Alexander v Yass Valley Council

[2011] NSWLEC 148

Land and Environment Court

New South Wales

Medium Neutral Citation:	Alexander v Yass Valley Council [2011] NSWLEC 148
Hearing dates:	22 July 2011, 3 - 4 August 2011
Decision date:	01 September 2011
Jurisdiction:	Class 4
Before:	Pain J
Decision:	The summons filed on 28 January 2011 is dismissed. Costs reserved.
Catchwords:	JUDICIAL REVIEW - whether apprehension of bias established where conflict of interest in council exercising functions under Environmental Planning and Assessment Act 1979 in relation to land owned by it - whether failure to properly consider heritage issues
Legislation Cited:	Environmental Planning and Assessment Act 1979 s 23G, s 23I, s 79C Local Government Act 1993 s 8, s 21, s 22, s 23A, s 45 Roads Act 1993 Development Act 1993 (SA) s 34
Cases Cited:	Anderson v Director-General, Department of Environment and Climate Change [2008] NSWCA 337; (2008) 163 LGERA 400 Attorney-General (NSW) v Quin [1990] HCA 21; (1990) 170 CLR 1 Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411 Belmorgan Property Development Pty Ltd v GPT RE Ltd [2007] NSWCA 171; (2007) 153 LGERA 450 Calardu Penrith Pty Ltd v Penrith City Council [2010] NSWLEC 50 Capital Airport Group Pty Ltd v Director-General of the NSW Department of Planning (No 2) [2011] NSWLEC 83 Dunlop v Woollahra Municipal Council [1975] 2 NSWLR 446 Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 F & D Bonaccorso Pty Ltd v City of Canada Bay Council (No 2) [2007] NSWLEC 537; (2007) 158 LGERA 250 Gwandalan Summerland Point Action Group Inc v Minister for Planning [2009] NSWLEC 140; (2009) 168 LGERA 269 Hot Holdings Pty Ltd v Creasy [2002] HCA 51; (2002) 210 CLR 438 Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488 Kindimindi Investments Pty Ltd v Lane Cove Council [2006] NSWCA 23; (2006) 143 LGERA 277 Kioa v West [1985] HCA 81; (1985) 159 CLR 550 Laws v Australian Broadcasting Tribunal [1990] HCA 31; (1990) 170 CLR 70 Lower Hutt City Council v Bank [1974] 1 NZLR 545 Marrickville Metro Shopping Centre Pty Limited v Marrickville Council [2009] NSWLEC 109 Marrickville Metro Shopping Centre Pty Ltd v Marrickville Council [2010] NSWCA 145; (2010) 174 LGERA 67 McGovern v Ku-ring-gai Council [2008] NSWCA 209; (2008) 72 NSWLR 504 Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 Minister for Immigration v Jia Legeng [2001] HCA 17; (2001) 205 CLR 507 Minister for Immigration and Citizenship v SZJSS [2010] HCA 48; (2010) 273 ALR 122 Murlan Consulting Pty Ltd v Ku-ring-gai Council (No 4) [2010] NSWLEC 95 Najjar v Haines (1991) 25 NSWLR 225 Parramatta City Council v Hale (1982) 47 LGRA 319 Re Minister for Immigration and Multicultural Affairs; Ex parte Epeabaka [2001] HCA 23; (2001) 206 CLR 128 Re Refugee Review Tribunal; Ex parte H [2001] HCA 28; (2001) 179 ALR 425 Schroders Australia Property Management Ltd v Shoalhaven City Council [2001] NSWCA 74 Sidney Harrison Pty Ltd v City of Tea Tree Gully [2001] SASC 27; (2001) 112 LGERA 320 S & M Motor Repairs Pty Ltd v Caltex Oil (Aust) Pty Ltd (1988) 12 NSWLR 358 Sweetwater Action Group Inc v Minister for Planning [2011] NSWLEC 106
Texts Cited:	John Griffiths SC, "Apprehended Bias in Australian Administrative Law" (2010) 38 Federal Law Review 353
Category:	Principal judgment
Parties:	Roy Alexander (Applicant) Yass Valley Council (First Respondent) Rossi Street Development Pty Ltd (Second Respondent) (submitting appearance)
Representation:	Mr P Larkin (Applicant) Mr P Clay (First Respondent) Woolf Associates (Applicant) Williams Love & Nicol Lawyers (First Respondent) Meyer Vandenberg Lawyers (Second Respondent)
File Number(s):	40067 of 2011

