Aeropelican Air Services v Lake Macquarie City Council - [2006] NSWCA 376

Reported Decision: 153 LGERA 19

Court of Appeal

CITATION: Aeropelican Air Services v Lake Macquarie City Council [2006] NSWCA 376

HEARING DATE(S): 1 November 2006

JUDGMENT DATE:
20 December 2006

JUDGMENT OF: Hodgson JA at 1; Tobias JA; McColl JA

DECISION: Appeal dismissed with costs

CATCHWORDS: ENVIRONMENT AND PLANNING – local environment plan – provision for acquisition of land by Council – notice requirement – notice given but land not acquired – construction of provision – principles

LEGISLATION CITED: Environmental Planning and Assessment Act 1979
Lake Macquarie Local Environmental Plan 2004
Land Acquisition (Just Terms Compensation) Act 1991
Local Government Act 1993

CASES CITED: Bidjara v Indigenous Land Corporation (2001) 106 FCR 203
Long v Copmanhurst (1969) 19 LGERA 19
Lubrizol Corporation Ltd v Leichhardt Municipal Council (1960) 6 LGERA 203
Naes v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 2
Nettheim on behalf of Actors Equity of Australia v Minister for Planning and Local Government, Court of Appeal 21 October 1988 unreported
NSW Aboriginal Land Council v the Minister (1988) 14 NSWLR 685
Port Stephens Council v Fidler (1997) 94 LGERA 298
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
Wang v Commissioner of Inland Revenue [1995] 1 All E R 367
Re Federal Commissioner of Taxation; Ex parte Australena Investments Pty Limited (1983) 58 ALR 577
Warren v Coombes (1979) 142 CLR 531

PARTIES: Aeropelican Air Services
Lake Macquarie City Council

FILE NUMBER(S): CA 40107/06

COUNSEL: A: T Hale SC / J Kildea
R: T Robertson SC / P J Bambagiotti

SOLICITORS: A: Paul Hines, Sydney
R: Peter Rees, Spears Point

LOWER COURT JURISDICTION: Land & Environment Court

LOWER COURT FILE NUMBER(S): LEC 40107/05

LOWER COURT JUDICIAL OFFICER: Cowdroy J

LOWER COURT DATE OF DECISION: 17 February 2005

LOWER COURT MEDIUM NEUTRAL CITATION: Aeropelican Air Services Pty Ltd v Lake Macquarie Council [2006] NSWLEC 18

CA 40107/06
LEC 40107/05

HODGSON JA
TOBIAS JA
McCOLL JA
Wednesday 20 December 2006

AEROPELICAN AIR SERVICES v LAKE MACQUARIE CITY COUNCIL

Facts:

Clause 19 of the Lake Macquarie Local Environmental Plan 2004 relevantly provided that:

(1) The owner of any land within:

(a) Zone No 5(a), 5(c), 6(c) or 7(b); or
(b) Zone No 7(c),
may, by notice in writing, require:
(c) the Council; or
(d) the Corporation,
respectively, to acquire the land.

(2) On receipt of a notice referred to in subclause (1), subject to subclause (3), the authority concerned shall acquire the land, unless the land may be required to be provided as a condition of consent to the carrying out of development.
(3) Nothing in this plan, other than subclause (4), shall require the Council to acquire any land within Zone No 6(c) if, in the opinion of the Council, the need for the open space has not yet been created by residential development in the vicinity.
(4) On the receipt of a notice referred to in subclause (1), the Council must acquire land within Zone No 6(c) if the Council is of the opinion that the owner of the land will suffer hardship if the land is not acquired within a reasonable time.

The appellant gave the Council a notice pursuant to cl 19(1). The Council did not acquire the land and relied upon the terms of cl 19(3). The appellant contended that the conditional obligation referred to in cl 19(2) should be enforceable upon the expiry of a reasonable time. At first instance, Cowdory J held that the Council should merely be compelled to form the decision referred to in cl 19(3).

Held, dismissing the appeal with costs:

Per Hodgson JA, McColl JA agreeing

1. The opinion referred to in cl 19(3) may be formed at or after the time the Council receives the notice referred to in cl 19(1): [5]; Tobias JA agreeing at [111].

2. Accordingly, the words in cl 19(2) “subject to sub-clause (3)” delay the imposition of the obligation on the Council to acquire the land if and until it forms the opinion referred to in cl 19(3): [5], [14].

3. Although no time limit is expressed in cl 19(3) for the formation of this opinion, the words “subject to subclause (3)” in cl 19(2) do import an obligation on the Council to consider the matter within a reasonable time: [4], [14].

4. If the Council fails to do so, the owner of the land may commence court proceedings to compel the Council to make a decision or to enforce the Council’s obligation to acquire the land: [11].

5. The Council should not be able to defeat such proceedings at the last minute by forming the necessary opinion at any time before a court order is made: [13]; Wang v Commissioner of Inland Revenue [1995] 1 All ER 367, Naes v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 2 distinguished.

6. However, there is insufficient warranty to imply to cl 19(3) words that would render the opinion of the Council ineffectual if it were reached after the expiry of a reasonable time: [14].

Per Tobias JA, Hodgson JA agreeing

7. The meaning of “a reasonable time” will depend upon the particular circumstances of each case. However, cl 19(3) should not be construed upon the basis that the relevant opinion can be formed at any time after the receipt of notice: [116].

Per Tobias JA, dissenting

8. The opinion in cl 19(3) must be formed in a reasonable time upon receipt f the notice. If it does not, the conditional obligation imposed by cl 19(2) becomes unconditional and liable to be enforced by an order mandamus: [136], [157]–[158]; NSW Aboriginal Land Council v The Minister (1988) 14 NSWLR 685, Wang v Commissioner of Inland Revenue [1995] 1 All ER 367, Naes v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 2 distinguished.

9. In the circumstances of this case, the appellant’s right to have the land acquired in fact crystallised and the appeal should be allowed: [175]–[177].

CA 40107/06
LEC 40107/05

HODGSON JA
TOBIAS JA
McCOLL JA
Wednesday 20 December 2006

AEROPELICAN AIR SERVICES v LAKE MACQUARIE CITY COUNCIL

Judgment

1 HODGSON JA: The circumstances giving rise to this appeal and the issues involved in it are set out in the judgment of Tobias JA.

2 Critical to the case is the construction and effect of cl.19 of Lake Macquarie Local Environmental Plan No.84 (the LEP), which relevantly provided as follows:

3 The appellant gave the Council a notice in terms of cl.19(1) and the Council did not acquire the land. In the proceedings brought by the appellant seeking an order that the Council acquire the land, the Council relevantly relied on cl.19(3). It is clear that cl.19(3) does not relieve the Council of the obligation to acquire the land in respect of which a notice has been given, unless the Council forms the opinion referred to in cl.19(3).

4 In those circumstances, the inter-relationship of cl.19(2) and cl.19(3) raises problems of interpretation. Clause 19(2) says that the authority (here the Council) shall acquire the land “on receipt of a notice”, suggesting that the obligation arises immediately. However, cl.19(3) relieves the Council of this obligation if it forms an opinion, which is an opinion which mayor perhaps must be formed after the time of receipt of the notice. No time limit is expressed in cl.19(3) for the formation of this opinion.

5 In those circumstances, unless the words in cl.19(2) “subject to sub-clause (3)” delay the imposition of the obligation on the Council to acquire the land, the Council would inevitably be in breach of cl.19(2) during whatever time it took for the Council to reach the opinion referred to in cl.19(3). As I have already said, the opinion of the Council referred to in cl.19(3) is plainly one that may be arrived at after the service of the notice; and in my opinion, substantially for the reasons given by Tobias JA, the opinion in fact must be formed at or after the time the Council receives the notice, and formed with reference to the particular land that is the subject of the notice. The time requirement is indicated by the word “yet” in cl.19(3), and the need to have regard to particular land is indicated by the words “in the vicinity”.

6 I think it would be unreasonable to construe cl.19 as putting the Council in breach of the LEP, and therefore of the Environmental Planning & Assessment Act 1979 (see s.122(a)(i) and (b)(ii)), in all cases where it took no steps towards acquiring the land while it was going about considering the opinion referred to in cl.19(3). Accordingly, I think it is appropriate to interpret the words “subject to sub-clause (3)” in cl.19(2) as introducing some time delay for the imposition of the obligation, at least in those cases where there is any question of application of sub-clause (3).

7 One possible construction of the words “subject to sub-clause (3)” is to give them the effect that the obligation is postponed to the expiry of a reasonable time for determining the question posed by sub-clause (3), and does not arise at all if the Council is then of the opinion referred to in sub- clause (3). Another possible construction of the words is to give them the effect of requiring the Council to address the question in sub-clause (3), and postponing the obligation until such time as the Council has addressed the question and not reached the opinion referred to in sub- clause (3).

8 A question also arises whether there should be an implication in sub-clause (3) to the effect that the opinion of the Council referred to in that sub-clause is not efficacious to displace the obligation to acquire the land unless that opinion is reached within a reasonable time from the Council's receipt of the notice. That result could be achieved by implying the words “reached within a reasonable time” after the words “opinion of the Council” in sub-clause (3).

9 In substance, the primary judge adopted the second construction of the words “subject to sub-clause (3)” in sub-clause (2), referred to above; and Tobias JA has adopted the first construction, and combined it with the implication in sub-clause (3) to which I have referred.

10 The question whether there should be an implication of that kind in sub-clause (3) is one I find most difficult.

11 An owner who gives a notice under cl.19 should have a result within a reasonable time, either by having the land acquired or having such acquisition denied by reason of the Council reaching a cl.19(3) opinion. If neither of these things happens within a reasonable time, the owner's remedy can only be to take court proceedings, either to compel a decision by the Council (if the primary judge's view of cl.19(2) is correct) or to enforce the Council's obligation to acquire the land (if Tobias JA's view of cl.19(2) is correct). In either case, it seems unsatisfactory that the Council should be able to put an end to any breach of cl.19, and defeat the court proceedings, by then forming the cl.19(3) opinion at any time before a court order is made.

12 On the other hand, the intention of the LEP would appear to be that (subject to the provision concerning hardship in cl.19(4)) the Council should not be required to acquire land where the need for open space had not yet been created by residential development in the vicinity of that land, and that the question whether or not such need had been reached should be determined by the Council. In those circumstances, it would seem odd and unsatisfactory that there should be a point in time, not clearly defined, such that an opinion reached just before that point in time is effectual to relieve the Council of the obligation, while an opinion reached just after it is entirely ineffectual.

13 I agree with Tobias JA that the cases of Wang and Naes, relied on by the Council as supporting the view that an opinion formed after the expiry of a reasonable time is still effectual, are distinguishable, at least unless the primary judge's view that there is an implied obligation on the Council to address the matter and form an opinion within a reasonable time is correct. In both Wang and Naes there was an obligation on the decision- maker to form an opinion, which could be enforced by mandamus; whereas in this case, there is no express obligation, and unless such obligation is implied, the owner's only remedy would be to seek to enforce the Council's obligation to acquire the land. And as I have already indicated, it would seem unsatisfactory that the Council could defeat proceedings of that kind at the last minute by forming the necessary opinion at any time before a court order is made.

14 The matter is finely balanced; but on the whole I think the preferable view is that there is insufficient warrant to imply in cl.19(3) words which render the opinion of the Council ineffectual if that opinion is reached after the expiry of a reasonable time after receipt of a notice. And if, in accordance with that view, the owner's right to have the Council acquire the land can be defeated by an opinion of the Council formed after the expiry of a reasonable time, and indeed formed at any time before the owner obtains a court order enforcing acquisition, I think it is reasonable to interpret the words “subject to sub-clause (3)” in cl.19(2), in their context and in their relationship with sub-clause (3), as importing an obligation on the Council to consider the matter within a reasonable time, and as postponing the obligation to acquire the land until the Council has in fact done so.

