Posted on December 6, 2022 by Megan Hawley and Liam Mulligan

Challenging CDCs – Errors, time limits and the Court’s discretion

We previously blogged on the recent Court of Appeal decision in Ross v Lane [2022] NSWCA 235, in which the Court held that the application of SEPP 65 to a particular DA was not a “jurisdictional fact” capable of objective determination by the Court.

In that blog we noted that the decision was in many ways consistent with the law regarding challenges to complying development certificates (CDCs), and in particular the well known decision in Trives v Hornsby Shire Council [2015] NSWCA 158. In Trives, the Court of Appeal found that a CDC could not be subject to challenge on the basis that the development authorised by the certificate was not in fact complying development.

In the recent decision of The Hills Shire Council v Drenovac [2022] NSWLEC 139 (Drenovac), the Land and Environment Court reaffirmed the difficulties faced by applicants in challenging CDCs, where the basis of challenge is that the development was not in fact complying development. Such challenges will be particularly difficult where the proceedings are commenced more than 3 months after the date of issue (or the date of public notice), of the CDC.

Did the LEP specify a ‘minimum lot size’?

In Drenovac, the Council challenged the validity of the CDC on the basis that the size of the site did not comply with the minimum site area required for Terrace Housing Development under the State Environmental Planning Policy (Exempt & Complying Development Codes) 2008 (Codes SEPP). It was argued that the CDC was therefore invalid, as the development was not in fact complying development.

Under clause 3B.33 of the Codes SEPP, development for the purposes of multi dwelling housing (terraces) may only be carried out if the area of the parent lot is not less than either the minimum lot area specified in the applicable environmental planning instrument that applies to the land, or if no minimum lot size is specified in that EPI, 600m2.

The site had an area of about 1,300m2. The Hills Local Environmental Plan 2019 (LEP) applied to the site, and clause 4.1A provided that development consent may be granted to multi-dwelling housing (in the relevant R3 zone), if the area of the lot was equal to or greater than 1,800m2.  On its face therefore, the area of the parent lot was less than the minimum lot size specified in the applicable LEP, such that clause 3B.33 was not engaged.

However, clause 4.1A of the LEP also allowed development consent to be granted to development on an undersized lot where the consent authority was satisfied that it was consistent with a number of specific design outcomes. This required, in effect, a merit assessment to be carried out.

The Council submitted that the lot size of 1,800m2 specified in clause 4.1A of the LEP was the minimum lot size for the purposes of cl 3B.33(1)(b) of the Codes SEPP. The First Respondent instead argued that the clause did not specify a minimum lot size, as the clause itself expressly allowed for a minimum lot size of less than 1,800mdepending upon the outcome of the merits assessment allowed by the clause.

Her Honour concluded that, when considered in the context of the whole of clause 4.1A:

…it is apparent that the numeric nomination is the specification of the minimum of the lot area. The provisions of cl 4.1A(3) do provide a capacity to vary the lot size, however, that variation is dependent upon the form and expression of the development proposed and not the size of the “parent lot” as required by cl 3B.33 or the lot size minimum specified in column 3 of cl 4.1A of the LEP. Whilst there is a capacity to vary the minimum specified that capacity does not deprive the original designation of the numeric minimum from having the character of a “minimum lot area [being] specified” in the relevant LEP.

Accordingly, the minimum lot size for the purposes of the Codes SEPP was 1800m2, as per cl 4.1A of the LEP.

Her Honour accepted that there was an error in the certifier’s decision to grant the CDC. The questions which occupied the bulk of her decision were – firstly, did the error lead to the invalidity of the CDC, and secondly – what, if anything, should the Court do about the error?

Did the error render the decision invalid?

Ultimately, despite finding that the development did not comply with the minimum lot size, Her Honour found that the certifier’s error was an error within his jurisdiction. The error was not one that was open to review, other than a challenge relating to the certifier’s decision making (i.e. that the decision was so unreasonable that no certifier could have made it). The Council did not put its case on that basis.

Relevant to this determination was the principle of the High Court set out in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, that whether an act done in breach of a condition regulating the exercise of a statutory power is invalid depends upon whether ‘there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition.

Relevantly, Her Honour did not consider that the statutory framework indicated any such intention, and was not persuaded by the Council’s argument that the “bifurcation” of development assessment under the EPA Act for development which may be undertaken with development consent, into that which requires development consent pursuant to s 4.15 of the EPA Act as a development application, and that which can be carried out as complying development, was sufficient to indicate such a legislative purpose. To the contrary, Duggan J remarked that the legislation has intentionally and expressly vested the determination of such factors in the certifier, by way of s 4.28 of the EPA Act.

On this basis, Her Honour held that the certifier’s decision to grant the CDC, whilst erroneous, was not invalid.

Court’s discretion

The Council finally submitted that, given that a breach of the EPA Act had been established, the Court should exercise its discretion and grant the relief sought by the Council, including an order that the development carried out in accordance with the CDC be demolished, or in the alternative, that part of the building be demolished such that the remaining portion complies with the 10m setback requirement.

Regardless of the error in the certifier’s decision, Her Honour declined to grant the relief sought by the Council in the exercise of the Court’s discretion. Her Honour noted this was primarily due to the ‘lengthy and largely unexplained delay in the Council commencing the proceedings‘, and the fact that in light of the evidence of the planners she was satisfied that permitting the development to remain would not result in an unacceptable outcome for the locality such as would warrant the demolition of the buildings either in whole or in part.

Time limits for challenging CDCs – the 3 month deadline 

Following the decision in Trives, s 4.31 was inserted into the Environmental Planning and Assessment Act 1979 as follows:

Without limiting the powers of the Court under section 9.46(1), the Court may by order under that section declare that a complying development certificate is invalid if- (a) proceedings for the order are brought within 3 months after the issue of the certificate, and (b) the certificate authorises the carrying out of development for which the Court determines that a complying development certificate is not authorised to be issued.

The kind of review permitted by s 4.31 is direct review, rather than judicial review, meaning that in proceedings under s 4.31 an applicant can successfully challenge a CDC on the basis that it is not actually complying development. In Drenovac, the Council commenced the proceedings significantly beyond 3 months of the issue of the relevant CDC, and therefore the powers of the Court under s 4.31 were not available.

Judicial review (under s 4.59 of the EPA Act) can still be available after 3 months. However, once again, it is greatly preferable to bring such proceedings within 3 months of the date that the CDC was issued, or the date that public notice of the CDC was given (if any).

Section 4.59 of the EPA provides that any proceedings challenging the validity of a CDC must be brought within 3 months from the date on which public notice of the CDC was given. Unlike the deadline under s 4.31, the time for bringing proceedings under s 4.59 can be extended by leave of the Court, but the principles are complex.

Without going into the somewhat difficult law regarding privative clauses, the Hickman principle and its various extensions and exceptions, it is sufficient to note that Her Honour was not persuaded by the Council’s submissions on this point, and concluded that even if the error raised by the Council was a basis for judicial review, she would find that the proceedings were not brought within time and were precluded by operation of s 4.59 of the EPA Act.

Ultimately, Drenovac does not change or extend the existing law, but is a useful reminder of the importance of prompt action in cases relating to CDCs, and the difficulties that can arise for applicants who fail to bring proceedings within 3 months of the relevant decision.

You can read the Court’s decision here.

You can read our blog on the Court of Appeal decision in Ross v Lane [2022] NSWCA 235 here.

If you have any questions regarding this article please contact Megan Hawley, Liam Mulligan or Alex Rutherford.