Judgment

Judicial review of Council decision to grant development consent

1. Mr Alexander, the Applicant, is challenging in judicial review proceedings the grant of development consent by Yass Valley Council (the Council), the First Respondent, to Rossi Street Development Pty Ltd, the Second Respondent, on land owned by the First and Second Respondents on 27 October 2010. The Second Respondent filed a submitting appearance.

1. The Applicant is the registered proprietor of land in Rossi Street, Yass (the Applicant's land). The Second Respondent is the registered proprietor of land known as Lot 23 in DP 1110775 also in Rossi Street, Yass (the Second Respondent's land). The Council is the registered proprietor of land known as Lot 22 in DP 1110775 also in Rossi Street, Yass (the Council's land). The Applicant's land, the Council's land and the Second Respondent's land are contiguous.

1. The Second Respondent lodged development application number 91/2009 (the DA) in or about mid April 2009 with the Council. The DA sought consent for the development of the Council's land and the Second Respondent's land as "Multi-Unit Residential Development".

1. The Council, established pursuant to the Local Government Act 1993 (the LG Act), acted as consent authority under the Environmental Planning and Assessment Act 1979 (EPA Act) in the assessment and determination of the DA.

1. There are two grounds of challenge, one based on apprehension of bias and one alleging failure to consider heritage issues.

Agreed background facts

1. The parties tendered an agreed bundle of documents and helpfully agreed a statement of facts now set out. It is unnecessary to refer to many of the tendered documents as a result. The documents or matters not in the agreed statement are indicated in square brackets. Specific emails relied on in the Second Further Amended Points of Claim (SFAPOC) Sch A are also identified.

Conditional sale of Council land to Second Respondent

1. By letter dated 15 May 2008, Mr Chapman, of ATM Investments Group (a member of the development consortium) formally offered to purchase the Council land from the Council for $600,000 plus GST. Mr Chapman indicated that the Second Respondent owned the adjacent land and that it was the Second Respondent's intention, upon acquiring the Council land, to develop a multi-unit development upon the two lots.

1. The Council's selling agent, Mr Gray of Yass Real Estate, forwarded the offer to purchase to Mr Rowe of Council. Mr Gray stated: "While the offer is subject to council approval of a DA the purchaser is happy to negotiate with the Council a timeframe in which that DA will be lodged that will form part of the sale contract." Mr Gray also asked the Council to consider:

a. That the Second Respondent recently paid $400,000 to acquire the Second Respondent's land which was "significantly larger" than the Council land and would not require any demolition works.

b.   That any proposed development "will be in keeping with the council LEP and will be designed in conjunction with [Council] prior to the lodgement of the DA to ensure a smooth and fast transition to settlement."

1. Contracts for the sale of the Council land to the Second Respondent were exchanged on 15 August 2008. On 20 August 2008 Mr Davis of Davis Faulkner & Co, lawyers, who acted as conveyancer, forwarded to Council a copy of "Special Condition 4 - Development Approval". The following provisions are of relevance:

(a)   Clause 4.1 made the contract subject to "development approval by Council for a multi-unit residential development on the Land".

(b)   By clause 4.3, the Second Respondent agreed to lodge a development application with Council and use all reasonable endeavours "to pursue efficiently the applications and approvals".

(c)   Clause 4.6 entitled either party to terminate the contract by written notice at any time after 1 August 2009 "if the development application shall not have been approved by that date" or "upon refusal of the ... development application". Clause 4.7 provided for extension of the time for performance.

(d)   Clause 4.11 provided that, if the contract was terminated pursuant to clause 4.6, the deposit paid by the Second Respondent was to be refunded.