15 In other respects I agree with the reasons of Tobias JA; but for the reasons I have given, I would uphold the primary judge's decision and would dismiss the appeal with costs.

16 TOBIAS JA: The primary issue in this appeal concerns the proper construction of cl 19(3) of Lake Macquarie Local Environmental Plan No 84 (the LEP). More particularly, the question of law arising out of that issue is whether in the circumstances which I shall relate, the respondent (the Council) was required to acquire the appellant’s land in respect of which it had given notice to the Council under cl 19(1) for its acquisition.

Background

17 The appellant is the owner of land being Lots 939, 157 and 163 in Deposited Plan No 75523 (the land), which was formerly known as the Aeropelican Airport situated at Belmont within the area of the Council. Under the LEP the land was at all relevant times prior to 19 March 2004 zoned 6(c) Open Space (Local Reservation).

18 On 19 March 2004 Lake Macquarie Local Environmental Plan 2004 was gazetted (the 2004 LEP) which in effect repealed the LEP and rezoned the land partly Zone 5 Infrastructure and partly Zone 7(2) Conservation.

19 Clause 19 of the LEP was relevantly in the following terms:

“(1) The owner of any land within:

(a) Zone No. 5(a), 5(c), 6(c) or 7(b); or

(b) Zone No. 7(c)

may, by notice in writing, require:

(d) the Corporation,

respectively, to acquire the land.

(2) On receipt of a notice referred to in subclause (1), subject to subclause (3), the authority concerned shall acquire the land, unless the land may be required to be provided as a condition of consent to the carrying out of development.

(3) Nothing in this plan, other than subclause (4), shall require the Council to acquire any land within Zone No. 6(c) if, in the opinion of the Council, the need for the open space has not yet been created by residential development in the vicinity;

(4) On the receipt of a notice referred to in subclause (1), the Council must acquire land within Zone No. 6(c) if the Council is of the opinion that the owner of the land will suffer hardship if the land is not acquired within a reasonable time.”

20 On 9 December 2003 the appellant gave notice in writing to the Council pursuant to cl 19(1) of the LEP requiring it to acquire the land (the first notice). That notice relevantly stated:

“This Company hereby gives notice pursuant to Clause 19 of the Plan for the Council to acquire that part of the abovementioned land zoned 6(c).”

21 On 17 March 2004 the appellant gave a further notice in writing to the Council pursuant to cl 19(1) requiring it to acquire the land (the second notice), but in so doing specifically alleged that it would suffer hardship if the land was not acquired within a reasonable time, this being a reference to cl 19(4). Although the land was rezoned by the 2004 LEP in a manner that did not engage the equivalent provision in that plan to cl 19 of the LEP, it was common ground that neither acquisition notice was relevantly affected by that fact.

22 Each of the notices was received on or about the date each bore, namely, 9 December 2003 in respect of the first notice and 17 March 2004 in respect of the second notice. However, it was not until 27 June 2005, some 18½ months after receipt of the first notice and some 15 months after receipt of the second notice, that the Council resolved in the following terms:

“B. Council is of the opinion that the need for open space, being the land known as Belmont Airport, has not yet been created by residential development in the vicinity.

C. Council is of the opinion that the owner of Belmont Airport will not suffer hardship if the land known as Belmont Airport is not acquired within a reasonable time.”

The proceedings at first instance

23 On 15 February 2005 the appellant filed a Class 4 application in the Land and Environment Court (the LEC) together with Points of Claim which, as amended, alleged the giving by the appellant and receipt by the Council of each of the notices and, the failure of the Council to acquire the land in breach of cl 19(2) of the LEP. It sought relief in the form of a declaration that the Council was required to acquire the land and an order that it make application to the Minister for Local Government pursuant to s 187(2) of the Local Government Act 1993 for approval to give a proposed acquisition notice to the appellant pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 in respect of the land together with other consequential orders.

24 In its amended Points of Defence the Council denied that it was required by cl 19(2) of the LEP to acquire the land, although it admitted that it had taken no steps to do so. It further pleaded that it had formed the opinion that the need for the open space constituted by the land had not yet been created by residential development in the vicinity. It relied for the formation of that opinion on four resolutions or decisions.

25 The first was a resolution of 18 November 2002 to forward draft Lake Macquarie Local Environmental Plan 2002 (the 2002 draft LEP), and which ultimately became the 2004 LEP to the Department of Infrastructure, Planning & Natural Resources under s68 of the Environmental Planning and Assessment Act 1979 (the Act), and which, when made by the Minister, zoned the land in the manner to which I have referred in [20] above; the second was a resolution of 22 November 2004 adopting the 2004 Lake Macquarie Section 94 Contributions Plan Citywide Residential (the 2004 Contribution Plan) which made no provision for the acquisition of the land in respect of which s94 contributions were to be obtained; the third was its adoption of the former Lake Macquarie Section 94 Contributions Plan in 1993 and 1998 (the 1993/1998 Contributions Plan) which also made no provision for the acquisition of the land for open space purposes; and the fourth was the resolution of 27 June 2005.

26 The Council also pleaded that it did not form the opinion, on receipt of either notice, that the appellant would suffer hardship if the land was not acquired within a reasonable time and had not subsequently formed that opinion, although it had formed the opinion by resolution of 27 June 2005 that the appellant would not suffer hardship if the land was not so acquired. Accordingly, by reason of the foregoing it was alleged that the Council was not, on receipt of either notice or at a time thereafter, required to acquire the land.

27 Upon the amended Points of Defence being filed, the appellant filed further amended Points of Claim in which it alleged that the Council’s resolution of 27 June 2005 was ineffective to establish that it was of the opinion set out in paragraphs B and C thereof in that

(a) the resolution was not bona fide and did not represent the Council’s opinion, being moved and resolved for an improper purpose;

(b) in making the resolution the Council denied the appellant procedural fairness;

(c) in making the resolution the Council erred in its construction and understanding of the meaning of hardship in cl 19(3) of the LEP and/or that in forming the opinion in relation to hardship it failed to take into account a relevant consideration;

(d) having refused to acquire the land as admitted in its original Points of Defence dated 1 June 2005 without having the formed opinion referred to in cl 19(3) of the LEP, the Council could not justify that refusal by a subsequently formed opinion; and

(e) the resolution did not amount to a refusal to acquire the land.

28 The proceedings were heard by Cowdroy J who, on 17 February 2006, dismissed the appellant’s application. It is from that decision that the appellant appeals to this Court.

Some further facts

29 The 1993/1998 Contributions Plan originally came into force on 26 June 1993. An amended plan came into force on 4 May 1998. Although there was no evidence of the actual resolutions adopting either the original or amended plan, it would be reasonable to infer that each plan was approved by resolution of the Council pursuant to s94B of the Act. The purpose of the plan, as s94 of the Act required, was to enable the Council to obtain contributions towards the provision or augmentation of public services and amenities required as a consequence of the increased demand from development or to provide such services and amenities in anticipation of, or to facilitate, such development. Contributions were to be levied under the plan for, amongst other things, Open Space and Recreation Facilities.

30 The amended 1998 plan recited that the basic premise adopted in the plan was that, in general, adequate reserves of land existed to meet the existing and future population demands in the City over the life of the plan. Consequently, the contribution rate was primarily determined by establishing the monetary contributions required to augment existing reserves to a standard that matched anticipated demand of the new population at a basic facility level.

31 Although the plan provided for the dedication and acquisition of land for open space purposes where it was deemed appropriate for that purpose, it did not identify the appellant’s land as land that might be so acquired.

32 At its meeting on 18 November 2002 the Council resolved to refer the 2002 draft LEP to Planning NSW with the recommendation that it be made by the Minister in accordance with s68 (sic) of the Act. It was also resolved to rename draft LEP 2001 to draft LEP 2002 at the time of its referral to Planning NSW.

33 Under the 2002 draft LEP as well as the 2004 LEP the land was no longer zoned for open space purposes although the plan retained a zone 6(1) Open Space. However, the land was zoned 5 Infrastructure under which some 30 forms of development were permissible with consent including, relevantly, airline terminals, airports, childcare centres, community facilities, education establishments, entertainment facilities, helipads, heliports, hospitals, medical centres, motels, transport terminals and veterinary hospitals. Interestingly, in the 6(c) zone under the LEP none of those uses were permissible with consent, but racecourses, recreation areas, refreshment rooms, showgrounds and tourist facilities were so permissible.

34 Much was made by the Council of the fact that tourist facilities were a permissible use within the 6(c) zone under the LEP. That form of development was defined by the 1980 Model Provision which were incorporated into the LEP pursuant to cl 8 thereof was defined to mean “an establishment providing for holiday accommodation or recreation which could include, amongst other things, a caravan park, holiday cabins, hotel, marina, motel and refreshment room”. Of course, the commercial viability of constructing tourist facilities on the land at Belmont was no doubt another matter. It seems to me that a comparison of the forms of development permissible with consent in the 6(c) zone under the LEP did not, from a practical commercial point of view, differ significantly from those permissible in the Infrastructure Zone in the 2004 LEP. Furthermore, in the 7(2) Conservation (Secondary) Zone under that LEP, relevantly only bed and breakfast establishments, dwelling houses and tourist accommodation were permissible with consent.

35 However, cl 29 of the 2004 LEP severely limited the number of dwelling houses that could be constructed upon the land. In fact, it would appear that only one dwelling house could be erected upon that land pursuant to cl 29(3) of that plan. Accordingly, any realistic commercial advantage to the appellant as a consequence of the rezoning of the land from 6(c) Open Space (Local Recreation) under the LEP to Zone 5 Infrastructure and Zone 7(2) Conservation (Secondary) under the 2004 LEP by way of comparison of the developments permissible with consent in each zone, is not self-evident. What is evident, however, is that whereas cl 19 of the LEP provided for the giving by the owner of the land of a notice to the Council to acquire its land, no such provision applied to the land as zoned under the 2004 LEP. I only mention these matters as it was suggested by the Council in its submissions that under neither the LEP nor the 2004 LEP was the land sterilised in terms of commercially viable use which was permissible with consent.

36 On 22 November 2004 the Council approved the 2004 Contribution Plan in accordance with cl 31(1)(b) of the Environmental Planning and Assessment Regulation 2000. At the same time it repealed the 1993/1998 Contributions Plan. Clause 6.4.1 of the 2004 Plan noted that it required a contribution towards the acquisition of open space to accommodate the demand for recreation facilities generated by the incoming population. The list of open space land to be acquired and when it was to be acquired, was set out in the Schedule of Works attached as Appendix B to that plan. It did not include the appellant’s land. In fact no land in the Belmont area was listed for acquisition.

37 Leaving to one side the Council’s resolution of 27 June 2005, it was submitted that the Council’s resolutions of 18 November 2002 with respect to the 2002 draft LEP, the approval in 1993 and 1998 of the 1993/1998 Contributions Plan and its resolution of 22 November 2004 to approve the 2004 Contributions Plan all evidenced the formation by the Council of the opinion that no need had been created by residential development in the vicinity of the land which required its acquisition. Accordingly, it was submitted that that opinion had not only been formed before Council’s receipt of the notices on or about 9 December 2003 and 18 March 2004 respectively, but also that that opinion had been confirmed on 22 November 2004 when the 2004 Contributions Plan was approved.

38 Each opinion was sufficient, so it was submitted, to constitute the opinion required by cl 19(3) so that the Council was not required to acquire the land.

Events subsequent to the receipt of the notices

39 On 16 December 2003 Mr Tony Farrell, Group Manager, Strategy of the Council, received a telephone call from Mr Steve Ferris, Managing Director of the appellant. According to a file note made by Mr Farrell dated 29 December 2003, Mr Ferris was concerned that the proposed new zoning of the land under the 2002 draft LEP would result in its sterilisation, a matter which had only been brought to his attention a few weeks previously. It would appear that that concern had prompted the service of the first notice on or about 9 December 2003.

