Posted on November 12, 2013 by

Court prevents sale of community land in Manly

The case of Save Little Manly Beach Foreshore Incorporated v Manly Council (No 2) [2013] NSWLEC 156, decided by Biscoe J on 9 October 2013, serves as a timely reminder to councils of the importance of precisely following the procedures for classifying public land set out in Part 2 of Chapter 6 of the Local Government Act 1993 (LG Act).

Facts of the Case

On 10 December 2012, Manly Council resolved to sell two parcels of land it owned being 34 and 36 Stuart Street, Manly. The Council had purchased No 34 in May 1977, relevantly before the commencement of the LG Act, whilst it had acquired No 36 in September of 1998  after the commencement of the LG Act under the owner-initiated acquisition provisions of the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act).

The resolution to sell the properties came despite a number of previous resolutions purportedly demonstrating Council’s commitment to establishing a community park on the land following the demolition of the existing dwellings on the properties.

At issue in the proceedings was whether the properties were classified as ‘community land’ under the LG Act, which under s45(1) of the LG Act  a council has no power to sell, or as ‘operational land’ which can be sold.

The applicant, Save Little Manly Beach Foreshore Incorporated was a public interest objector group who brought proceedings in the Land and Environment Court (LEC) against the Council pursuant to s674 of the LG Act. Biscoe J granted the orders sought preventing the Council from selling the land in breach of s45(1) of the LG Act.

The judgment covers a number of interesting legal questions, some of which will be discussed in detail below. In summary, His Honour held that:

• No 34 was taken to be classified as community land as at 1 July 1993 on the coming into force of the LG Act by virtue of the transitional provisions in cl6(2)(d) of Sch 7 of the LG Act, and that Council’s subsequent resolution to classify the land as operational land on 21 June 1994 was without power and therefore invalid;
• Council’s September 1998 resolution classifying No 36 as operational land was ineffective for failure to meet the advance public notice requirements of s34(2) of the LG Act, as well as being inconsistent with the terms of a trust for a public purpose applying to the land and inconsistent with the terms of an instrument executed by the transferor of the land;
• it could not be argued that the Council’s resolutions classifying Nos 34 and 36 were valid despite the breaches of the LG Act;
• the proceedings were not time-barred by virtue of s729 of the LG Act, which only operates to protect council decisions that fail to comply with a ‘procedural requirement’, so although s729 would cure the lack of public notice under s34(2), it could not protect resolutions made without power.

What lessons for councils?

The facts of this case, and Biscoe J’s treatment of them, are particularly well suited to illustrating the potential pitfalls for councils when dealing with public land and the different ways in which land can be classified and reclassified as community or operational under the LG Act. A few of the more interesting issues are considered here.

Transitional provisions – is the presumption that certain land is community land rebuttable?

Because 34 Stuart Street was vested in Council as at 1 July 1993 when the LG Act came into force, the transitional provisions contained in cl6 of Sch 7 applied.

Clause 6(2)(d) of Sch 7 provides that any land vested in or under the control of a council as at 1 July 1993 is ‘taken to have been classified as community land‘ if it was zoned under an environmental planning instrument as open space. No 34 Stuart Street was zoned Open Space under the Manly Local Environmental Plan 1988 (1988 LEP) as at 1 July 1993.

The issue before Biscoe J was whether the presumption contained within cl6(2)(d) (i.e. that the land was ‘taken to be community land’) was rebuttable and if so, whether the Council had rebutted the presumption. If the Council could not rebut the presumption it would follow that its subsequent resolution to reclassify the land as operational land in 1994 would be without power, as reclassification of community land as operational land can only be achieved by a local environmental plan.

Biscoe J rejected the Council’s argument that the presumption was rebuttable.

At paragraphs [43] to [47] his Honour concluded that if the presumption in cl6(2)(d)was rebuttable it would result in ‘considerable uncertainty in determining the classification because it cuts across the detailed statutory scheme for classifying public land as either community or operational‘ and that ‘such a construction would require clear words – which are absent‘ (at [43]).