Progress of the Development Application

1. In or about mid April 2009 the Second Respondent lodged a DA. The DA sought consent for the development of the Council land and the Second Respondent's land as "Multi-Unit Residential Development" (the proposed development). The DA appears to be a standard form issued by the Council. It includes a section headed "Pecuniary Interest". The Second Respondent indicated that the Council did have such an interest in the DA, by reason of being the owner of the Council land.

1. A Post-lodgement Development Application Checklist was completed on 21 April 2009. In the "Additional Comments" section, the Council officer who completed the form stated: "one of the lots is owned by Council - peer review possibly required".

1. It appears that in or about May 2009 the DA was referred to a Council planning officer, Mr Rubbani.

1. Notification of the DA was given by advertisements placed in the Yass Tribune as well as by letter to proximate occupiers and landowners, including the Applicant. The advertisements and letters stated that: "It should be noted that this application involves land... which is owned by Yass Valley Council." They do not appear to have provided any further explanation of the arrangements that had been made between the Council and the Second Respondent in relation to the Council land.

1. On or about 27 May 2009 the Council received a written advice from a heritage advisor, Dr Kabaila (first heritage advice). Dr Kabaila outlined the historic and heritage values of Rossi Street. He then made the following statements regarding the proposed development:

The proposal has no consistency with its heritage setting and would, if it were to proceed, severely impact heritage values in the Yass CBD.

No heritage advice was requested at either pre-design or pre-lodgement stage. The design does not acknowledge location in a heritage town. Basic heritage design considerations are missing from the proposal.

A DA referral to the Yass and District Historical Society is recommended. More detailed advice for some of these considerations is attached. Heritage Impact Statements and an archival record are recommended to be lodged for any buildings proposed for demolition.

This DA is recommended for re-design.

1. Dr Kabaila then set out various heritage design aspects. These included:

(a)   "Height and scale - to respect the predominant scale (building height ...) of the heritage buildings in the vicinity in order to retain the prevailing scale of the item or Conservation Area. The impact of an inappropriately scale building cannot be compensated for by building form, design or detailing."

(b)   Various items to include in the proposal to consider heritage aspects in the design, including, relevantly, "[k]eeping to single storey".

(c)   "Building form (proportions) not in sensitive harmony with heritage setting. The drawings clearly show awkward proportions in some buildings. The "stretched" appearance of some elevations ... does not harmonise with the carefully thought-out proportions of the nearby historic cottages."

(d)   "Cumulative impact on development density - Height and bulk. The usual requirement in heritage related situations to keep a limit on height and bulk is to build no higher than single storey, or at most 'one and a half storeys' i.e. single-storey plus utilising roof space above, without the aspect of a single storey".

1. On 2 July 2009 Mr De Szell, Director of Planning and Environmental Services of the Council, forwarded the first heritage advice to the Second Respondent.

1. On 14 July 2009, the Yass & District Historical Society wrote to Mr Szell. Amongst other things, the letter stated: "Our members consider this proposal to be an example of the very worst type of a multi-residential development".

1. On 14 August 2009 a report prepared by Jefferson Godfrey Architects Pty Ltd (the Godfrey report) on behalf of the Second Respondent was provided to the Council. The Godfrey report was apparently prepared in response to Council's letter dated 22 May 2009. The report assessed the DA against the Yass Valley Council - Multi-unit Residential Development - Development Control Plan, August 2003 (the DCP), which applied to the Council's land and the Second Respondent's land. The following aspects of the Godfrey report are relevant:

a.   In relation to the minimum development size requirement in the DCP (1000 sq m with minimum street frontage of 18m), the Godfrey report stated: "Complies as the proposal amalgamates two blocks for a total of 5,923.5 sq m of site area".

b.   Similarly, the assessment of site coverage and development density proceeded on the basis that the two blocks had been amalgamated.

c.   There was a short section dealing with heritage considerations, but it did not refer to heritage issues relating to the area in which the site was located.

1. [By email dated 18 September 2009 Mr Chapman wrote to Mr Rowe asking that someone contact him urgently to advise the true status of the Second Respondent's DA (SFAPOC filed in Court on 3 August 2011, Sch A, item 1).]

