4.53 (x95) Hunter Development Brokerage PTY LTD v Cessnock CITY Council PDF

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IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40779/04 L&E 11564/03 CA 40812/04 L&E 40525/04

SANTOW JA TOBIAS JA STEIN A-JA Monday 23 May 2005 HUNTER DEVELOPMENT BROKERAGE PTY LTD v CESSNOCK CITY COUNCIL TOVEDALE PTY LIMITED v SHOALHAVEN CITY COUNCIL Head note Both appeals (heard together because of the common issues of law which they raised) involved the granting by, in the one case, Cessnock City Council to Hunter Development Brokerage Pty Limited (Hunter) and, in the other, Shoalhaven City Council to Tovedale Pty Limited (Tovedale) of development consent to the subdivision of land into residential lots. With respect to each consent, the relevant council contended that it had lapsed. Hunter and Tovedale challenged those contentions. The statutory provisions relevant to the issue of whether the respective consents had lapsed (namely, s 95(4) of the Environmental Planning and Assessment Act 1979 as at 24 February 2003 in the case of the Hunter consent and s 99(1)(a) of that Act as at 28 September 1991 in the case of the Tovedale consent) both relevantly provided to the effect that a development consent for the subdivision of land would lapse after a specified period of time unless "building, engineering or construction work relating to" the development was "physically commenced" upon the land to which the consent applied. Each subdivision involved the carrying out of physical work such as the provision of roads, water and sewerage reticulation and drainage. In each case survey work had been carried out prior to the relevant lapsing date. With respect to the Hunter consent, further work had been carried out in the nature of geotechnical investigations and landscape work. In each case, the primary judge upheld the contention of the council that the consent had lapsed. It was from those decisions that Hunter and Tovedale appealed to the Court of Appeal. HELD by Tobias JA (Santow JA and Stein A-JA agreeing): (1) The natural and ordinary meaning of the expression "engineering work" is capable of including physical survey work of the nature and extent of that the subject of the appeals ([80], [83]-[85]).

Richard v Shoalhaven City Council [2002] NSWLEC 11 applied. (2) The relevant work must be more than merely notional or equivocal in that it must truly be work relating in a real sense to that which has been approved ([86]). (3) The physical survey work carried out by Tovedale and Hunter respectively, and the geotechnical investigation work carried out by Hunter, was neither notional nor equivocal; was, in fact, engineering work; and was physically commenced ([87], [91]). (4) Whether one describes the relevant work as "merely preparatory" is irrelevant ([97]-[98], [106], [111]). Once it is determined that the work relied upon falls within the expression "building, engineering or construction work" and has been "physically commenced" upon the land to which the consent applies, the only remaining issue is whether that work was work "relating to" the development the subject of the consent ([100], [106], [111]). Green v Kogarah Municipal Council (2001) 115 LGERA 231 applied. Besmaw Pty Limited v Sutherland Shire Council (2003) 127 LGERA 413 applied. (5) The expression "relating to" involves at the very least some real relationship or connection between the relevant work and the development in respect of which consent has been granted. The required relationship is satisfied if the work is a necessary step in, or part of, the process required for the development ([104], [106], [112]). If the work serves more than one purpose, it is sufficient that one of those purposes bears a real relationship to the development ([115], [117]). (6) In each of the present cases, the work relied upon "related to" the approved subdivision ([102][103], [110]). (7) The survey work in each case and the geotechnical investigation work in Hunter was: (a) engineering work (b) related to the approved subdivision, and (c) physically commenced upon the land to which the consent applied before the relevant lapsing date. As a result, neither consent lapsed ([129]). -----------

