Posted on February 14, 2012 by Lindsay Taylor

Council’s Attempt to Avoid S94 Contributions Cap Thwarted by Court

Introduction

In North Western Surveys Pty Limited v Penrith City Council [2012] NSWLEC 1017, Dixon C in the Land and Environment Court upheld an appeal by a developer against development consent conditions imposed by the Council that the Court held were contrived to avoid the Minister’s $30,000 cap on monetary s94 contributions.

The development proposal and planning context

The subject consent related to the development of land in an area known as the Caddens Release Area, which is a sub-precinct of the Werrington Enterprise Living and Learning Precinct (‘WELL Precinct’) within the Council’s area.

The subject development was for the residential subdivision of land and associated works.

The  adopted WELL Precinct Development Contributions Plan 2008 (‘CP’) applied to the subject development. It authorised the imposition of conditions of development consent under s94 of the Environmental Planning and Assessment Act 1979 (‘EPA Act’) in relation to development on the subject land.

A draft contributions plan (‘Draft CP’) that had been prepared by the Council and forwarded to the Minister for approval also related to development on the subject land.

A direction by the Minister to the Council under s94E of the EPA Act capped the amount of monetary s94 contributions that could be imposed in respect of the development at $30,000.00 per lot (‘S94 Cap’). The evidence was that if the S94 Cap did not apply, the Council could have imposed s94 conditions on the subject development consent requiring a monetary contribution exceeding $50,000.00 per lot.

The relevant part of Penrith Development Control Plan 2006 contained provisions relating to infrastructure requirements for the development of the Caddens Release Area, which had been identified in the WELL Strategy.

Conditions appealed against

The conditions the subject of the appeal required the developer:

1. to construct at its own cost a detention basin and roads (‘Works Condition’),
2. to dedicate to the Council free of cost the land on which the detention basin was to be constructed (‘Dedication Condition’), and
3. to pay a monetary contribution of $2,130,000.00 (‘Monetary Contribution Condition’), which was imposed under the Draft CP rather than the CP.

Legal context

The Works Condition and Dedication Condition were purportedly imposed under s80A(1) of the EPA Act.

Section 80A(1) authorises the imposition of a development consent condition if it relates to any matter referred to in s79C(1) applicable to the subject development. Section 79C(1) sets out the matters that the consent authority must consider, if relevant to the subject development, when determining a development application relating to the development.

The Monetary Contribution Condition was purportedly imposed under s94 of the EPA Act but was not calculated in accordance with the Cap.

Section 94 authorises the imposition of a condition requiring the payment of a monetary contribution or the dedication of land free of cost towards the provision of public amenities and public services if the consent authority is satisfied that the development the subject of a development application will or is likely to require the provision of, or increase the demand for such amenities and services.

It is well established in the case law that s94 has an exclusive field of operation and that a condition under s80A cannot be imposed relating to a matter to which s94 relates: see Fairfield City Council v N&S Olivieri [2003] NSWCA 41.

More recently, however, in Botany Bay City Council v Saab Corp Pty Ltd [2011]  NSWCA 308, the Court of Appeal held that the fact that a condition otherwise validly imposed under s80A may incidentally provide a wider public benefit does not render the condition invalid. The test seems to involve an examination of what circumstances give rise to the need for the condition.

The matters the subject of the Works Condition and the Dedication Condition were also dealt with by the CP. However, the Council gave evidence that it had determined to impose the Works Condition and the Dedication Condition on the subject development consent in order to avoid the restrictions imposed by the S94 Cap on the levying of monetary s94 contributions so as to ensure the provision of adequate infrastructure to support new development.

Parties’ contentions

The Council contended that the S94 Cap frustrated the delivery of required infrastructure to support the implementation of planning strategies to achieve sustainable and high quality development in the WELL Precinct.

The Council also contended that the Works Condition and the Dedication Condition were not controlled by the S94 Cap as those conditions were imposed under s80A of the EPA Act and not under s94.