At paragraphs [46] to [47] his Honour concluded by giving his opinion that the statutory presumption in cl6(2)(d) was not capable of being rebutted, but that if contrary to his opinion it was capable, the Council had not established that it was in fact rebutted in the circumstances.

Application of Project Blue Sky test of invalidity

Another interesting issue raised for determination by the Council was whether its 1994 and 1998 resolutions respectively classifying Nos 34 and 36 Stuart Street as operational land (which Biscoe J had found to be without power) were valid despite being made in breach of the LG Act under the principles in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355.

The Project Blue Sky test of invalidity is a principle of statutory construction which asks whether ‘it was a purpose of the legislation that an act done in breach of the provision should be invalid‘ – per McHugh, Gummow, Kirby and Hayne JJ at [93].

Applying the test, Biscoe J held that where there was  no power to reclassify by resolution as this was a ‘more fundamental defect than a breach of a legislative provision‘, giving rise to a ‘strong, if not irresistible, indication that it was a purpose of the LG Act to invalidate the resolutions‘ (at [84]). Biscoe J concluded that the resolutions could not be saved by application of the test (at [84]).

Land subject to a trust for a public purpose

Section 31 of the LG Act gives councils a power to classify land acquired after 1 July 1993 as either community land or operational land, with some restrictions. One of the relevant restrictions in the Save Little Manly Beach case was s31(3)(b) which (then)  provided:

(3) A council must not resolve under this section that land be classified as operational land if: …

(b) the resolution would be inconsistent with any other Act, the terms of any trust applying to the land or the terms of any instrument executed by the donor or transferor of the land.

The applicant successfully argued that the Council’s 1998 resolution to reclassify No 36 as operational land was beyond the Council’s power because it was inconsistent with the terms of a trust for a public purpose applying to the land by virtue of its acquisition under the owner-initiated acquisition provisions of Just Terms Act (the land having been zoned for open space purposes under the 1988 LEP).

In arriving at his conclusion, Biscoe J followed the leading authority in Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566  which examined the phrase ‘any trust applying to the land’ as that phrase appears in cl6(2)(b) of Sch 7 of the LG Act. His Honour concluded that the expression ‘any trust applying to the land’ in s31(3)(b) was wider than, but included ‘land subject to a trust for a public purpose’ as that phrase was interpreted in the PWC Case (at [75]).

Biscoe J held that the land was acquired subject to a trust for a public purpose, noting that both the pre-acquisition notices under the Just Terms Act, and the funding from the State government for the acquisition of the land noted that the land was for a public purpose (at [76]). At paragraph [77] Biscoe J held that the trust continued to apply after the acquisition was complete, in part because s188 of the LG Act restricts the re-sale of land acquired by a council except with consent of the owner.

It follows that council’s must be cautious in dealing with land which has been compulsorily acquired, particularly if the purpose of the acquisition could be characterised as a public purpose in line with the authority in the PWC Case.

Section 729 of the LG Act

At paragraphs [88]-[93] Biscoe J considered the Council’s submission that the LEC proceedings were barred by the three months time limit in s729 of the LG Act which provides as follows:

729 Proceedings alleging non-compliance with a procedural requirement

The validity or effectiveness of a decision of a council may not be questioned in any legal proceedings on the ground that, in making or purporting to make the decision, the council failed to comply with a procedural requirement of this Act or the regulations (including a requirement as to the giving of notice) unless the proceedings are commenced within 3 months after the date of the decision.

His Honour found that s729 provided a limited protection to the 1994 and 1998 resolutions insofar as the applicant’s challenge to their validity or effectiveness was based on the failure to give advance public notice as required by s34, but did not extend to protect the resolutions made without power (at [90]-[91]). The absence of power, Biscoe J held, could not be characterised as a failure to comply with a “procedural requirement” (at [91]).

Biscoe J’s findings in respect of s729 might therefore provide some limited comfort to council’s who have failed to satisfy the public notification requirements of s34 of the LG Act in respect of classifying public land.