Posted on August 19, 2021 by Stuart Simington 29

The modification powers in s4.55 and s.4.56 of the EPA Act have been misunderstood

We previously wrote about the decision of the Land and Environment Court in Buyozo Pty Limited v Ku-ring-gai Council [2021] NSWLEC 2 here. Pepper J held that the corridors in a self storage development were not ‘gross floor area‘ (GFA) within the meaning of that term in standard instrument LEPs. This was because those corridors were excepted from the definition of the term by paragraph (h) of the definition as ‘any space used for the loading or unloading of goods (including access to it)’.

The Council had thereby miscalculated the s7.11 contributions due in respect of the development because the contributions were calculated under the contributions plan by reference to the GFA of the development.  Pepper J determined to modify the s7.11 condition to reduce the contributions to the corrected amount even though they had already been paid.  Pepper J considered there still remained utility in doing so because:

1. there was public utility in correctly calculating the “gross floor area” upon the proper construction of that term in the LEP
2. if modified and to the extent that there had been an overpayment, the Council would need to take the overpayment into account prior to the imposition of any condition in respect of any future development application made by the applicant (see s 7.11(1), (3) and (6) of the EPA Act) and
3. the overpayment might also give rise to an equitable claim, such as that of unjust enrichment, albeit in another suit in another court.

On appeal, however, the Court of Appeal held that :

• Pepper J’s interpretation of the exception in paragraph (h) of the definition of GFA was incorrect and that there was no miscalculation
• in any event, there was no power to modify the condition in question under the modification power in s4.56(1) of the EPA Act;
• in any event, there would have been no utility in doing so.

Any space used for the loading or unloading of goods (including access to it)

The Court held that the relevant inquiry demanded by paragraph (h) of the definition of gross floor area is to identify the access to the spaces used for loading or unloading of goods. Here, the spaces used for loading or unloading of goods were limited to  the designated loading areas on levels 1 and 2 which would be used by trucks and vehicles. The access for trucks and vehicles to the designated loading areas was only by the driveways. Preston CJ said that ‘The vehicles or trucks cannot use the internal stairs, lifts or corridors within the buildings to access the designated loading areas….It is irrelevant that once goods are unloaded from the truck or vehicle parked within the designated loading area, people may walk carrying their goods to a self-storage unit by the stairs, lifts or corridors, and vice versa. The stairs, lifts and corridors may provide access to and from the self-storage units, but do not relevantly provide access to the designated loading areas.’

Power to modify the condition

However, in the more surprising element of the decision, the Court has also fundamentally altered the long held understanding of the modification powers in s.4.55(1A), (2) and 4.56(1) of the EPA Act, to the effect that they are available to modify any aspect of a consent even mere conditions. While the Court upheld  the previous law that the modification power is beneficial and facultative, it nevertheless held that that is subject to (previously unrecognised) constraints in the terms of the sections themselves.

In that regard, although the modification powers speak of modifying a ‘development consent’, the Court held that conditions for the exercise of the power (eg the substantially same development requirement) demonstrated that it is “the development to which the consent as modified relates” which must be modified before the power is engaged.

Therefore the modification powers are only available where some change is proposed with respect to the development for which consent was granted.

In this case, the reduction of contributions did not effect any change to the actual development, so the modification power was not engaged.

Preston CJ further held that there was also no power to modify the development consent to amend the contributions condition 30 in circumstances where the contribution had already been paid. This was because a condition of consent has the essential characteristic of requiring the doing or refraining from doing something in the future. Accordingly a condition of development consent can never be modified so as to require the doing of something retrospectively.

It remains to be seen whether a modification of a condition that does not modify the development would still be possible if proposed in combination with some unrelated modification of the development to which the consent relates.

Going forward, the decision appears to stand for the proposition that any objection to conditions imposing taxes, fees or bonds (or other matters that do not change the development itself) must be addressed either in:

• a review application,
• an appeal against (the conditions of ) the granting of consent, or
• judicial review proceedings (but only if severance of the condition is possible).

Developer’s have historically utilised the modification power rather than an appeal to address contributions issues as an appeal has the disadvantage of allowing the opening up other issues and also preventing that consent from operating while the issue is determined.

Utility

The Court also considered that there was no utility in the modification because the money had already been paid.

A modification (which is only only prospective) could not prevent the overpayment from being a ‘benefit provided as a condition of the grant of development consent under this Act‘ as referred to in s7.11(6)(a) because at the time that it was paid, it was indeed such a benefit. The overypayment would thereby be unable to be considered under s7.11(6)(a) by the consent authority considering any future development application.

Also, the Court considered that any restitutionary claim was clearly excluded, amongst other reasons given that any proceedings for the recovery of a tax must be commenced within 12 months of the date of payment: see s2(1)(b) of the Recovery of Imposts Act 1963.

You can read the decision here.