40 On 23 December 2003 Mr Farrell prepared an internal memorandum addressed to all councillors, the subject matter being “ACQUISITION REQUEST – AEROPELICAN AIR SERVICES, MARKS POINT”. The memorandum was in the following terms:

“The operator of Aeropelican Air Services Pty. Ltd., IAG Group Australia Pty. Ltd., has served notice on Council to acquire their property at Marks Point. The property the subject of the acquisition is currently zoned Proposed Open Space 6(c) under the terms of LMLEP 1984. An acquisition liability applies to this zoning. Under draft LMLEP 2000, the property has a zoning of 5. Infrastructure. No acquisition liability applies to the site under the draft LEP.

I have had one telephone conversation with the Managing Director of Aeropelican regarding the acquisition notice. It appears the company is acting on advice that the proposed draft represents a ‘backzoning’ of the property. I am not certain how Aeropelican’s advisers reached this conclusion, or why the acquisition notice is viewed as a solution. The Managing Director further advised there was no intention to discontinue the airline’s operations at this time.

I have arranged a meeting with Aeropelican representatives next week and hope they will clarify their intentions and concerns at that time.

Given the significance of the site and the likelihood for publicity regarding this action, the purpose of the memo is to give you early advice on the matter.”

41 Of particular significance to the issues in the present case was a further internal memorandum dated 29 December 2003 from Mr Farrell to Ms Diane Tomkin, Acting Manager, Community Planning and Ms Diane Crosdale, Manager Environmental Planning. It stated as follows:

“Please find attached an acquisition notice served on Council by Aeropelican Air Services for land at Marks Point zoned 6(c) Open Space (Local Reservation) under LMLEP 1984.

Pursuant to clause 19(3) of LMLEP 1984, the following test is to be applied prior to proceeding with acquisition:

Nothing in this plan, other than subclause (4), shall require the Council to acquire any land within Zone No.6(c) if, in the opinion of the Council, the need for the open space has not yet been created by residential development in the vicinity.

In order to facilitate Council forming an opinion on the need for the open space, please prepare a report to Council addressing the question of the need for the open space being created by residential development in the vicinity. Your report should include a recommendation on what position the Council should take. I would appreciate it if the report is completed in time for inclusion in the standing committee business paper of 2 February 2004. Please advise me if you can not meet the timeframe.”

42 A meeting took place between Mr Farrell, Mr Ferris and a Mr Hadley (the appellant’s valuer) on 29 December 2003 to discuss the company’s motivation for serving the first notice. At that meeting Mr Ferris informed Mr Hadley that the appellant would prefer to discuss an alternative zoning for the land rather than have it acquired as Aeropelican (the airline) was not viable in the long term. The company’s aim was for the land to be rezoned primarily residential with some commercial. Consultants had been commissioned to prepare a rezoning application. Mr Ferris informed Mr Farrell that subject to legal advice on the implications of doing so, the company would write to the Council advising it that the acquisition notice should be held in abeyance pending finalisation of the appellant’s rezoning application. Mr Farrell advised all councillors of the foregoing in an internal memorandum dated 30 December 2003.

43 On 31 December 2003 Ms Susan Boyd, Manager, Community and Cultural Services of the Council, emailed Mr Eric Neville, a valuer employed by the Council, requesting a valuation of the land in order to fulfil the financial implications of the report which Mr Farrell had requested to be prepared for the meeting of the Standing Committee of the Council on 2 February 2004. Mr Neville emailed Ms Boyd on 5 January 2004 indicating that it would be impossible for him to provide a valuation within the deadline set, noting that the acquisition of the land might have a consequential effect upon the appellant’s business for which it would be entitled to extensive compensation under the provisions of the Land Acquisition (Just Terms Compensation) Act.

44 On 9 January 2004 Mr Hadley on behalf of the appellant wrote to Mr Farrell with respect to the possible holding in abeyance of the first notice pending finalisation of a rezoning application. The letter relevantly stated:

“I further note your advice to the meeting that Council would prefer to rezone the land and not acquire it at this stage. I note that under the provisions of the Draft LEP, Council proposed to rezone the property in a way that would significantly diminish the value of the property as the proposed zoning will not permit the highest and best use of the land which would include residential, tourist and commercial uses.

If Council was willing to readdress the proposed zoning of the land under the Draft LEP to permit reasonable development of the land for some or all of the abovementioned uses, my client would be prepared to consider withdrawing the Clause 19 Notice that it has served.

My client cannot withdraw the Clause 19 Notice it has served until the Council gives it some appropriate assurance that it will not be prejudiced in so doing. I appreciate that Council may need some time to consider its position and that Council cannot undertake to rezone the land. …

…

I would appreciate your advice as to how Council proposes to address the situation so that both parties’ interests are protected. In the meantime I am instructed to advise that my client agrees to allow Council some time to respond and that it will not object if Council holds the Notice in abeyance and does not proceed to act on it for the next 28 days.”

45 On 13 January 2004 Ms Boyd, Community Land Planner (Recreation) of the Community Planning Department of the Council, forwarded to Ms Crosdale, Manager, Environmental Planning, an internal memorandum comprising some six detailed pages relating to the potential population growth of the City over the next 20 years. She identified existing recreational facilities; the level of recreation provision needed to service the existing population, the requirement for such provision to service future population growth; the future needs of the Belmont area; and the nature of the adjoining and available land in that area available to provide appropriate recreation facilities.

46 Paragraph 10 of Ms Boyd’s memorandum contained her recommendations, of which the first was as follows:

“It is recommended that the subject land be acquired for the future need to provide additional recreational facilities to accommodate the potential demand. The land is flat, which is optimum for the development of sporting and recreation facilities.

There is a substantial amount of land zoned 2(2) in the catchment and some of the lands have extensive water views. Three storey development will eventually occur in these locations as the demand for these properties increase. There is also opportunity for potential development within the 2(1) zone with many larger lots capable of dual-occupancy developments.

Council has s94 funds currently held in reserve, for the acquisition of open space in the locality.

…

Based on the escalating cost of land prices and the fact that there is no other open space land available for the development of the sporting and recreation facilities, the land should be acquired now ahead of anticipated demand.

Irrespective of what method is used to determine population growth, there is no question that the catchment will increase in population. It is just a matter of timing. The following recreation facilities are a modest estimate of future recreation open space provisions for future growth.”

47 By letter dated 10 February 2004 Mr Hadley again wrote to Mr Farrell noting that the 28 days during which his client was prepared to hold the first notice in abeyance had expired and urgently seeking Mr Farrell’s advice as to the Council’s position in relation to the matter. The letter further stated that the appellant could not withdraw the cl 19 notice until Council had given some assurance that it would not be prejudiced in so doing. The letter concluded by stating that as the Council had not given any indication of some arrangement which would provide a degree of comfort to the appellant, it was assumed that it would act upon the cl 19 notice to acquire the land.

48 Mr Farrell responded to this letter on 13 February 2004 purporting to confirm Mr Farrell’s previous verbal advice that Mr Hadley should advise him of the consultants who had been engaged in preparing the rezoning application for the land and that he would then organise meetings between those consultants and relevant members of the Council’s staff. He stated:

“From those meetings, you will be able to form your own conclusions about the process of preparing and submitting a rezoning proposal for the land.”

49 On 24 February 2004 Ms Boyd forwarded a further internal memorandum to Mr Rob Oerlemans, Manager, Community Planning in which she summarised the potential population growth projections for the area surrounding the land and advised that based on those projections, additional recreational facilities were required. She concluded that

“As demonstrated in my memo of 13 January 2004, there is no available open space in the area, so the acquisition of additional land for the future provision of these facilities is required. The facilities recommended provide a range of recreational experiences and cater for both the aging population and new families moving into the area.”

50 It is apparent that Ms Boyd’s recommendations were ignored. Certainly, the Council did not tender any evidence that any report was prepared by either Ms Tonkin or Ms Crosdale for inclusion in the Standing Committee Business Paper of 2 February 2004 as requested by Mr Farrell’s internal memorandum to those officers dated 29 December 2003.

51 By letter dated 17 March 2004 Mr Ferris wrote to the Council indicating that as the sole shareholder of the holding company of the appellant, he was suffering hardship and loss of income as all his personal assets were tied up within the business of which the main asset was the land. The letter requested that the Council acquire the land pursuant to cl 19 “without delay”. Upon legal advice, Mr Ferris stated that he was giving the Council a fresh notice dated 17 March 2004 with an appended detailed case for hardship. The letter concluded in these terms:

“I gave such a notice on 9 December 2003 but to date the Council has not confirmed that it will acquire the land. Consequently I do not have in writing any idea where the Council stands in this matter.

Please respond in writing confirming that the Council will acquire the land.”

52 Two days later, on 19 March 2004, the 2004 LEP was gazetted. There would appear to have been no further action taken by the Council or its officers with respect to the plea contained in Mr Ferris’ letter of 17 March 2004 until Mr Farrell forwarded an internal memorandum to Mr Ross Gilshenen, Manager, Finance and Administration of the Council to the City Solicitor, Mr Peter Rees. The memorandum requested that certain documents be examined which outlined a case for hardship by the appellant which related “to an acquisition notice served on Council by the owner, twice”. The memorandum noted that in verbal discussions had with Mr Ferris, it had been indicated that he did not wish the Council to proceed with the acquisition but instead wanted a rezoning. Notwithstanding those verbal assertions, Mr Farrell indicated that he could not ignore the advice contained in the “quoted document”, apparently, this was a reference to Mr Ferris’ letter of 17 March 2004 together with its attachments relating to his hardship case.

53 However, it is apparent from Mr Ferris’ letter of 17 March 2004 that although he was making a hardship case in accordance with the second notice, he had not abandoned the first notice and had expressly requested the Council to confirm that it would acquire the land pursuant thereto.

54 By letter dated 24 April 2004 Mr Farrell wrote to Mr Ferris responding to his letter of 17 March 2004. In that letter he indicated that he had initiated a review of the hardship claim. He sought Mr Ferris’ written clarification of the status of his intention to seek a rezoning of the land indicating that if it was intended to submit a rezoning proposal, work on

“your acquisition notice is wasteful and if you propose to pursue the acquisition, the rezoning would be wasteful. I would appreciate if you clarified your true intention.”

55 By letter dated 27 May 2004 Mr Ferris wrote to Mr Farrell in the following terms:

Re: Acquisition of Aeropelican

In response to your letter of 24th April 2004, let me make my position clear:

(a) the company has given a notice pursuant to the LEP, as it was, which obliges the Council to acquire the land;

(b) the company will not do anything to jeopardize that notice and is not to be seen or perceived by the Council to waive its rights pursuant to that notice.

Please confirm that the Council acknowledge its obligations to acquire the land and that it will act accordingly.”

56 Although that letter refers to the company having given “a notice” pursuant to the LEP, there was nothing in it to suggest that the appellant had abandoned the first notice and was relying only the second notice. Nor was there any suggestion by the Council that that was how the letter was interpreted.

57 Nevertheless, it is apparent that the Council officers concentrated on the issue of hardship. Thus, Mr Gilshenen wrote to Mr Ferris on 5 July 2004 requesting seven additional items of information in relation to the financial accounts of the appellant including the appellant’s most recently audited accounts of its holding company.

58 By letter dated 27 July 2004 Mr Ferris responded to each of the seven matters in respect of which additional information had been sought. The letter made it clear that the appellant did not have separate audited accounts although enclosed the 2003 audited accounts of the Group. The letter concluded by stating that Mr Ferris trusted that he had answered all of Mr Gilshenen’s questions. He concluded:

now

59 Apart from some internal emails between various officers of the Council, there was no further communication between any such officers and Mr Ferris. Accordingly, on 15 February 2005 the appellant instituted the present proceedings.

