

Land and Environment Court

LEC finds Council officers cannot be charged under executive liability provisions of the POEO Act

Environment Protection Authority v McMurray [2024] NSWLEC 6 by Duggan J (6 February 2024).  Access the case here.

In these Class 6 proceedings, the Environment Protection Authority (EPA) appealed against a decision of the Local Court to grant a permanent stay of a prosecution commenced against the General Manager of a regional Council. The EPA alleged that, in his role as General Manager, the Respondent caused a sewage treatment plant to be used for the disposal of liquid waste without lawful authority, which is an offence under s 144(1) of the Protection of the Environment Operations Act 1997 (POEO Act) that attracts special executive liability.

Section 169(1) of the POEO Act provides that if a corporation contravenes, whether by act or omission, a provision of that Act attracting special executive liability, each person who is a director of the corporation or who is concerned in the management of the corporation is taken to have contravened the same provision. Section 220(4) of the Local Government Act 1993 (LG Act) provides that: ‘A law of the State applies to and in respect of a council in the same way as it applies to and in respect of a body corporate (including a corporation)’. The key issue on appeal was whether s 169 of the POEO Act is one to which the provisions of s 220(4) of the LG Act apply.

It was held that s 169 of the POEO Act was not a law that was ‘to and in respect of’ a body corporate or corporation because “[t]he clear words of s 169 creates a liability of a person that is not a corporation but an individual person in the true, natural sense (rather than in the legal sense where a corporation has personality)”, at [86]. As a result, the Council’s General Manager could not be held personally liable for the executive liability offence under the POEO Act. 

Implications: This decision confirms that Council executives involved in the management of Council are unable to be charged individually for executive liability offences under the POEO Act, and likely cannot be charged under other Acts that contain similar provisions to section 169 of the POEO Act.

SEPP “rural land sharing community” provisions considered for the first time

NCV Enterprises Pty Ltd v Tweed Shire Council [2024] NSWLEC 14 by Pepper J (23 February 2024). Access the case here.

For the first time the Land and Environment Court has considered in detail the application of Schedule 5 of the State Environmental Planning Policy (Primary Production) 2021 (SEPP).  The aims of Schedule 5 include to encourage and facilitate the development of rural land sharing communities by, among other matters, “enabling people who collectively owner a single lot to erect multiple dwellings on that lot without dividing the lot.”

Sparke Helmore acted for Council in the proceedings, which concerned a concept development application for ten rural land sharing communities (RLSC) and Stage 1 private road and earthworks.  Subsequent stages would include the subdivision of the land into 10 lots (with an RLSC on each), establishment of community infrastructure and design for each RLSC (including dwelling plots).  The Statement of Environmental Effects indicated that there was potential for up to 392 dwellings on the land by the final stage. 

The land the subject of the development application comprised Crown land and 21 lots and the majority was zoned RU2 Rural Landscape.  Within this zone, development for the purposes of “multi-dwelling housing” is prohibited. However, under clause 4(1) of Schedule 5 of the SEPP, a consent authority may grant development consent to development on land to which the Schedule applies “for the purposes of 3 or more dwellings if satisfied” of a range of matters, including that:

(a)           the land is a single lot with an area of not less than 10 hectares, and

…

(g)           the development is consistent with the aims of the Schedule.

While the Tweed local government area is excluded from the application of Schedule 5, the concept development had the benefit of a savings provision in the Tweed Local Environmental Plan 2014.

Justice Pepper was required to determine a number of preliminary questions concerning the permissibility of the proposed development.  In a detailed judgment, which includes an analysis of the application of the provisions of Schedule 5 to a concept development application, Her Honour ultimately found that the proposed development was prohibited under the SEPP.  At [77] Pepper J found:

The provisions of the Primary Production SEPP, including cl 4(1)(a) of Sch 4, apply to concept proposals given the wide import of the words ‘for the purposes of’ in the chapeau to that clause.  As a consequence, the consent authority must be satisfied of the matters contained in that clause.  They are a statutory precondition to the exercise of the power to grant consent.  The concept DA did not seek approval merely for Stage 1 works but also for the concept proposals…. It is this concept proposal that required compliance with cl 4(1)(a) of the Primary Production SEPP.  Until the consent authority is satisfied that the land is a single lot with an area of not less than 10 ha (it is presently 21 lots) consent cannot be granted.