1. By letter dated 18 September 2009 the Council communicated to the Second Respondent various instances of non-compliance with the DCP. These included units 3 to 12 exceeding the maximum height limit in the DCP. Mr Chapman conveyed to Mr Rubbani his disappointment with the Council's comments on the mandatory requirements of the DCP (SFAPOC Sch A, item 2).

1. By letter to Council dated 9 June 2009, the Applicant objected to the DA and sought further information about various issues. By further handwritten letter to the Council dated 28 September 2009, the Applicant indicated that he had not received some of the further information sought.

1. [Revised drawings dated October 2009 were lodged with the Council in November 2009 by the Second Respondent.]

1. It appears that a meeting in relation to the proposed development was held on 13 January 2010. The minutes of the meeting, prepared by the Applicant, referred to the Applicant as "RA" and Mr De Szell as "PDS", and include the following (at 170):

RA referred to a recent article in the Yass Tribune which indicated the sale of Lot 22 by YVC to the Unit Developer would be overseen by Queanbeyan City Council due to potential conflicts of interest associated with the sale of Lot 22. RA asked if documents relating to QCC's role were available.

PDS advised that QCC had no such role. PDS advised that YVC will prepare a Report on the development which will be given to a neighbouring Council for peer review. The neighbouring Council will then issue a subsequent Report to YVC, whose planning team will then review that Report, the submission from the Developer, the objection submissions from adjoining neighbours and any technical comments from YVC, and will then prepare a further Report.

1. On or about 21 January 2010, the Applicant wrote to Mr De Szell, raised various concerns about the DA and sought further information.

1. On or about 16 March 2010 the Council received a written advice from Ms Hubert, a heritage advisor. Ms Hubert summarised Dr Kabaila's recommendations, and noted that revised documents had been submitted in November 2009 to incorporate some of the recommendations and comments of Dr Kabaila. Ms Hubert a stated under the "Comment" section of the advice:

Units 13 and 14 still appear as a two story building. I am not aware of previous discussions, but would suggest that this building needs redesign to increase the setback of the first floor portion so that the main roof form close to Rossi Street is that of the pitched roof over the single-storey part of the building.

1. There is a handwritten note next to the section of text extracted above stating: "We have gone too far. Can't ask for re-design as discussed with PDS." [Two handwritten notes that other matters identified by Ms Hubert can be the subject of conditions concerning the appearance of units 1 and 2 and the fencing also appear on the report.] By letters dated 21 April 2010 and 11 May 2010 the parties appear to have agreed to extend the time for performance of the contract from 1 August 2009 to 1 August 2010. The letter of 11 May 2010 stated that the Council expected the DA to be considered at its meeting of 9 June 2010.

1. It appears that the determination of the DA was delayed. On 6 September 2010 Mr Doumos of the Second Respondent enquired of Mr De Szell by email whether the DA would be determined at the next Council meeting. On or about 9 September 2010 Mr De Szell sent a reply email to Mr Doumos (SFAPOC Sch A item 4) in which he stated :

My apologies, for the delay in its response. As you would be aware, I had been having difficulty arranging for another Council to pier [sic] review your application. Harden Council agreed to do the job for me but unfortunately have [not] been able to complete it at this time due to their current staffing and other work commitments. I have been given a guarantee by Harden that the job will be completed by the end of next week.

I understand that by now you must be completely frustrated by the process as am I. Accordingly, your application will be put to Yass Valley Council's meeting of 22 September whether or not I have a response from Harden. I feel that this is the only way that I can give you any confidence that the application will be processed. I again apologise for the delay and thank you for your patience in relation to the matter.

1. Mr Doumos responded (SFAPOC Sch A item 4): "Thanks for your response. Don't we need Harden Council's approval before Yass Valley Council can approve it?" to which Mr De Szell responded (SFAPOC Sch A item 3): "... The answer is technically yes. The wording of Council's resolution would have to be considered very closely for probity reasons if Harden have not completed the job. It is certainly not the preferred option to go this way and I am confident that Harden will complete the job. I feel however that I need to have another option available to give you some certainty that the application will be considered."