Events after the commencement of the proceedings

60 On 17 February 2005 a meeting was held between Mr Don Fox, a planning consultant retained by the appellant’s parent company, Mr Hadley, who was then representing a potential purchase of the land, McCloy Developments Pty Ltd, and Mr Farrell in which Mr Fox advised that work had proceeded on preparation of documentation to support a rezoning application for the land. Mr Farrell apparently advised that the Council would be concerned over the loss of the airport and that there was a strategic desire to retain it as part of the City transport network. This meeting prompted an internal memorandum from Mr Farrell to all councillors dated 17 February 2005. Relevantly, that memorandum was in the following terms:

“Council may be aware that the owner of the Aeropelican Airport at Belmont, IAP Air Services served notice on Council to acquire the airport site in late 2003. This acquisition notice seeks to take advantage of the previous zoning of the site which was 6(c) Open Space (Local Reservation). The site was rezoned to 5. Infrastructure under LMEP 2004. As the acquisition notice was lodged prior to gazettal of LMLEP 2004, it remains current and must be dealt with by Council. The owner has consistently advised that he requires the acquisition notice to be processed, notwithstanding an earlier indication that his long term goal was to achieve a rezoning.

The owner has now served notice of their application to the Land and Environment Court to have orders issued against Council to force it to acquire the land. …

Aside from the acquisition action, the owner’s planning consultant sought a meeting with me, which was conducted today, to update me on their progress with a rezoning application. … It is the lead consultant’s view that the investigations support a rezoning to predominately 2(1) Residential and permitting 100 residential lots, 1 tourism lot accommodating 36 units, and a lot of about 2000m² with undetermined use fronting the Highway. …

The representatives I met with also advised they would like to see the rezoning proposal ‘assessed objectively without the threat of court action’.

I have consistently advised all parties that have approached me regarding the Aeropelican site that an airport is a valuable element of the transport network servicing the City and that its role (and location) is reflected in the LS 2020 Strategy. …

An additional party to the potential redevelopment of the site has also now identified themselves, namely the McCloy Group who hold a mortgage over the land the subject of the acquisition notice. McCloy(s) have asked for the opportunity to present the rezoning proposal directly to Councillors and this is being arranged through the Mayor’s office. …

It is apparent that a decision will shortly be required from Council on whether it will consider a rezoning application or whether it will follow the acquisition path. Insufficient information is currently available to provide a recommendation on a course of action, though that is likely to change quickly.

I trust the foregoing is of interest. …”

61 PricewaterhouseCoopers (PWC), the Council’s auditors, had been retained to investigate the appellant’s claims of hardship. PWC reported to Mr Gilshenen by letter dated 24 February 2005. The penultimate paragraph of that letter stated as follows:

“The operating losses and resultant deterioration in the net asset position along with net current liabilities indicate that the company is under financial pressure. The future viability of the company is of concern if working capital is potentially insufficient and operating losses continue to be incurred which will further erode the company’s net asset position. To improve the overall financial position of the company, Aeropelican needs to improve its operating results or realise non-current assets to provide additional working capital. The extent to which asset sales would improve the position is largely dependant on the recoverable amount of those assts, in particular the land the buildings. In this regard as noted above, we believe further analysis be performed with respect to the fair value of the land and building assets.

Our report is solely for your information and is not to be used for any other purpose or distributed to any other party. This report does not extend to any financial report of Aeropelican Air Services Pty Limited, taken as a whole. …”

62 By letter dated 8 March 2005 the City Solicitor, Mr Rees, wrote to the appellant’s solicitor, Mr Hines, in terms which commenced as follows:

“In order for my client to consider your client’s claim in terms of clause 19(4) of the Lake Macquarie LEP 1984, would you please provide to me as a matter of urgency”

63 There then followed correspondence between Mr Hines and Mr Rees relating to the provision of further financial information. In particular, by letter dated 10 March 2005, Mr Hines wrote to Mr Rees enclosing a copy of the June 2004 accounts of the consolidated IAP Group indicating that those accounts had not been signed off as the audited accounts, but that sign off was imminent. Mr Hines stated that there were no separate audited accounts for the appellant.

64 Some internal emails were then exchanged between Mr Rees, Mr Farrell and Mr Gilshenen relating to difficulties that PWC were allegedly having in analysing the financial information which and been passed on to it. Again, on 14 March 2005 Mr Rees wrote to Mr Hines indicating that the Council needed to be fully informed of the facts and circumstances giving rise to the appellant’s claim of hardship if it was to perform its function under cl 19(4) of the LEP. That letter also asserted that Order 1 sought in the appellant’s Class 4 application was misconceived in that it required

“the Respondent to make application to the Minister for approval to issue a proposed acquisition notice in respect of certain lands zoned 6(c) under the Lake Macquarie LEP 1984.”

65 A further ground upon which it was alleged that Order 1 was misconceived was that

“The notices are founded on cl 19(4) of the LEP which requires the Council to form an opinion.”

“No order in terms of the acquisition of the land pursuant to clause 19 of the Lake Macquarie LEP 1984 can be made until Council forms an opinion that the applicant will suffer hardship if the land is not acquired within a reasonable time.”

66 The appeal papers do not include the original Class 4 application and Points of Claim filed on 15 February 2005 but only the Amended Application and Points of Claim filed on 17 May 2005. However, it was not suggested by the Council in either its written or oral submissions on the appeal that the original Points of Claim only relied upon the second notice and not the first.

67 In his letter of 18 March 2005 Mr Hines wrote to Mr Rees agreeing that the form of the Class 4 Application needed amendment. That amended Application was filed on 24 March 2005. It sought a declaration, inter alia, that the appellant was suffering, and would continue to suffer, hardship if the land was not acquired within a reasonable time (being a reference to cl 19(4)) as well as a declaration that the second notice was a valid notice for the purpose of cl 19 of the LEP.

68 Finally, it further sought a declaration pursuant to that notice that the Council was obliged to form the opinion referred to in cl 19(4), that that was the only reasonable opinion capable of being formed and, therefore, the Council was obliged to acquire the land. The amended application was again amended on 17 May 2005 in a manner which did not distinguish between the first and second notices.

69 In the meantime, the Council had engaged Mr Dennis Robertson of Weston Woodley Robertson, Accountants, in place of PWC to investigate the appellant’s accounts and to provide a report to the Council with respect to its claim of hardship. That report was provided on 23 June 2005 and concluded by expressing the opinion that adequate information had not been provided by the appellant to enable the Council to form the opinion that the owner of the land would suffer hardship if it was not acquired within a reasonable time.

70 At all material times the appellant was unaware that PWC’s retainer with respect to this matter had been terminated and that Mr Robertson and his firm had been retained in lieu. In this respect, by letter dated 11 April 2005, Mr Hines wrote to Mr Rees stating that:

“My client has instructed Guy Hazlehurst and James Winter of Ernst & Young … [who were the appellant’s auditors] to meet with your client’s Accountants and provide them with whatever they may require by way of company accounts, to enable the Council’s Accountants to provide advice to the Council. This offer is made with a view to reducing the costs in these proceedings.”

71 On 1 April 2005 the appellant ceased to use the land as an airport. This prompted Mr Rees to write to Mr Hines by letter dated 1 June 2005 in which the following was stated:

“In view of the land being now no longer used as it was by your client prior to 30 April 2005, my client proposes to reconsider the aspect of need referred to in Clause 19(3) of the Lake Macquarie Local Environmental Plan 1994, in relation to that land.

I am instructed that although my client has, by its

expressed its view that residential development in the vicinity of the land has not generated a need to acquire the land for open space purposes, my client wishes to afford your client the opportunity to make submissions to it before 14 June 2005, as to whether or not the need for the land as open space has been created by residential development in the vicinity.

Immediately following that date, a report will be prepared by a Council officer and submitted to Council for its consideration on 20 June 2005.”

72 The evidence did not directly explain why, on 1 June 2005, the Council suddenly proposed to “reconsider” the aspect of need referred to in cl 19(3) of the LEP. As far as the evidence indicated the aspect of need had not been previously considered by the Council at all. Ms Boyd’s recommendations had not seen the light of day. The explanation may be that, as stated by Mr Farrell in his internal memorandum to all councillors dated 17 February 2005, he had consistently advised all parties that the airport was a valuable element of the transport network servicing the City and that its role (and location) was reflected in the LS2020 Strategy. Again, why Council’s desire to retain the airport prevented it from determining whether to express the opinion referred to in cl 19(3) was never explained.

73 However, what Mr Rees’ letter of 1 June 2005 demonstrated was that the Council at all material times regarded the first notice as still being “active” but that, whilst the land was being used by the appellant as an airport, the Council saw no necessity to determine whether to form the opinion referred to in cl 19(3) and only determined to revisit or, more accurately, visit that issue when the airport operations ceased. No doubt it was for this reason that between March 2004 and June 2005, Council’s efforts were directed towards the second notice and the question of hardship.

74 Mr Hines responded to Mr Rees’ letter of 1 June 2005 by letter dated 7 June 2005 in which he said

“With regard to your letter of 1 June 2005, affording my client the opportunity to make a submission, such a submission would appear to be useless given that the defence states that the Council has made its determination on clause 19(3).”

75 The reference to the Council’s defence on cl 19(3) was a reference to par.12 of the Amended Points of Defence filed on 3 June 2005 which denied par.12 of the Amended Points of Claim which alleged that by reason of the receipt of the Council of the first and second notices, it was required by cl 19(2) of the LEP to acquire the land. The particulars of that denial alleged that the Council had opined that the need for the open space had not yet been created by residential development in the vicinity within the meaning of cl 19(3) of the LEP, that opinion having been formed in the manner to which I have referred in [25] above.

76 As I have indicated in [22] above, on 27 June 2005 the Council resolved that it was of the opinion that the need for open space, being the land known as Belmont Airport, had not yet been created by residential development in the vicinity and that the owner of the Airport would not suffer hardship if the land was not acquired within a reasonable time. The first of those resolutions was supported by a report of Mr Ian Andrew of 20 June 2005, the City Strategist (the Andrew report). In its Introduction, the report indicated that it had been prepared to advise Council on the question of whether residential development in the vicinity of the land owned by the appellant had generated the need for the acquisition of the land for open space purposes. The report then addressed the site in its context, the relevant planning controls and the Lake Macquarie Open Space Strategy.

77 Under that heading the report stated

“In the process of preparing the Lifestyle 2020 Strategy that underpins Lake Macquarie LEP 2004, and the LEP itself, Council appointed URS Australia Pty Ltd to prepare the Lake Macquarie Open Space Strategy 2001. The strategy examined the need for open space throughout the City and related this need to the areas of land zoned for and reserved for open space so that Council could achieve the appropriate distribution of open space and recreation facilities for the projected population of the city as identified in the Lake Macquarie Lifestyle 2020 Strategy. The strategy recommended lands that Council could acquire to provide for the open space needs of the future population of the city to year 2020, and potential disposal of lands considered surplus to open space need.”

78 The report then referred to the Belmont Planning District within which the land was located, noting that the 2004 LEP had placed all 6(a) Open Space (Public Recreation) and 6(c) Open Space (Local Reservation) under the LEP, except Belmont Airport, into a mix of open space, conservation and environmental zones to reflect the underlying inherent capability of those lands without changing their open space function.

79 The report continued that the Open Space Strategy provided Council with a framework to plan open space and recreation facilities to meet future population needs. That included acquisition of open space areas zoned 6(c). However, Figure 6.1 of the Open Space Strategy did not include the land as being required for open space purposes, but recommended that it be rezoned from Open Space 6(c) (Local Reservation) to Airport Use. However, the report noted that the Council had not adopted the open space strategy although it had used its findings and recommendations in the assessment of open space requirements during preparation of the 2004 LEP.