Her Honour further held that there was no power to grant development consent because the proposed development was not consistent with the aims of the Schedule 5 “because there was no collective ownership of a single lot and the concept DA relies upon subsequent development, namely, subdivision at a later stage…to achieve this aim …”.

Commissioner Espinosa considers the ‘substantially the same’ test required for a Modification Application

22 Redan St Pty Ltd v Mosman Municipal Council [2024] NSWLEC 1013 by Espinosa C (23 January 2024). Access the case here.

These proceedings related to two Class 1 appeals. The first, to modify a consent previously granted by the Court (Modification Application) by adding an additional unit on the lower ground floor, which required additional excavation into a hill. The second, against Council’s refusal of a DA, which proposed alterations and additions on the same dwelling (DA Appeal). The proposed alterations and additions in the DA Appeal were the same as the works proposed in the Modification Application (that is, approval was sought by two pathways simultaneously). The key issue for the Modification Application was whether the proposed modification was substantially the same as the consent as granted.

Beginning at paragraph 68, Espinosa C reminded us of the test for ‘substantially the same development’ before considering both a quantitative and qualitative assessment of the proposed modification. It was held that the quantitative assessment (which demonstrated an increase from three to four storeys, from 6 to 7 dwellings, and a floor space ratio (FSR) of 0.55:1 to 0.79:1) was sufficient grounds to conclude the modified development was not ‘substantially the same’. Further, on a qualitative basis, it was held that the proposed modifications to enclose the western balconies and add a new basement tunnel access resulted in a qualitative difference to the communal open space. Accordingly, the Court was not able to reach the requisite level of satisfaction that the development was substantially the same.

The Modification Application appeal was dismissed on this basis. However the DA Appeal was upheld.

A clause 4.6 request to vary a development standard put under the microscope

Christou v Wollongong City Council [2024] NSWLEC 1018 by Walsh C (24 January 2024).  Access the case here.

These Class 1 proceedings sought approval for minor alterations and the use of an unauthorised warehouse structure for storage purposes. The key issue in contention involved the contravention of the FSR development standard applicable to the site, and by extension, whether the Applicant’s cl 4.6 written request, which sought to justify the contravention, was adequate to allow approval of the proposal, notwithstanding the contravention.

The bulk of the decision considers the cl 4.6 written request, critiquing it with a fine-tooth comb. Ultimately, it was held that the written request did not adequately address the matters required to be demonstrated, being that (a) compliance with the development standard was unreasonable or unnecessary in the circumstances, and (b) there were sufficient environmental planning grounds to justify contravening the development standard. Some of the criticisms of the cl 4.6 request were that the claims made in it were not supported by evidence, the planning context was not properly assessed, and that the applicant’s argument that there was an absence of harm arising from the contravention was not a sufficient ground to override the development standard.

Accordingly, the facultative powers of cl 4.6 of the LEP were not available, and in the circumstances of the contravention of the FSR development standard, there was no jurisdiction to grant approval.

There are several bills that propose amendments to the Environment Protection and Biodiversity Conservation Act 1999 currently before the Federal parliament. These include:

• the Environment Protection and Biodiversity Conservation Amendment (Climate Trigger) Bill 2022 [No. 2]
• the Environment Protection and Biodiversity Conservation Amendment (Expanding the Water Trigger) Bill 2023 [No. 2], and
• the Environment Protection and Biodiversity Conservation Amendment (Protecting Environmental Heritage) Bill 2024.

We will continue to monitor their progress.

• The Commonwealth Government's Department of Climate Change, Energy, the Environment and Water has issued a media release advising that it is setting up a Biodiversity Assessment Expert Reference Group as part of its Nature Repair Scheme and is seeking experts to apply.  You can read more about the Group and its Terms of Reference here.
• The Australian Conservation Foundation has reported that record number of species have been added to its 2023 national threatened species list.  You can find our more here. 
• A NSW government survey has found that more than half of newly registered apartments have had at least one serious defect.  Read more about the survey results and the work of the NSW Building Commission.
• In news from the House Standing Committee on Climate Change, Energy, Environment and Water, a Federal inquiry into the transition to electric vehicles has been announced. Interested in learning more about the inquiry or the process of making a submission? Visit this link.
• In case you missed it, effective 1 January 2024 the NSW Department of Planning and Environment split into two departments - the Department of Climate Change, Energy, the Environment and Water and the Department of Planning, Housing and Infrastructure.  You can read more about what this means here.