1. On or about 17 September 2010, Mr Rubbani informed Mr Doumos that the DA was to be determined at the Council meeting on 22 September 2010 and that "the accompanying report to Council recommends the application be approved". The "report" appears to be a reference to the "Director of Planning & Environmental Services Report" (the Director's report) [which was considered at the Council meeting on 27 October 2010]. The Council file note records that the Applicant was advised of the same matters.

1. A copy of the Director's report contains a draft approval with conditions, including that prior to the issue of a construction certificate, "The height of the units 13 & 14 be reduced to 7.0m from the natural ground level". Heritage issues were dealt with at par 4.2.5 and following and that paragraph includes the following statements:

The initial advice provided by Council's Heritage Adviser suggests that the proposed development should be redesigned (See Attachment C). As a result, the applicant redesigned the townhouses in order to incorporate the changes suggested by the Heritage adviser such as increasing the pitch of roofs and ensuring that garages were constructed under separate roofs, etc.

The revised plans were again referred to Council's new heritage adviser. In response, the heritage adviser raised concerns about fencing, the windows of units 1, 2 & 17, the height of units 13 & 14 and the wall for the letterboxes (See Attachment C). Any approval of the proposed townhouses will be conditioned to address these issues prior to the issue of a construction certificate.

1. Attachment A to the Director's report was a document titled "Peer Review by Harden Shire Council" (the Harden Review). The issue of heritage was dealt with. The Harden Review stated:

A heritage assessment has been undertaken by Council's Heritage Adviser as the site is located in an older street of Yass. The advice received indicated that Rossi Street is an historically important street in Yass with the most important feature being the cottage frontages contained in the street. The advice suggested some design changes be made to the proposal. Amended plans were submitted and once again heritage advice sought. Whilst the amended plans addressed some of the issues raised other issues were not addressed.

Nonetheless the issues raised by the heritage advice in respect of the amended plans are capable of being incorporated as design changes in any approval should Council be of a mind to issue consent to the proposal. Such include changes to the windows fronting Rossi St in units 1, 2 & 17; height changes to units 13 and 14 (this is also recommended previously in this report under the assessment of DCP compliance); and incorporation of letterboxes into fencing that is sympathetic to the heritage streetscape of the area.

1. The reference to consideration of the height of units 13 and 14 earlier in the Harden Review in connection with DCP compliance is a reference to an earlier paragraph (on p 4 of attachment A to the Director's report), which refers to units 13 and 14 having an overall height of 7.5m and states: "[g]iven that these units are located adjacent to a neighbouring property is not unreasonable that they meet the solution indicated in the DCP. ... The applicant should ... be requested to provide Council with amended plans to demonstrate that these townhouses will not exceed 7.0 m". The Harden Review concluded that the "the proposal has merit and there are insufficient grounds for Council to refuse the application".

1. On 21 September 2010 Mr Doumos of the Second Respondent asked the Council to remove the DA from the agenda for the Council meeting to be held on the following day. At the Council meeting on 22 September 2010 the Council resolved to defer consideration of the DA to the October 2010 meeting at the request of the Second Respondent and that an inspection take place before that meeting.

1. Mr Doumos met with Council representatives on 25 October 2010. In an email sent to the Council on that day Mr Doumos described various difficulties encountered by the Second Respondent "due to the time the process has taken and the impact of the GFC". Mr Doumos stated that: "[S]hould the DA be approved on Wednesday, we would not be in a position to settle on the block within the designated period and stand to [lose] the $66,000 deposit, on top of the considerable development planning costs we have already incurred ... The only way we would feel comfortable in proceeding at this point, would be to have the contract amended to remove the time limit for the purchase of the block following the DA approval" (SFAPOC Sch A item 5).

1. There was further email correspondence between Mr Doumos and Mr Rowe of the Council on 26 and 27 October 2010 (SFAPOC Sch A items 7, 8). Mr Doumos restated that the Second Respondent required that the sale agreement be amended to provide the Second Respondent with 12 months to settle and that the Second Respondent should have "the ability to rescind prior to the 12 month deadline without losing our deposit". He said that, failing such amendment, the Second Respondent would "be in the unfortunate position of having to rescind" (SFAPOC Sch A item 6). The last comment appears to be a reference to the fact that by 27 October 2010, the time for the performance of the sale contract had expired (notwithstanding the extension from 1 August 2009 to 1 August 2010) and it is therefore open to either party to terminate the contract by notice in writing pursuant to cl 4.6.