80 Under the heading “Need for Open Space”, the Andrew report again referred to the recommendation of the Open Space Strategy that the land be rezoned for Airport Use. This recommendation, it was asserted, supported the proposal in the 2002 draft LEP (and subsequently the 2004 LEP) to zone the land as 5 Infrastructure. The report continued:

“This zone does not carry an acquisition liability for Council. At the time the Open Space Strategy and draft Lake Macquarie Local Environmental Plan 2001 were being prepared, Belmont Airport was an operating airport.”

81 The report then referred to the 2004 Contributions Plan and to the authors’ understanding of the concept of “vicinity” in cl 19(3). After setting out a list of contributions made under that Contributions Plan since 2004, the report stated that the contributions levied on residential developments in Marks Point were for the acquisition of foreshore reserve lands and had not been allocated to the acquisition of specific open space land in Blacksmiths and Pelican at this time.

82 Under the heading “SUMMARY AND CONCLUSION”, the author stated

“The Site is zoned 6(c) Open Space (Local Reservation) under the provisions of Lake Macquarie Local Environmental Plan 1984.

It is my opinion that the need for open space has not yet been generated by residential development in the vicinity of the Site.”

83 Finally, the agenda papers for the meeting of 27 June 2005 included a report from Mr Robertson of Weston Woodley Robertson, dated 23 June 2005 (the Robertson report) which expressed the opinion to which I have referred in [69] above. It was on the basis of these opinions that the Council resolved resolutions B and C, which I have recorded in [69] above.

The decision of the primary judge

(a) The construction of cl 19

84 The primary judge found (at [74]) that as a matter of statutory construction, since subclause (2) of cl 19 was made subject to subclause (3), the latter had to be answered before the former was engaged. Accordingly, the Council had to form an opinion under cl 19(3) in relation to the notices. His Honour considered (at [75]) that it was insufficient for the Council to have no opinion or to rely upon a general policy. The service of each notice activated a duty upon the Council to give genuine consideration to the opinion required to be formed pursuant to cl 19(3).

85 As to cl 19(4), his Honour considered (at [76]) that it was incumbent upon an applicant for acquisition to provide evidence of hardship and that in the absence of such evidence the Council was entitled to presume that the owner of the land would not suffer hardship. However, if evidence was provided, the Council was required to consider that evidence and to determine its opinion as to whether the owner would suffer hardship within a reasonable time.

(b) Did the Council form the cl 19(3) opinion?

86 The primary judge considered the Council documents which had come into existence after receipt of the first notice and, in particular, the internal memoranda of Mr Farrell dated 29 December 2003 and 17 February 2005 as well as the memoranda prepared by Ms Boyd in January and February 2004. His Honour found (at [78]) that none of these documents suggested that the Council already held an opinion concerning the need for open space in the vicinity. He noted that there was no mention of such an opinion in the correspondence between the respective solicitors for the parties until Mr Rees’ letter of 1 June 2005, when it was suggested that the Council had, through the 2004 LEP and the 2004 Contributions Plan, expressed the view that the residential development in the vicinity of the land had not generated a need to acquire the land for open space purposes.

87 Nevertheless, before the primary judge (and repeated on the appeal) the Council relied upon its comprehensive consideration prior to the receipt of the first notice of the land use requirements for the City including the appellant’s land as part of its preparation of the 2004 LEP. Reliance was placed upon the Council’s 18 November 2002 resolution as well as the 1993/1998 Contribution Plan. Reliance was also placed by the Council on the making of the 2004 LEP on 19 March 2004 and its approval in November 2004 of the 2004 Contributions Plan. Those instruments considered land use in the area and, so it was submitted, determined that there was no need for the acquisition of further open space in the Belmont area.

88 The primary judge rejected the Council’s submission that these documents, whether taken severally or jointly, constituted the formation of an opinion for the purpose of cl 19(3) of the LEP. He said (at [81]):

“However, the Court does not consider that any of the above action satisfied the obligation of the Council to form an opinion under clause 19(3). As a result of the service of the Acquisition Notices, the Council was required to give specific consideration to the need for the applicant’s land. The Council was not merely entitled to apply a policy without giving consideration to the acquisition notices.”

89 The primary judge then referred to the fact that the Council had given specific consideration to the need for the appellant’s land for open space purposes in 2005 in the report prepared by Mr Andrews for the Council meeting of 27 June 2005. The author had concluded that the land was not required because the need for open space had not been generated by residential development in the vicinity. On 27 June 2005 the Council formally adopted the opinion that there was not yet a need for open space in the vicinity of the applicant’s land.

(c) Consideration of hardship

90 His Honour then turned to the Council’s consideration of the appellant’s claim of hardship under cl 19(4). He concluded that the appellant bore the onus of establishing to the Council’s satisfaction that it would suffer hardship if the land was not acquired within a reasonable time. He considered (at [84]) that cl 19(4) stated a subjective rather than an objective test. The Court was not required to determine for itself whether the appellant would suffer hardship if the land was not acquired but was required to determine whether the Council had formed an opinion to that effect. The Council formed such an opinion on 27 June 2005. It had done so on the basis of the conclusion reached in the Robertson report to the effect that the appellant had not provided sufficient information upon which an opinion could be formed that it would suffer hardship if the land was not acquired within a reasonable time.

(d) Procedural fairness

91 The appellant submitted that the Council’s opinion that it would not suffer hardship if the land was not acquired within a reasonable time was made without affording it procedural fairness. In particular, it submitted that the Council was required to provide it with the findings of the Robertson report before it made a decision so that it would have the opportunity of answering the opinion expressed in that report and, in particular, in providing the information which Mr Robertson suggested was absent.

92 The primary judge (at [87]) rejected this submission upon the basis (which was not challenged on appeal) that the only material before Mr Robertson was that provided by the appellant to the Council. Accordingly, there could be no suggestion that there was any adverse material provided to Mr Robertson in respect of which the appellant was denied the opportunity to answer. In these circumstances, there was no obligation on the Council to provide the appellant with Mr Robertson’s report since it merely contained advice based upon the material provided by the appellant.

93 In any event, in his letter of 1 June 2005 to the appellant’s solicitor, Mr Rees, according to his Honour (at [88]), invited the appellant to provide submissions to the Council prior to the meeting of 27 June 2005, an invitation which the appellant declined and, therefore, in respect of which it could not complain of being denied procedural fairness. However, the letter of 1 June 2005 only invited the appellant to make submissions to the Council prior to 14 June 2005 as to whether or not the need for the land as open space had been created by residential development in the vicinity. The invitation did not extend to the provision of any further submissions with respect to the issue of hardship.

(e) The test for hardship

94 The appellant submitted to his Honour that Mr Robertson had misunderstood the requirements of cl 19(4) in evaluating the appellant’s accounts. The Robertson report had referred to the fact that the appellant could have sold the land if it were experiencing hardship. The appellant responded that such a statement misunderstood the fact that it would have to sell the land at a lesser value because of its 6(c) zoning. As a consequence it would suffer hardship by virtue of that fact alone. On the other hand, if the land was acquired by the Council, its value would be based upon its underlying residential zoning as its zoning for the public purpose of open space would need to be disregarded.

95 The primary judge rejected this submission upon the basis that there was no evidence that the underlying zoning of the land if it was compulsorily acquired would be residential or that its residential value would have substantially exceeded its market value in accordance with its current zoning. The first point so referred to has substance, although the second seems highly unlikely.

96 Nevertheless, at [91] his Honour considered that the hardship provisions in cl 19(3) were intended to mandate acquisition when an owner was in genuine financial distress because of the zoning of the land and not simply where some level of financial loss might be incurred if the owner was required to sell the land in order to relieve its financial distress based on its value in accordance with its current zoning. His Honour considered that an owner may be in genuine financial distress if the land was unsaleable because of its zoning but he was not satisfied that these circumstances existed in the present case.

97 In any event, it was for the Council rather than the Court to form the relevant opinion and, provided that opinion was reasonably open to it on the evidence, it could not be the subject of legal challenge. Accordingly, his Honour then turned to the challenge by the appellant as to the validity of the resolution of 27 June 2005.

(f) Improper purpose

98 The appellant submitted that the Council’s resolution of 27 June 2005 was not a bona fide exercise of its powers but was made for an improper purpose, namely to provide a defence to the proceedings. His Honour correctly determined (at [96]) that the onus of proving that the resolution was not bona fide or was for an improper purpose rested upon the appellant. The only evidence that the appellant was able to point to in support of such an allegation was the fact that the proceedings had been commenced before the resolution was passed and that the Council’s business papers referred to the fact that it was defending those proceedings. His Honour considered that insufficient to justify a finding that the resolution of 27 June 2005 was neither a genuine nor proper exercise of the Council’s powers.

99 Although the appellant relied on authorities such as Lubrizol Corporation Ltd v Leichhardt Municipal Council (1960) 6 LGERA 203 at 210 and Long v Copmanhurst (1969) 19 LGERA 19 at 34, the correct approach to its submission is encapsulated in the following passage from the judgment of McHugh JA in Nettheim on behalf of Actors Equity of Australia v Minister for Planning and Local Government, Court of Appeal 21 October 1988 (unreported) where his Honour, with the agreement of Samuels JA and Needham AJA, observed (omitting citations):

”The appellant placed reliance on a series of cases where the Courts have held that decisions by administrative authorities were invalid because they were made with the intention of flaunting legal proceedings … These cases are authority for the proposition that an exercise of power by an administrative body made with the intention of achieving the collateral purpose of thwarting pending or potential legal proceedings, is invalid. However, the proposition has no application unless the evidence establishes that there was a purpose of thwarting the legal proceedings and that it was a substantial purpose in the sense that no attempt would have been made to exercise the power if the administrative authority had not desired to thwart the litigation … Here there is no evidence of a purpose of thwarting the litigation.”

100 Although the appellant re-agitated this issue on the appeal, that challenge to his Honour’s decision must fail. His Honour correctly observed (at [97]) that not only did the appellant rely solely upon the fact that the resolution was passed after the litigation had been commenced, but also the comprehensive nature of both the Andrews report (which considered the need for open space in the vicinity) and the Robertson report (which concluded that there was insufficient information to justify the formation of an opinion that an appellant would suffer hardship if the land was not acquired within a reasonable time) provided a more than sufficient basis upon which it was open to the Council to form the opinions it did at its meeting on 27 June 2005.

101 In this respect, no attack was made on the bona fides of either the Andrew report or the Robertson report or to criticise or challenge the validity of their conclusions in the sense that it was not open to the authors of those reports to form the opinions recorded in them. Accordingly, his Honour rejected the appellant’s challenge to the validity of the Council resolution of 27 June 2005 and, in my opinion, was correct to do so.

(g) A reasonable time

102 His Honour noted that cl 19(3) did not include any specific time limit within which the Council was to form the relevant opinion if it was to avoid acquisition of the land. Although cl 19(4) refers to the formation of an opinion that the owner of the land would suffer hardship if the land was not acquired within a reasonable time, like cl 19(3) there was no specific time limit within which such an opinion was required to be formed. However, his Honour considered that there was a clear implication that in respect of both provisions the Council must form the relevant opinion within a reasonable time. The Council challenged this implication on the appeal. Further, what was a reasonable time in the circumstances was also the subject of dispute.

103 His Honour considered that what constituted a reasonable time would depend upon the circumstances of each case. The Council was entitled to make appropriate enquiries and to give “a proper, genuine and realistic consideration on the merits” to the issue prior to forming the necessary opinion.

104 In the present case the Council’s resolution of 27 June 2005 was made a little more than 18 months after the service of the first notice. The appellant provided information to the Council in relation to its claim for hardship prior to and on 27 July 2004. His Honour noted (at [100]) that there appeared to have been no communication between the Council and the appellant or between their legal representatives in respect of the notices until the proceedings were commenced on 15 February 2005.