(Re: HUNTER DEVELOPMENT BROKERAGE PTY LTD v CESSNOCK CITY COUNCIL) 29 His Honour commenced his consideration of this issue by reference to the decision of Cripps J in Smith (No 3). As this decision was pivotal to his Honour's ultimate conclusion, I shall consider it in some detail. 30 In Smith the applicant obtained development consent to erect a six-storey residential flat building. Shortly prior to the expiration of the two year period within which the development was required by s 99(2) of the EPA Act (as it then stood) to be commenced, two employees of the developer went onto the subject land and carried out minor demolition work and excavated approximately 450m² of earth to a depth of between 600-900mm to determine what materials were likely to be encountered

in the intended basement area of the proposed building. Cripps J held that that work had no real relation to the erection of the approved building but was for the purpose of inspecting the site to determine the design of the basement. In so holding, his Honour applied the decision of the High Court in Day v Pinglen Pty Limited (1981) 148 CLR 289. 31 The relevant factual finding of Cripps J was as follows (at 173-4): "Mr Smith and Mr Toft, a civil and structural engineer advising Mr Smith, had given evidence concerning the circumstances of the excavation. Mr Toft advised Mr Smith that it would be necessary to investigate the site to determinate what materials were likely to be encountered in the area to be occupied by the basement of the building. He advised Mr Smith either to have the site test drilled on a regular grid pattern or to excavate certain critical areas of the site to expose fully the various strata levels. Mr Smith chose the second alternative and it was for that reason that the excavation was carried out." 32 Cripps J recorded the submissions of the respondent council at 175. Upon the assumption that excavation work was relevantly building work, it was submitted that what was done in the present case was work preparatory to building work and that the provisions of EPA Act had not affected the distinction referred to in the reported cases between what was preparatory work (and, therefore, not relevantly part of the "development" or "building work" as the case may be) and what was not. It was therefore submitted that what was done was work preparatory to the erection of the approved building because the purpose of the excavation and subsequent inspection was to permit a proper design of the basement of that building to be achieved. The council further submitted that although the excavation work was "engineering work", it had not been shown to be only (or at least clearly and unambiguously) referable to the erection of the proposed building for the reason that what was done was only relevantly referable to the design of its basement. 33 According to Cripps J (at 176) these submissions constituted three ways of saying the same thing, namely, that what was done was not relevantly referable to that for which the consent was granted. 34 Cripps J then referred (at 176) to the fact that prior to the commencement of the EPA Act, most planning schemes contained a provision that development consent would be void if the development to which it referred was not substantially commenced within a certain time. Such a provision was reflected in s 315 of the LG Act which was in the following terms: "Any approval given under this Part, or under any ordinances made thereunder, shall be void if the building work to which it refers is not substantially commenced within 12 months after the date of the approval." 35 His Honour then noted that the cases to which he referred thereafter were concerned with the meaning of "substantial commencement". The first of these was North Sydney Municipal Council v Middle Harbour Investments Pty Limited (1963) 10 LGRA 41 at 45 where Hardie J said: "The use of the adverb 'substantially' in the context, in my view, emphasises two points, or perhaps two different approaches to the one point. One is that the commencement must be some positive unequivocal step indicating that the building for which consent or approval has been obtained has actually been commenced; in other words that some work has been done on the site which is referable to and only referable to the particular building or structure that has been approved; in that sense, it emphasises that the commencement must be a real or actual one as distinct from preparatory work and as distinct from a notional or equivocal or sham commencement."