1. In the late afternoon of 27 October 2010 (just before the Council meeting at which development consent was given) Mr Doumos sent a further email in which he "officially informed" Mr Rowe that the Second Respondent's intent was to "rescind" unless the Council agreed to the variations (SFAPOC Sch A item 8).

1. On 27 October 2010 the Council passed a resolution which granted the development consent subject to the conditions set out in the Director's report. The development consent was forwarded to the Second Respondent by the Council by letter dated 29 October 2010.

Variation of the sale contract after development consent granted

1. By letter dated 2 November 2010 Mr Doumos, on behalf of the Second Respondent, requested the Council extend the period for settlement of the contract for the sale of land, in consideration for which the Second Respondent would release the 10 per cent deposit with interest to the Council.

1. There was a dispute between the Council and the Second Respondent as to whether it was open to the Second Respondent to terminate the contract under cl 4.6. The Council apparently took the view that the time for performance had been further extended to either 15 November 2010 or 1 December 2010. The Second Respondent took the view that there had been no further extension, and that the contract had therefore been terminable by either party by notice in writing from 1 October 2010. The Council also alleged that the Second Respondent sought to "manipulate" the timing of the Council meeting to consider the DA "in an endeavour to frustrate the time provisions of the Contract".

1. On 17 December 2010 the Council served on the Second Respondent a notice to complete the contract of sale of land, the validity of which was disputed by the Second Respondent on the basis that the contract had been terminated by the Second Respondent's letter of 22 November 2010. On or about 28 January 2011 the Council issued a notice of termination.

1. I am informed that the Council continues to own the land.

A. Ground of challenge - conflict of interest giving rise to apprehension of bias

1. The SFAPOC identify three circumstances which are relied on to establish a conflict of interest. These are the Council's ownership of part of the land the subject of the DA of the Second Respondent (cl 3(a)), the Council is a party to the contract for the sale of that land which is conditional (on the grant of development consent) (cl 3(a1)) and the Council is a party to communications with the Second Respondent identified in Sch A (cl 3(a2).

Applicant's submissions

1. The Applicant alleges that by reason of the circumstances surrounding the grant of development consent to the Second Respondent the Council had a conflict of interest between its duties under the EPA Act as a consent authority and its interest as the registered proprietor of the Council's land the subject of the Second Respondent's DA. It entered into a conditional contract for sale with the Second Respondent for $600,000 plus GST. The finalisation of the contract was conditional on the grant of development consent. Those facts alone (cl 3(a) and cl 3(a1) SFAPOC) establish a conflict of interest for the Council in carrying out its regulatory functions under the EPA Act. That conflict gives rise to an apprehension of bias in the Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 sense:

... the governing principle is that, subject to qualifications relating to waiver ... or necessity ... a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide.

1. The Ebner might/might test has been held to apply to administrative decision-makers more generally, including local councils, see McGovern v Ku-ring-gai Council [2008] NSWCA 209; (2008) 72 NSWLR 504 at 507 - 508, 516 - 517, 553. Spigelman CJ in McGovern at [26] identified that there is a low threshold to establish an apprehension of bias where a conflict of interest is found.