105 It further appeared to his Honour from the internal memoranda received by the Council from PWC, who had been retained to advise it in relation to the hardship issue, that it was the source of the delay which his Honour considered to be unreasonable. On the evidence, he found that the Council did not prepare its final report or seek any further information from the appellant until after proceedings had commenced. Accordingly, his Honour found the delay on the part of the Council after July 2004 was unreasonable.

(h) The effect of the Council’s delay

106 This issue is of significance in the present case particularly with reference to the proper construction of cl 19(3). This is because it was submitted to the primary judge that after a reasonable time had elapsed and the Council had not formed the opinion referred to in cl 19(3), the obligation upon the Council to acquire the land crystallised. If this submission was correct, then it would not matter that at some later point in time the Council formed the necessary opinion. It would be too late.

107 However, his Honour rejected this construction of cl 19(3) in these terms (at [102]):

“These cases differ from the present case, where the Council retains a discretion to acquire the applicant’s land. Clause 19(3) and cl 19(4) pose a subjective test on which the obligation to acquire is based. The Court is not satisfied that, in the circumstances, delay could justify the orders which the applicant seeks, namely an order that the Council acquire the land. The applicant might be entitled to mandamus to require the Council to form opinions under cl 19(3) and 19.(4). However, where, as in the present case, the obligation to acquire the land is entirely dependent upon the opinion of the Council, a failure in this respect does not justify an order that the land be acquired.”

108 His Honour then concluded (at [103]) that since the Council had formed the relevant opinions under cl 19(3) and (4) on 27 June 2005, there was no utility in the Court being asked to make any declarations in the nature of mandamus. However, that lack of utility reflected upon the reasonableness of the appellant commencing the proceedings on 15 February 2005 “after a prolonged delay by the council considering the acquisition notices”. It is not entirely clear to what this last observation of his Honour was directed but, in all probability, it was directed to the issue of costs which his Honour reserved.

109 There is also some element of confusion in [102] of his Honour’s judgment, which I have set out above. However, as I understand it, his Honour rejected the appellant’s submission that the expiry of a reasonable time, without the Council opining that the need to acquire the open space constituted by the land had not yet been created by residential development in the vicinity, gave rise to an enforceable obligation on the Council to acquire the land. Rather, his Honour held that it gave rise only to a right in the appellant to seek an order in the nature of mandamus that the Council form the opinion referred to in both cl 19(3) and (4).

The issues on the appeal

(a) Must the Council upon receipt of an acquisition notice under cl 19(1) of the LEP, form an opinion by resolution specifically directed to the question of whether or not the need to acquire the land, the subject of the notice, has yet been created by residential development in the vicinity?

110 Although the appellant’s primary submission (which if answered in its favour is sufficient to dispose of the appeal) was that as the opinion referred to in cl 19(3) was not formed within a reasonable time of the receipt by the Council of the first notice, the Council’s obligation to acquire the land had at the expiration of that time crystallised or become unconditional, there is a precedent issue as to the nature of the opinion called for by that provision. The appellant submitted, and the primary judge found, that the Council was required to form an opinion upon the receipt of the notice within a reasonable time in that it could not rely upon its adoption of draft local environmental plans, contribution plans or other policy documents from which it could be gleaned that the Council had no need and no wish to acquire the land the subject of the notice for the purpose for which it was zoned (in the present case) as open space.

111 The Council submitted by way of Notice of Contention that his Honour erred in his construction of cl 19(3) (at [75]) that upon receipt of a notice to acquire under cl 19(1), the Council must undertake an enquiry into the need to acquire the land the subject of the notice and form an opinion as to whether any such need had yet been created by residential development in the vicinity. It submitted that the subject matter of cl 19(3) was not the specific land which was the subject of the notice under cl 19(1) but any or all land within the 6(c) zone. The opinion contemplated by cl 19(3) was not about any particular land but the need for open space generated by local development. It is not the land but the need which was the subject of the opinion. Accordingly, opinions formed by the Council in respect of the need for local open space generated by residential development formed at various times, whether before or after the receipt of the notice, such as in revising the zoning of land the subject of a cl 19(1) notice or in the preparation of s.94 contribution plans, were operative opinions for the purposes of cl 19(3).

112 It was thus submitted that as the purpose of reserving to Council the timing of acquisition was to ensure the control of the provision of open space in an orderly way, the opinion to which cl 19(3) related would usually be formed in the context of planning for open space provisions such as in contribution plans, new draft local environmental plans and the like. Accordingly, the provision envisaged or included a determination of need that had already been made when the notice was served.

113 The Council’s submission went so far as to assert that the express subjection of cl 19(2) to subclause (3) suggested that the service of a notice of acquisition was premature unless and until the Council had decided that the locality required additional open space unless a hardship case had been made out. Certainly, so it was submitted, each notice was ineffective until the Council had formed the necessary opinion under cl 19(3) absent a positive opinion on the issue of hardship. It was further submitted that his Honour had implied that the opinion referred to in cl 19(3) must be formed within a reasonable time and that this was the product of his construction that what was referred to as a fresh needs opinion must be made upon service of the notice.

114 But even if the opinion was required to be formed within a reasonable time, its expiry must be assessed in a planning context which required the identification of the relevant open space, the relevant vicinity, the residential development in that vicinity and the need, if any, for that open space. This, it was submitted, would involve the collection of data of various types in order to enable a recommendation to be made to the Council as to whether the relevant need for the acquisition of the land, the subject of the notice, had yet been created. In other words, so the submission went, the opinion to which cl 19(3) related could not be driven by the timing of the notice but the intrinsic difficulty of and the factors relevant to the determination of the question of need in a planning context.

115 In any event, it was submitted that the primary judge made no finding in terms that the needs opinion was not formed within a reasonable time. His finding in [100] that the delay on the Council’s part after July 2004 was unreasonable was made in the context of the hardship issue. Therefore, he had made no finding as to whether the needs opinion required by cl 19(3) was not formed within a reasonable time.

116 In my opinion the respondent’s submissions should be rejected. Although what is a reasonable time will depend upon the particular circumstances of each case, I find it impossible to construe cl 19(3) or, for that matter cl 19(4), upon the basis that the opinions to which they refer can be formed by the Council at any time after receipt of a notice pursuant to cl 19(1) and that it is irrelevant how long the formation of those opinions is delayed.

117 My reasons for that conclusion are as follows. First, cl 19(1) empowers an owner of land within the relevant zones to give notice in writing requiring the relevant authority (in this case the Council) to acquire land within those zones at any time. Subject only to subclause (3) and an immaterial exception, cl 19(2) obliges the authority on receipt of the notice to acquire the land the subject of that notice.

118 Second, in the case of land within zone 6(c), the Council’s obligation to acquire the land the subject of the notice is made subject only to subclause (3). In other words, there is a conditional obligation upon the Council to acquire the land that it can avoid only by fulfilling that obligation.

119 Third, the effect of subclause (3) is to relieve the Council from the obligation under cl 19(2) of acquiring land the subject of a notice within zone 6(c) if, in its opinion,

yet

120 Fourth, subclause (3) has no operation even if the opinion referred to therein is formed and the Council must acquire the land pursuant to subclause (2) where it is of the opinion that the owner of the land will suffer hardship if the land is not acquired within a reasonable time. The reference to a “within a reasonable time” must be to the receipt of the notice. That being so, it is clear that the Council is required to form the relevant opinion referred to in subclause (4) within a reasonable time of the receipt of the notice. Otherwise, the purpose of subclause (4) in obliging the Council to acquire land within zone 6(c) where the owner will suffer hardship if the land is not so acquired would be set at nought.

121 Fifth, the critical word in subclause (3) is “yet”. That word provides a connection between the formation of the opinion and the receipt by Council of the notice to acquire. In other words, the Council is not required to acquire land within zone 6(c) if, in its opinion, the need for the open space, being the land the subject of the notice, has not “yet” been created; that is, at the time that the notice is received.

122 Sixth, it is for this reason that the proper construction of subclause (3) requires the opinion to be formed within a reasonable time of the receipt of the notice. Otherwise it would be open to the Council to form the opinion that there was no need created at the time that it formed its opinion which may, as in this case, be 18 months after the receipt of the notice in circumstances where there was such a need at the time the notice was received but which had since lapsed.

123 Seventh, the primary source of the Council’s obligation to acquire land the subject of a notice given pursuant to cl 19(1) remains cl 19(2). Subclause (3) directs attention to whether, at the time the notice is received, there is then a need to acquire the land created by residential development in the vicinity. Such a requirement can only be fulfilled if, upon receipt of the notice, the Council forms the relevant opinion with respect to the particular land the subject of the notice. Whether or not at the time the notice is received a need for the open space has been created can only be determined at the time, or within a reasonable time, of receipt.

124 Eighth, accordingly it follows that not only must the opinion be formed within a reasonable time, it must also be a specific opinion formed after receipt of the notice and relating expressly to whether a need for the acquisition of that open space has then been created by residential development in the vicinity.

125 I would therefore reject the respondent’s submissions that such an opinion can be formed prior to the receipt of the notice or that such an opinion can be formed by reference to general planning and other policy documents of general application.

126 I turn now to the question of whether a reasonable time had elapsed between 9 December 2003 and the formation of the relevant opinion by the Council on 27 June 2005. I would accede to the Council’s submission that his Honour’s finding (at [100]) that delay on the part of the Council after July 2004 was unreasonable was directed to the expiration of a reasonable time within which the Council was required to form an opinion with respect to the hardship issue. The reference to July 2004 is probably based upon the last communication of information relating to that issue by the appellant to the Council under cover of Mr Ferris’ letter of 27 July 2004.

127 But even if that was not so, there can be no doubt in my opinion that a reasonable time for Council to have formed the opinion required by cl 19(3) if it was to avoid the obligation to acquire the land had well and truly expired by July 2004. In fact, in my opinion, the reasonable time expired well before that date. In this regard, the evidence did not support the conclusion that the delay between 9 December 2003 and 27 June 2005 was for a considered reason as distinct from being in consequence of neglect or oversight: Bidjara v Indigenous Land Corporation (2001) 106 FCR 203 at 208 [20]-[21].

128 If, as the Council submitted, it had already formed the opinion that no need had yet been created by residential development in the vicinity for the acquisition of the land prior to the receipt of the notice, then a reasonable time within which to form the opinion required by cl 19(3) would have expired within months of 9 December 2003 when the first notice was received. At the very latest, a reasonable time would have expired when the 2004 LEP was gazetted in March 2004 when the land was rezoned.

129 Given that the present proceedings were brought in Class 4 of the Court’s jurisdiction, the appeal from the primary judge is an all grounds appeal. All the evidence is documentary. If his Honour did not make the necessary finding in that the one he did make was directed to the formation of the opinion required by cl 19(4) rather than that required by cl 19(3), then it is open to this Court to make the necessary finding of fact being in as good a position to do so as the primary judge: Warren v Coombes (1979) 142 CLR 531 at 552.

130 What then is the legal consequence of the Council’s failure to form the opinion required by cl 19(3) within a reasonable time? According to his Honour that did not render absolute or unconditional the Council’s obligation to acquire the land but, rather, merely gave rise to an enforceable duty on the Council to form the opinion. In my view his Honour erred in so holding.

131 The respondent submitted that the construction of cl 19(3) could give rise to four possibilities. First, that any obligation to acquire the land could not survive the formation of the needs opinion within a reasonable time. Second, that there is no obligation to acquire unless and until the council has determined whether or not to form the needs opinion. Third, no obligation to acquire the land arises under cl 19(2) provided the needs opinion is formed under subclause (3) irrespective of the date upon which that opinion arises, however distant. Fourth, an obligation to acquire arises under cl 19(2) subject only to the needs opinion being formed under subclause (3) within a reasonable time. It is this last construction for which the appellant contends with the rider that once a reasonable time has expired, Council loses the right by subsequently forming the needs opinion to avoid the obligation under cl 19(2) to acquire the land. Although the first construction is clearly correct, acceptance of the fourth requires rejection of the second and third possibilities.