It is to be observed that Hardie J considered that the requirement that the commencement be a real or actual one as distinct from preparatory work was mandated by the use of the adverb " substantially ". 36 Cripps J then cited the following passage from the judgment of Gibbs J (with whom the rest of the High Court agreed) in Drummoyne Municipal Council v Lebnan (1974) 131 CLR 350 at 360: "Clearly the work and development which s 315 of the Act and cl 38(2) of the Ordinance require should have been substantially commenced is that to which the approval or consent itself refers, and it would seem to follow that work or development is not commenced when nothing more has been done than acts preparatory to the work or development which is the subject of the approval or consent. It may therefore be assumed, although it is not necessary to decide, that the demolition of the existing houses should not be regarded as commencement of the work in the present case." 37 The above passage from the judgment of Gibbs J in Lebnan was also cited by the primary judge in [88] of his judgment. It is to be observed, however, that like Hardie J in Middle Harbour Investments, Gibbs J was construing the expression "substantially commenced". Further, the demolition of the existing houses upon the relevant land in Lebnan was indeed preparatory in the sense that although that demolition was necessary before the developer could proceed to erect the approved residential flat building, that demolition did not itself require consent so that, in truth, it could be said that the development consent was not itself referable to that demolition and vice versa. Furthermore, Gibbs J held that the other work relied upon as constituting "substantial commencement", namely, the excavation for the footings of the approved building, was not only a commencement but also a substantial commencement of that building. There was therefore no issue but that that excavation was referable to the development which was the subject of the consent. 38 Cripps J next made reference to the decision of Hutley JA (sitting as a single judge in the Equity Division of the Supreme Court) in Liverpool City Council v Home Units Australia Pty Limited [1973] 2 NSWLR 61. Again, that was a case where the development consent was for the erection of a residential flat building. It was also a case of excavation work being carried out upon the site of the proposed development, which was held by his Honour to constitute substantial commencement. 39 After referring to the passage from the judgment of Hardie J in Middle Harbour Investments cited in [35] above, Hutley JA observed (at 69): "It was suggested that that passage [that is, the passage from the judgment of Hardie J] means that in determining whether work has been substantially commenced, work off site was to be disregarded, such work being preparatory work. Though the passage lays it down that there has to be work done on the site for there to be substantial commencement, it does not mean that work done off the site which is referrable to a particular building or structure is to be disregarded. Such work though preparatory work in one sense can be part of the unequivocal step indicating that the building has been commenced. The law is not compelled to disregard the transformation in building practice brought about by prefabrication on a large scale in the development of the means of erecting buildings in situ by the assembly of prefabricated sections … It would be ridiculous to disregard prefabricated work or firm contracts for the prefabricated work in determining whether the building is substantially commenced as in such work the great bulk of the

expenditure on the building work may be made. … A small amount of work on site may well be preceded by a great amount of work. The distinction between preparatory work and other work is that work leading up to the making of the building contract is preparatory work, work which is part of the contract to erect is not preparatory work. Design work for incorporation in the contract is preparatory work, design work in consequence of the contract is not. Preparatory work is not work off site. The erection of a structure has not substantially commenced if all that has happened is that planning has started to enable a contract to be let or the work of erection to be started but, provided some contract work has been done on site, all the work which is part of the contract can be looked at to answer the question." 40 It is to be noted that neither Cripps J in Smith nor the primary judge in the present case saw fit to cite the above passages from the judgment of Hutley JA in Home Units. This is unfortunate because, in my opinion, those passages make it clear that his Honour considered that even work off-site such as design work when performed pursuant to a contract for that work, and which is referable to the approved development, is capable of constituting the substantial commencement of that development provided some further work has been performed on site. 41 Cripps J next referred to the decision of Mahoney J in Auburn Municipal Council v F N Eckold Pty Limited [1974] 2 NSWLR 148. Again the case involved consent to the erection of a residential flat building. The only work relied upon as constituting "substantial commencement" was the demolition of one of three dwellings on the land. After referring to what Gibbs J said in Lebnan, Mahoney J (at 153) made the point that a "… development consent may by implication be a consent to matters incidental to the development". 42 Thus, in Parramatta City Council v Shell Co of Australia [1972] 2 NSWLR 632 at 637 Hope JA (with whom Jacobs and Manning JJA agreed) construed a consent to the erection of a service station as requiring the service station to be erected on a flat or horizontal surface at a level approximating the level of the roads to which the site had frontages. Accordingly, it was held that the consent impliedly authorised any filling of the land which was necessary for the purpose of producing such a surface. Such work, therefore, would not be regarded as preparatory to the development the subject of the consent but as work necessarily involved in that development. 43 However, following what Gibbs J said in Lebnan, Mahoney J considered (at 154) that demolition alone did not qualify as substantial commencement as it was an act preparatory to the development rather than an act "necessarily involved in the development." 44 Cripps J then referred (at 177) to Waverley Municipal Council v Ladec Holdings Pty Limited (1978) 36 LGRA 188, where Rath J held that demolition work was not work referred to in a development consent for the erection of 14 townhouses. However, the erection of a retaining wall did qualify because there was a proved relationship between that work and the development as approved. 45 Finally, Cripps J cited the following passage from the joint judgment of the High Court in Day v Pinglen at 298: "However, it remains necessary to consider, applying an objective test, whether, firstly, there was a commencement of the building work, and if so whether that commencement was substantial. There are some persuasive indicators pointing to a conclusion that there was no commencement of the