1. The communications referred to in cl 3(a2) SFAPOC between representatives of the Second Respondent and the Council officers further establish conflict of interest giving rise to an apprehension of bias, relying on Sidney Harrison Pty Ltd v City of Tea Tree Gully [2001] SASC 27; ( 2001) 112 LGERA 320 and F & D Bonaccorso Pty Ltd v City of Canada Bay Council (No 2) [2007] NSWLEC 537; (2007) 158 LGERA 250 . These emails are between Council officers including the General Manager Mr Rowe and representatives of the Second Respondent and are identified in the statement of agreed facts set out above at par 19, 20, 27, 28, 34, 35 and par 36. These emails show that Mr Chapman wrote to Mr Rowe asking that someone contact him urgently to advise the true status of the Second Respondent's DA. Mr Chapman expressed disappointment to the Council planner about the DA and the mandatory DCP requirement. Mr De Szell of the Council said to the representative of the Second Respondent that he was having difficulty arranging for a peer review of the DA and the DA would be put to the next meeting of the Council on 22 September 2010 regardless. When asked whether Harden Council's approval was required, Mr De Szell said technically yes. The DA was removed from the agenda on 22 September 2010 at the request of the Second Respondent. The representative of the Second Respondent sent an email on 25 October 2010 stating the Second Respondent would not be able to comply with the contract condition requiring settlement in a certain period and asking that the contract be amended to remove the time limit for the purchase of the block following the development consent. In a further email the Second Respondent's representative requested the contract be amended to allow 12 months to settle or the Second Respondent would have to rescind. In a further email sent on 27 October 2010 (at 4:50pm) the Second Respondent's representative said it would rescind the contract unless the contract was amended.

What knowledge is attributed to the fair-minded lay observer

1. There is uncertainty in the authorities about the extent to which the fair-minded lay observer referred to in Ebner is taken to have background knowledge where the decision in question is administrative, concerning public administration, as explored in John Griffiths SC, "Apprehended Bias in Australian Administrative Law" (2010) 38 Federal Law Review 353 at 358 - 359. It is clear however that questions about background knowledge aside, the fair-minded lay observer is taken to know "the conduct which is said to give rise to an apprehension of bias" ( Re Refugee Review Tribunal; Ex parte H [2001] HCA 28; (2001) 179 ALR 425 , at [28]). That is the case whether or not the conduct occurred in public or private (for instance, a private email or other communication). This is demonstrated by a large number of cases including the following:

(a)   Gwandalan Summerland Point Action Group Inc v Minister for Planning [2009] NSWLEC 140; (2009) 168 LGERA 269 - fair-minded lay observer taken to know about a number of internal emails sent by departmental officers to the Minister (see, in particular, at [131]).

(b)   Re Minister for Immigration and Multicultural Affairs; Ex parte Epeabaka [2001] HCA 23; (2001) 206 CLR 128 - fair-minded lay observer taken to know about views expressed on a (public) personal website.

(c)   McGovern - fair-minded lay observer taken to know about various private email communications between councillors and other councillors, and between councillors and the proponent for development (particularly at [121] and following).

1. A clear statement of principles of the knowledge ascribed to a fair-minded lay observer is found in McGovern per Basten JA at [81].

1. The apprehension of bias arises in relation to the Council as a whole so that the state of mind of individual councillors is irrelevant. Sidney Harrison is similar on the facts. Debelle J of the Supreme Court of South Australia found a reasonable apprehension of bias arose as a result of prejudgment and as a result of financial conflict of interest. In relation to the conflict of interest issue, the facts were that the council, as a corporate body, was the owner of certain land which it proposed, in that capacity, to lease to a telecommunications company, for $10,000 per annum. Planning approval was sought by the company for the erection of a mobile phone tower on the council's land. Debelle J held at [17]:

... As the Council's letter to the Minister discloses, it has a real financial interest in maintaining the validity of this development consent so that it may recover a reasonably substantial rent. That financial interest gives rise to a perception of bias in that the fair-minded bystander might reasonably apprehend that the Council might not bring an impartial and unprejudiced mind to the question whether development consent should issue. This is a further reason to disqualify the Council.

1. In this case, the Council, as a corporate body, had "a real financial interest" in retaining the benefit of the contract for the sale of its land. Having regard to the reasoning in Sidney Harrison , it is not necessary to impute particular knowledge to the councillors. The states of mind of the councillors are irrelevant. It was sufficient that, having regard purely to the conflict of interest of the Council as a corporate body, the reasonable apprehension of bias might arise, objectively, in the mind of a reasonable bystander.