The developer contended that the combined effect of the Works Condition, Dedication Condition and Monetary Contributions Condition was to impose development contribution requirements in respect of the development in the order of $51,000.00 per lot contrary to the ‘intent’ of the S94 Cap and that the cumulative impact of the conditions was unreasonable.

Contrary to the approach adopted by the Council, the developer contended that it should be entitled to a ‘credit’ against a ‘capped’ monetary s94 condition for the costs incurred in carrying out the detention basin and drainage works and dedicating the detention basin land to the Council.

Monetary Contribution Condition

The Court disallowed the Monetary Contribution Condition.

The Court held that the Draft CP was not a contributions plan for the purposes of s94B(1) of the EPA Act. That section authorises the imposition of a s94 condition only if it is of a kind allowed by and is determined in accordance with a contribution plan.

Furthermore, the Court held that the Monetary Contribution Condition was unreasonable in the circumstances of the case because it imposed on the developer a monetary contribution requirement ‘for non-essential works based on a draft plan‘ where the developer was then required to ‘pay for the essential works identified in the adopted plan by other means namely: s80A conditions’.

Works Condition & Dedication Condition

The developer argued that the intention of the S94 Cap was to limit the cumulative financial impost of development contribution requirements imposed on the developer (whether being obligations to pay money or dedicate land under s94, or carry out works under s80A) to $30,000.00 per lot.

The developer argued that the Works Condition and Dedication Condition should not be imposed because they were not directed to matters arising from the subject development but rather to the provision of broader public amenities and public services and were in substance s94 conditions ‘masked’ as works conditions.

The Court accepted the developer’s argument. In so doing, it distinguished the decision  in Olivieri on the facts. In that case, a road work condition imposed under s80A was held to be valid as the evidence showed that the work was required to serve the development. In the present case, however, the works and dedication in question were contained within the CP and the Court held that they could not have been so included ‘if they had not provided a public amenity’. This was so despite expert evidence that the Works Condition was directly referable to the subject development. Dixon C said: ‘The evidence supports the finding that the works are more than applicable to the needs of this development. They are applicable to the greater community than just the residents of this development.’

Furthermore, the Court held that the Dedication Condition was unreasonable because it ‘offend[s] the principles of apportionment contained in s94 of the Act’ and could not be imposed under s94, which is the sole source of power in the EPA Act for the imposition of dedication conditions.

The Court disallowed the Works Condition, Dedication Condition and Monetary Contributions Condition imposed by the Council and instead substituted conditions proposed by the developer offering works-in-kind and material public benefits in lieu of monetary payments.

Specifically, the Court held that under s39(2) of the Land and Environment Court Act 1979, it had the power on appeal to accept such offers from the developer, including the power under s94(5)(b) to accept an offer of a material public benefit in part or full satisfaction of a s94 condition requiring the payment of a monetary contribution or the dedication of land free of cost.

Implications

This decision has a number of implications.

First, although technically the S94 Cap only applies to the imposition of monetary s94 conditions, the case shows that the Court will examine the cumulative effect of all s94 and s80A conditions contained in a development consent not only for the purpose of determining the overall reasonableness or otherwise of the financial imposts placed on the Developer but also to ensure that the ‘intent‘ of the S94 Cap is not undermined.

Second, leaving the S94 Cap to one side, the case could be seen as limiting the ability of a consent authority to impose a works condition if the subject-matter of the condition is contained in the relevant s94 contributions plan. This is so notwithstanding that the subject development may demonstrably generate a need for the particular works.

Third, this may cause a consent authority to prefer to negotiate a planning agreement or other kind of agreement with the developer in relation to works arising from proposed development and, if this is unsuccessful, to refuse consent altogether to the subject development.

Fourth, quaere if the Court’s decision would have been different if the decision in Saab had been handed down at the time of the hearing and argued in the proceedings.  The expert evidence before the Court that the Works Condition was directly referable to the subject development and Dixon C’s finding that ‘the works are more than applicable to the needs of this development’ seem to bring the Saab decision squarely into play. As mentioned, in Saab, the Court of Appeal held that the fact that a condition otherwise validly imposed under s80A may incidentally provide a wider public benefit does not render the condition invalid.