building work in March 1977. There was, of course, the construction of a concrete slab but the detailed drawings for the approved project had not been prepared. Tenders had not been called, and no contract had been let. The casual arrangement by which a builder, already engaged in another project for the owner, transferred some of his men on the site for the three or four days that were necessary to complete the particular work to which he was assigned strongly suggests that this was an isolated work that had no real relation to the building work for which approval had been given. The job was an end in itself. It was the construction of a concrete slab." 46 Cripps J then concluded (at 178): "Although the court [in Day v Pinglen ] was not prepared to disturb the trial judge's finding that the work had commenced, it concluded that there had been no 'substantial' commencement. In my opinion, the observations of the High Court are apposite to the facts of the instant case. The owner used some of his men for a few days to do some isolated work that had no real relation to the erection of the residential flat building in the sense referred to by the High Court. The job was an end in itself in that it was for the purpose of inspecting the site to determine the design of the basement. Although, as I have said, in appropriate circumstances excavation could amount to physical work preparatory to the commencement of the erection of a building, in this case the work was not done for that purpose. What the section requires is that the development the subject of the consent is commenced within a period of two years. That commencement occurs when the building, engineering or construction work relating to the development the subject of the consent is physically commenced. In my opinion, there has not been established a sufficient nexus or relation between what was done by Mr Smith's employees in June 1983 and the development the subject of the consent, namely the erection of a six-storey residential flat building." 47 The primary judge then referred to the decision of Connolly J of the Supreme Court of Queensland in Ex parte Dackfield Pty Limited [1983] 1 Qd R 10 as providing "an apt illustration" of how the decided cases on the statutory concept of "substantial commencement of development" can usefully be employed in the statutory context of s 95. 48 One of the principles extracted by Connolly J (at 13) from the decided cases in which commencement was required to be "substantial" was the following: "where a provision calls for substantial commencement of the work within a specified time, the work concerned is that to which the approval itself refers and work is not commenced when nothing more has been done than acts preparatory to the work which is the subject of the approval." 49 The work relied on in Dackfield concerned excavation work within the limits of the external foundation walls of the approved building with a view to bringing the level of the land down to that at which piling machines could commence their work of constructing piles. After referring to the passage from the judgment of Gibbs J in Lebnan at 360 to which I have referred in [36] above, Connolly J observed (at 14) that it would be possible to distinguish the finding of Gibbs J in Lebnan that the excavation work performed in that case was a substantial part of the work referred to in the consent by treating the subject excavation as no commencement because it was work preparatory to the siting of the piling machines and was not excavation of the footings or of any other part of the approved building. However, his Honour was constrained by the definition of "building work" in the relevant legislation to find that, preparatory or not, the excavation work fell within the definition and, therefore, qualified as building work which had been commenced.

50 The suggestion by Connolly J in Dackfield that Lebnan could be distinguished for the reason he gave involved a finding not dissimilar to that of Cripps J in Smith where the latter found that the excavation work in question was only carried out as an end in itself for the purpose of enabling the site to be investigated in order to determine the materials likely to be encountered in the area to be occupied by the basement of the proposed building. For reasons which will become apparent, I do not consi...