132 The Council submitted that the appellant’s contention that the obligation to acquire arose once a reasonable time elapsed after receipt of the notice and, within that time, the Council had not formed a needs opinion, was contrary to the literal terms of cl 19(3). This was because once the needs opinion was formed, nothing in the LEP (including cl 19(2) and subject to c.19(4)) could compel acquisition. Accordingly, provided the Council formed a needs opinion before there was any order of the Court to acquire the land, no obligation to acquire arose.

133 The Council further submitted that if the temporal element in cl 19(2) governs the other subclauses, then the enquiry must be to ascertain whether, at the date of service of the notice, the Council held a needs opinion. Such a construction would enable the Council to rely on its various pre-notice planning decisions concerning the satisfaction of its open space needs without the necessity of acquiring the land.

134 Although cl 19(2) contains a temporal element in that it obliges the relevant authority to acquire the land the subject of the notice upon its receipt, that temporal element is subject to subclause (3) which provides an exception to the obligation of the Council to acquire the land on receipt of the notice if the needs opinion is formed.

135 There is nothing inconsistent with the temporal requirement of cl 19(2) in applying a different temporal requirement in subclause (3) with respect to the time within which the Council must, if it so determines, form the needs opinion. In other words, the obligation under cl 19(2) to acquire the land on receipt of the notice is suspended for a reasonable time within which the Council may, if it wishes, form the needs opinion. If it does, then the obligation to acquire under cl 19(2) is negated.

136 However, it must be observed that cl 19(3) does not place any obligation or duty upon the Council to form the needs opinion. Whether it does so or not is entirely a matter for it. The onus to form the opinion rests squarely on it. If it does form the opinion within a reasonable time of receipt of the notice, then it avoids the obligation under cl 19(2) to acquire the land. If it does not, then in my opinion what was a conditional obligation under cl 19(2) becomes unconditional: cf NSW Aboriginal Land Council v the Minister (1988) 14 NSWLR 685 at 694.

137 Nevertheless, the Council submitted that the only effect of the expiration of a reasonable time was to give rise to an obligation on its part to give proper consideration to the notice to acquire so that the only remedy was an order in the nature of mandamus which in the present case was never sought. If this be so, then it involves acceptance of the second possible construction of cl 19(3) referred to in [125] above. This is what the primary judge decided but, with respect, he was in error in doing so. This is because at no time, either upon receipt of the notice or upon the expiry of a reasonable time after receipt of the notice, was there an obligation under cl 19(3) on the part of the Council to form the needs opinion or a right in the appellant to have that opinion considered, let alone formed. The Council was empowered to form the opinion and if it did, certain consequences would follow. But if it did not, then it could not avoid the obligation to acquire.

138 The Council placed reliance on the following passage from the judgment of Brennan CJ in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 373-374 [38] where, omitting citations, his Honour said:

“A third kind of provision must be distinguished from provisions which restrict the ambit of the power and provisions which prescribe conditions on its availability for exercise. A provision may require the repository or some other person to do or refrain from doing something (sometimes within a period prescribed by the statute) before the power is exercised but non-compliance with the provision does not invalidate a purported exercise of the power: the provision does not condition the existence of the power. Such a provision has often been called directory, in contra-distinction to mandatory, because it simply directs the doing of a particular act (sometimes within a prescribed period) without invalidating an exercise of power when the act is not done or not done within the prescribed period. The description of provisions as either mandatory or directory provides no test by which the consequences of non-compliance can be determined; rather, the consequences must be determined before a provision can be described as either mandatory or directory.”

139 As I understand this submission, cl 19(3) required the Council to form the needs opinion or to refrain from doing so before it was required by cl 19(2) to acquire the land. However, as I have already observed (at [136]), cl 19(3) did not require the Council to determine whether or not to form the needs opinion although it was open for it to do so if it was so minded. Contrary to the Council’s submission, there was no obligation imposed by cl 19(3) on the Council to give proper or any consideration to the notice to acquire in the sense of determining within a reasonable time whether or not to form the needs opinion. That is not to say that it might not do so: only that it was not obliged to do so. Accordingly, the giving of consideration whether or not to form a needs opinion was not a condition precedent to the obligation to acquire the land in the event that no opinion was formed within a reasonable time. Either the Council formed the needs opinion within a reasonable time or it did not. If it had done so, then it was relieved of acquiring the land. As it did not, then it was obliged to acquire the land. In other words, it simply could not approbate and reprobate.

140 In other words, the terms of cl 19(3) are permissive: hence the use of the preposition “if” in the phrase “if in the opinion of the Council…”. The primary judge and the Council would construe the subclause, as the appellant submitted, as relieving the Council of the obligation under cl 19(2) to acquire the land “unless in the opinion of the Council the need for open space has been created by residential development in the vicinity”. Such a construction would rewrite the provision and convert the requirement for a negative opinion into a positive opinion. Such an approach is unsustainable.

141 The Council nevertheless placed reliance on the decision of the Privy Council in Wang v Commissioner of Inland Revenue [1995] 1 All ER 367 at 373(f), 374(j) and 377(d)-378. Lord Slynn of Hadeley, who delivered the judgment of the Board, referred at 373(f) to s64 of the Hong Kong Inland Revenue Ordnance, subsection (1) of which provided for a person to object to an assessment stating precisely the grounds of objection within one month after the date of the notice of assessment. By subsection (2) it was provided:

“On receipt of a valid notice of objection under subsection (1) the Commissioner shall consider the same and within a reasonable time may confirm, reduce, increase or annul the assessment objected to.”

142 The taxpayer contended first, that the Commissioner had failed to respond “within a reasonable time” to the taxpayer’s objections to the assessment and, second, that if that was correct then the two purported determinations of liability for tax based on the assessment should be quashed since because of the delay the Commissioner had no jurisdiction to deal with them. Accordingly, if their Lordships concluded that the Commissioner had not acted “within a reasonable time”, the question arose as to whether, after the expiry of a reasonable time, the Commissioner lacked jurisdiction to make any determination.

143 His Lordship, after reviewing the authorities cited by the taxpayer, observed that when a question such as in the present case arises – an alleged failure to comply with a time provision – the appropriate questions to ask were, first, whether the legislator intended the person making the determination to comply with the time provision, within a fixed time or a reasonable time; and second, if so, did the legislator intend that a failure to comply with such time provision would deprive the decision-maker of jurisdiction and render any decision which he purported to make null and void.

144 His Lordship concluded (at 377) that in the present case, the legislator did intend that the Commissioner should make his determination within a reasonable time. At the same time, the legislation imposed on the revenue authorities, including the Commissioner, the duty of assessing and collecting the relevant tax. If the Commissioner failed to act within a reasonable time he could be compelled to act by an order of mandamus. However, it did not follow that his jurisdiction to make a determination disappeared the moment a reasonable time had elapsed. Such a result would be surprising as it would mean that the Commissioner had jurisdiction to make the determination just before, but not just after, the expiration of a reasonable time.

145 His Lordship did not consider that that was the effect of a failure to comply with the obligation to act within a reasonable time in the particular legislation. Such a result would not only the deprive the government of revenue, it would also be unfair to other taxpayers who needed to shoulder the burden of government expenditure; the alternative result (that the Commissioner continued to have jurisdiction) did not necessarily involve any real prejudice to the taxpayer in question by reason of the delay.

146 Lord Slynn then concluded (at 377-378):

“Their Lordships accordingly consider that in the context of this legislation a failure to act within a reasonable time (had it occurred) would not have deprived the Commissioner of jurisdiction to make any determination by him null and void.”

147 There are a number of differences between the legislative provisions in Wang and cl 19(3) of the LEP. First, s 64(2) of the Ordnance provided that on the receipt of a valid notice of objection, the Commissioner “shall consider the same and within a reasonable time may” confirm or annul the assessment objected to. Accordingly, the provision placed squarely on the Commissioner the obligation to consider the objection and to act upon it within a reasonable time.

148 Second, it would have serious revenue implications which the legislature could not have intended if the failure to consider the objection and within a reasonable time to make a determination resulted in the Commissioner no longer having jurisdiction to subsequently do so.

149 Third, their Lordships’ decision that a failure to act within a reasonable time would not deprive the Commissioner of jurisdiction to make a determination was specifically stated to be “in the context of this legislation”. So much is consistent with the approach in Project Blue Sky as to whether of an act performed in breach of a statutory provision attracts invalidity.

150 Fourth, cl 19(3) is both in its terms and intent entirely different from the statutory provision considered in Wang. First, it does not place any express obligation upon the Council to form the relevant opinion. Second, subclause (3) is an exception to subclause (2) under which the Council is obliged to acquire the land on receipt of the notice. Third, the onus is placed upon the Council, if it wishes to avoid that obligation because it did not at that time have a need for the relevant open space to specifically form an opinion to that effect. It is only necessary for it to form the opinion that the need for the open space in question has not yet been created by residential development in the vicinity.

151 Fifth, if such a need has been created, then nothing in cl 19(3) requires the Council to form an opinion to that effect: if it does not form the negative opinion, then it is not required to form a positive opinion before it is obliged to acquire the land pursuant to cl 19(2).

152 Finally, the Council relied on the decision of Beaumont J in Naes v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 2 at [11]-[16] where his Honour held that even if there was inexcusable delay on the part of the Department, the only appropriate remedy would have been an application for mandamus compelling the relevant officer upon whom was placed the statutory duty prescribed by s198 of the Migration Act 1958 to remove the applicant “as soon as [is] reasonably practicable” in the circumstances of the applicant’s case.

153 The relevant statutory provision in that case was in the following terms:

“An officer must remove as soon as reasonably practicable an unlawful non-citizen who asks the Minister, in writing, to be so removed.”

154 In [12] Beaumont J referred to the principles explained by Murphy J in Re Federal Commissioner of Taxation; Ex parte Australena Investments Pty Limited (1983) 58 ALR 577. That was an application for mandamus to compel the Commissioner to deal in a timely fashion with a taxpayer’s objection to the Commissioner’s assessment of tax. Murphy J (at 578) considered that the Commissioner had a public duty to allow or disallow an objection within a reasonable time. Although the Commissioner submitted that the duty was only to consider the objection or, at its highest, a duty to give diligent, honest consideration to it, there was no time limit, reasonable or otherwise, in which he was required to determine the objection.

155 His Honour rejected this argument holding that where time limits had not been specified, a reasonable time must be implied. Without a time limit, any duty would be illusory. In the circumstances of that case, Murphy J refused mandamus on the ground that the delay involved had been adequately explained.

156 Beaumont J noted (at [14]) that Murphy J did not hold that if undue and unexplained delay had been demonstrated it would have had the consequence that the taxpayer’s objection was to be treated as allowed. To do so would have undermined the legislative scheme for dealing with the merits of the Commissioner’s assessment. The point, however, as his Honour observed in [15], was that Murphy J made it clear that where inexcusable delay had been demonstrated the Court would issue mandamus compelling the Commissioner to perform his statutory duty by considering the objection and ruling on it as soon as reasonably practicable. That form of relief would give effect to, rather than undermine, the statutory scheme.

157 Again, the legislative provisions with which Beaumont J was concerned on the one hand and Murphy J on the other, imposed in the one case an express statutory duty on the relevant officer to remove an unlawful non-citizen from Australia as soon as practicable and, in the other, to consider a taxpayer’s objection and allow or disallow it within a reasonable time. In each case the statutory context bore no relation to cll 19(2) and (3) of the LEP. I repeat that it is cl 19(2) that imposes a statutory duty upon the Council to acquire the land subject, relevantly, to subclause (3). That statutory duty can be enforced by an order in the nature of a mandamus as the appellant seeks to do.

