Posted on March 18, 2015 by Sue Puckeridge

What constitutes ‘participation in good faith’ for the purposes of a conciliation conference in a planning appeal?

Section 34 of the Land and Environment Court Act 1979 gives the Court the power to order that the consent authority and the applicant attend a conciliation conference to attempt to reach agreement as to the terms of a decision that would be acceptable to both parties. Each party is under a duty to participate in that conference in ‘good faith’. A recent decision by Justice Biscoe gives a new perspective to what this may mean in practice.

In Golden Max Pty Ltd v Hurstville City Council [2015] NSWLEC 16 the applicant appealed to the Court against Hurstville City Council’s (Council) refusal to grant consent to a multi-dwelling development comprising four dwellings, subdivision and ancillary works.

At the directions hearing before the Registrar of the Court, Council submitted that the matter should not be set down for a conciliation conference because:

1. Council staff had no authority to enter into a binding agreement on behalf of Council at or following any conciliation conference and as such the Council staff would not have the necessary authority to participate in good faith at the conference,
2. the development failed to comply with the necessary development standard in relation to minimum lot size to such an extent that the matter was not suitable for a s34 conference,
3. the s34 conference would add to the time involved in determination of the matter generally.

The Registrar accepted these arguments and set the matter down for hearing.  The applicant appealed against the Registrar’s decision to a Judge of the Court.

Participating in the conference in ‘good faith’

Prior to this case, it has generally been accepted that in order to participate in a conciliation conference in good faith, as required under s34(1A) of the Land and Environment Court Act 1979, the person representing the party at the conciliation conference must hold an appropriate authority to bind that party by any action taken or position agreed at the conference.

 This is the position taken by the Chief Judge of the Court in his paper ‘Conciliation in the Land and Environment Court  of NSW: History, Nature and Benefits ‘ (3 August 2007, available on the Court website) and subsequently adopted by the Court: see ROI Properties Pty Ltd. v Council of the City of Sydney [2010] NSWLEC 22; see also Presrod Pty Ltd. v Wollongong City Council [2010] NSWLEC 192.

In Golden Max, Biscoe J held, however, that while it was desirable for a representative to hold appropriate authority, this was not an essential element of the duty of good faith and it was sufficient if a party’s representative has authority to enter into a legally non-binding agreement as to the terms of a decision which that representative thinks might be acceptable to that party.

Biscoe J disagreed with the Registrar’s decision and found that even though the Council’s evidence was such that its representative did not have authority to enter into a ‘binding’ agreement, this was no impediment to the Court ordering a conciliation s34 conference.

His Honour did not give any clear indication as to what might be a ‘legally non-binding agreement’, however, it appears that it might be an agreement that is subject to a further approval or ratification by the party following the s34 conference.

Accordingly, it would seem that a party can comply with its duty to participate in good faith in a conciliation conference provided that party’s representative has authority to negotiate on that party’s behalf.  Arguably, the fact that any agreement reached is subject to the approval or ratification of another person, in this particular case, the Council, will not result in a breach of that duty.

Biscoe J was not satisfied that the other two reasons put forward by the Council were sufficient impediments to the ordering of a conciliation conference.

In light of this decision, it is anticipated that the presumption in favour of fixing a matter for a s34 conciliation conference as set out in the Practice Note for class 1 appeals will be very difficult to displace and that the Registrar will order that s34 conferences occur, even if it results in additional time and costs potentially being incurred in a matter.