158 Clause 19(3) on the other hand imposes no statutory duty upon the Council to do anything. It does not oblige the Council to consider the acquisition notice; nor does it oblige the Council to consider whether or not to form the needs opinion. The Council may form that opinion and if it does so within a reasonable time, it will avoid the statutory duty or obligation to acquire the land pursuant to cl 19(2). But if it does nothing within a reasonable time as in the present case, then it was bound to perform its statutory duty under cl 19(2) to acquire the land, a duty which is enforceable in the manner to which I have referred.

159 For the foregoing reasons, therefore, in my opinion the primary judge erred in holding that the failure of the Council to form the needs opinion within a reasonable time did not give rise to an obligation on it to acquire the land but only an obligation to require it to form that opinion which could be enforced by an order in the nature of a mandamus.

160 It may well be, as the Council submitted, that the underlying purpose of cl 19(3) is to give it the right to determine the time at which land zoned 6(c) which is the subject of an acquisition notice, should be acquired. But it does not follow that if the Council does not form the relevant negative opinion and simply does nothing as in the present case, that it is not deprived of forming that opinion at a time of its choosing, however distant. The Council is given a reasonable time within which to form the opinion that the need to acquire the land for open space has not yet been relevantly created. In that sense it has control of the timing of the acquisition of the land. But it requires the positive formation of the opinion that the need for that land as open space has not yet been created. If it fails to do so within a reasonable time then it must acquire the land pursuant to cl 19(2) as its power to avoid that obligation pursuant to subclause (3) is spent.

161 Accordingly, in my opinion Grounds of Appeal 1 and 2 should be upheld with the consequence that the appellant is entitled, subject to any question of discretion, to the relief claimed by it in its Further Amended Application.

Was the primary judge in error in holding that the Council validly formed the opinion by its resolution of 27 June 2005 that the appellant would not suffer hardship if the land were not acquired within a reasonable time?

162 Given that in my opinion Grounds 1 and 2 of the Amended Notice of Appeal should be upheld, the validity or otherwise of the Council’s resolution of 27 June 2005 becomes irrelevant. However, I shall deal with the issue shortly.

163 The appellant’s challenge to that resolution has two elements. The first was that the resolution pursuant to which the Council formed the opinion that the owner of the land will not suffer hardship if it is not acquired within a reasonable time, was one in respect of which the appellant was denied procedural fairness. For the reasons given by the primary judge to which I have referred in [92] above, there is no substance in this ground of challenge.

164 The second element was that the whole of the resolution was invalid upon the ground that it was colourable, being made for the purpose of providing a defence to the appellant’s claim in the proceedings; that it was not a bona fide exercise by the Council of its power “but merely an attempt to give an appearance of rectitude to actions which in fact lacked it”; and, finally the circumstances in which the resolution was passed were not achieved after a “proper, genuine and realistic consideration upon the merits”.

165 The primary judge considered that each of these arguments should be rejected and so do I. As his Honour noted, the only evidence advanced to support the allegations in question was the actual timing of the resolution. Of itself, that was insufficient to justify a finding of improper purpose or lack of bona fides. This is because, as the primary judge observed at [97] of his judgment, the Council had before it comprehensive reports by Mr Andrews and Mr Robertson on both issues, the contents of which were not challenged and upon which it was open to the Council to rely in support of the opinions which it resolved to adopt.

166 In any event, the hardship resolution is of no moment even though his Honour seemed to have found (at [100]) that the Council was required to determine whether to form the opinion referred to in cl 19(4) within a reasonable time which expired in July 2004. However, cl 19(4) is in quite different terms to cl 19(3). The latter when combined with cl 19(2) imposed an obligation on the Council to acquire the land unless within a reasonable time it had formed the needs opinion.

167 But it is only if the Council forms the hardship opinion in a timely way that cl 19(4) has any relevance. As no such opinion was formed within a reasonable time in the present case, then it became unnecessary for the Council to express an opinion one way or another with respect to whether or not the appellant would suffer hardship if the land was not acquired. It may well be that if the needs opinion is formed and a claim is made by an owner who has given a cl 19(1) notice that it will suffer hardship if the land is not acquired within a reasonable time, the Council may be under an implied duty to consider whether it would form a hardship opinion or not. However, it is unnecessary to determine that question in the present case.

The question of discretion

168 The effect of the failure of the Council within a reasonable time to a form the needs opinion is that it was bound to acquire the land pursuant to cl 19(2). It failed to do so and, therefore, was in breach of the Act: see s122(a)(i) and (b)(ii); Port Stephens Council v Fidler (1997) 94 LGERA 298. Pursuant to s124 of the Act where the Court is satisfied that a breach has been committed, it is empowered to make such orders as it thinks fit to remedy that breach. Although it was not contested that the Court had a discretion whether to grant the relief claimed by the appellant in its Further Amended Application, this Court held in Fiddler (at 303) that in a case such as the present it was not open to the LEC at final instance, or to this Court on an appeal, to refuse to make an order for compulsory acquisition as a matter of discretion.

169 Nevertheless the Council submitted that the Court should exercise its discretion and refuse the relief sought. It was submitted that the Council had on 27 June 2005 resolved that no need for the acquisition of the land had been created by residential development in the vicinity and, in any event, the land had been rezoned in a manner which did not attract the right of the landowner to serve an acquisition notice. As it was clear that the land was not needed by the Council for open space purposes, it would be an unreasonable burden upon its ratepayers if the Court was now to order that the Council acquire the land.

170 Further, the rezoning of the land had added value to it as a consequence of the uses which were now permissible with consent. Accordingly, there was no commercial reason why the appellant should be able to force the Council to acquire it against its will.

171 The Council therefore submitted that even if there was a right in the appellant to require it to acquire the land, that right had been rendered defeasible by the resolution of 27 June 2005 and the making of the 2004 LEP in March 2005. However, in my opinion, the appellant’s right to have the Council acquire the land and the Council’s obligation to do so, are indefeasible: the only question is whether as a matter of discretion this Court should grant relief pursuant to s124(1) of the Act. In my view, upon the assumption that the Court has a discretion, it should exercise its discretion in favour of granting the relief claimed. The Council had the opportunity to form the needs opinion but, as I indicated in [172] above, appears not to have done so as it wished the land to continue to operate as an airport. That was not a proper basis upon which to avoid forming the needs opinion if the Council wished to be relieved of the obligation to acquire the land. The necessity to form that opinion was well known to Mr Farrell who, in his internal memorandum of 29 December 2003, sought a report from the appropriate planning officers on that very question. It was his intention that that report be completed in time for inclusion in the Standing Committee Business Paper of 2 February 2004, but nothing happened notwithstanding that Ms Rogers on 13 January 2004, and confirmed on 24 February 2004, recommended that the land be acquired as there was a need for it as open space.

172 Furthermore, although the appellant indicated that it would prefer to have the land rezoned for residential and commercial purposes than have it acquired, it is quite clear from the documentary evidence that neither the Council nor its planning officers considered that there was any possibility of any such rezoning. This is more than apparent from the fact that on 19 March 2004, the land was rezoned by the 2004 LEP in a manner which was the very antithesis of a residential/commercial zoning. What is more, Mr Ferris made it clear to the Council in his letter of 27 May 2004 that the appellant was not prepared to do anything to jeopardise its acquisition notices or the Council’s obligation to acquire the land pursuant thereto.

173 The Council did not attend to forming the needs opinion notwithstanding that it was fully aware that if it was to avoid the obligation to acquire the land, it was required to do so irrespective of whether the appellant could make out a claim for hardship. It was only in response to the commencement of proceedings in February 2005 that the Council started to take a defensive position.

174 As I have observed, there was no communication between the Council and the appellant between July 2004 and March 2005, correspondence only recommencing after the institution of the present proceedings.

175 The appellant’s right to have the land acquired and the Council’s obligation to acquire it crystallised, in my opinion, in early 2004. Although the land has been rezoned, for the reasons to which I have referred in [34] and [35] above, the uses permissible with consent do not appear to me to provide any commercial advantage to the appellant greater than was the case when the land was zoned 6(c). Certainly, the Council led no evidence to support the contention that the appellant was better off under the 2004 LEP. It had its opportunity to avoid the obligation to acquire the land but failed to take advantage of it. In my opinion, the Council should not now be permitted to reap that advantage to which it is otherwise not disentitled by requesting this Court to exercise its discretion to deny the appellant the relief to which it is otherwise entitled.

176 Accordingly, I would reject the Counsel’s submission that as a matter of discretion this Court should not grant the appellant the relief claimed by it in its Further Amended Application.

Conclusion

177 For the foregoing reasons I would propose the following declarations and orders:

(a) Appeal allowed;

(b) Set aside the orders made by Cowdroy J on 17 February 2006;

(c) Declare that the respondent is required to acquire from the appellant Lots 939, 1576 and 1639 in DP 75233 (the land);

(d) Order that the respondent make application to the Minister for Local Government pursuant to s187(2) of the Local Government Act 1993 for approval to give a proposed acquisition notice to the appellant pursuant to the Land Acquisition (Just Terms Compensation)Act 1991 in respect of the land;

(e) Order that upon receipt of such approval from the Minister, the respondent forthwith give to the appellant a proposed acquisition notice under the Land Acquisition (Just Terms Compensation) Act 1991 in respect of the land;

(f) Order that the respondent acquire the land as soon as practicable after the expiration of 90 days from the giving to the appellant of the proposed acquisition notice;

178 McCOLL JA: I agree with Hodgson JA.

**********

CITATION:	Aeropelican Air Services v Lake Macquarie City Council [2006] NSWCA 376
HEARING DATE(S):	1 November 2006
JUDGMENT DATE:	20 December 2006
JUDGMENT OF:	Hodgson JA at 1; Tobias JA; McColl JA
DECISION:	Appeal dismissed with costs
CATCHWORDS:	ENVIRONMENT AND PLANNING – local environment plan – provision for acquisition of land by Council – notice requirement – notice given but land not acquired – construction of provision – principles
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979 Lake Macquarie Local Environmental Plan 2004 Land Acquisition (Just Terms Compensation) Act 1991 Local Government Act 1993
CASES CITED:	Bidjara v Indigenous Land Corporation (2001) 106 FCR 203 Long v Copmanhurst (1969) 19 LGERA 19 Lubrizol Corporation Ltd v Leichhardt Municipal Council (1960) 6 LGERA 203 Naes v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 2 Nettheim on behalf of Actors Equity of Australia v Minister for Planning and Local Government, Court of Appeal 21 October 1988 unreported NSW Aboriginal Land Council v the Minister (1988) 14 NSWLR 685 Port Stephens Council v Fidler (1997) 94 LGERA 298 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 Wang v Commissioner of Inland Revenue [1995] 1 All E R 367 Re Federal Commissioner of Taxation; Ex parte Australena Investments Pty Limited (1983) 58 ALR 577 Warren v Coombes (1979) 142 CLR 531
PARTIES:	Aeropelican Air Services Lake Macquarie City Council
FILE NUMBER(S):	CA 40107/06
COUNSEL:	A: T Hale SC / J Kildea R: T Robertson SC / P J Bambagiotti
SOLICITORS:	A: Paul Hines, Sydney R: Peter Rees, Spears Point
LOWER COURT JURISDICTION:	Land & Environment Court
LOWER COURT FILE NUMBER(S):	LEC 40107/05
LOWER COURT JUDICIAL OFFICER:	Cowdroy J
LOWER COURT DATE OF DECISION:	17 February 2005
LOWER COURT MEDIUM NEUTRAL CITATION:	Aeropelican Air Services Pty Ltd v Lake Macquarie Council [2006] NSWLEC 18