1. This conclusion is also supported by the reasoning in two decisions of this Court. In Gwandalan Lloyd J (at [38]) approved of certain observations of Biscoe J in Bonaccorso , as follows -

Biscoe J noted at [115] that it has been said that the application of the principle of procedural fairness or natural justice in connection with decision-makers outside the judicial system must sometimes recognise and accommodate differences between court proceedings and other kinds of decision-making (referring to Ebner at [4] and Jia Legeng at [99] inter alia). His Honour went on to hold at [120] that if a council as a whole is affected by the appearance of prejudgment it will be disqualified from considering a matter, subject to the possible application of the doctrine of necessity ... (emphasis added).

1. In applying this test to the Council, the fair-minded lay observer should be taken to know the relevant statutory scheme, including that the Council had the option of establishing an independent hearing appeal panel (IHAP) to determine the DA and therefore did not need to determine the DA itself. This is consistent with the decis ion in Sidney Harrison and the statements of principle in McGovern at 507. The Applicant does not need to impute to a fair-minded lay observer any further understanding of the nature of the Council or of the states of mind of individual councillors.

1. The prohibition upon the Council determining the DA in circumstances where it is subject to a disqualifying conflict of interest arises, as an incident of procedural fairness, "unless clearly excluded" by statute: see McGovern at 517 and Kioa v West [1985] HCA 81; (1985) 159 CLR 550 at 584 (per Mason J) and at 612 - 613 (per Brennan J). To render the reasoning in Sidney Harrison inapplicable because the South Australian development legislation has a specific provision for referral to a panel where a conflict of interest arises, it would be necessary for the Council Respondent to point to something in the NSW legislation which clearly excludes application of the relevant part of the obligation to accord procedural fairness. The Council cannot do so. Also, McGovern is direct authority against the Council's proposition.

1. Further, the NSW legislation also explicitly confirms application of the relevant principle. Section 8(1) of the LG Act provides:

A council has the following charter:

...

· to ensure that, in the exercise of its regulatory functions, it acts consistently and without bias, particularly where an activity of the council is affected ...

1. The knowledge to be attributed to the fair-minded lay observer includes all the material on the Council's file, which includes the communications between Council officers including the General Manager Mr Rowe and the Second Respondent or its director Mr Doumos (referred to in Sch A of the SFAPOC). The Council officers are agents for the corporate entity which is the Council and any communication with them must be deemed to be knowledge of the Council. It is not necessary to demonstrate that their knowledge was known to councillors (as would be the case if actual bias was sought to be established).

1. The consideration of heritage issues by the Council suggests that a fair-minded lay observer might consider there might not be impartial consideration because the Director's report (prepared on or before 17 September 2010 and considered at the Council meeting on 27 October 2010) was misleading as the report states that the Second Respondent had redesigned the townhouses in order to incorporate the changes suggested by the first heritage advisor and that the second heritage advisor's concerns related to the height of units 13 and 14 whereas the concern was the difference between a two-storey and a one-storey structure. This part of the apprehension of bias case is only pressed if the other submissions are accepted, in other words the treatment of heritage issues alone is not relied on to establish apprehension of bias.

1. In submissions in reply, a council's role as a landowner of land vested under the Roads Act 1993 or as community land should be distinguished from a council's role as a landholder in fee simple of operational land, the latter having no distinguishing feature in terms of a council's role from any holder of fee simple property. The NSW Independent Commission Against Corruption, Corruption risks in NSW development approval processes: Position paper (September 2007) (the ICAC report) referred to by the Council is not material that should be considered as within the knowledge of the fair-minded lay observer.

Council's submissions

1. A council is obliged to afford procedural fairness when considering a DA, an element of which is absence of an apprehension of bias. It is accepted that there is a conflict of interest as a result of the matters identified in cl 3(a) and cl 3(a1) of SFAPOC but it is not a disqualifying one. The first matter to consider is the statutory context in which a council is granting development consent under the EPA Act given its responsibilities as a council specified in the charter in s 8 of the LG Act. Where a conflict of interest arises as between the Council's role as a consent authority and the coincidence of ownership of land it is necessary to look at the legislative scheme. Under the LG Act the functions of a council are defined in s 21 and s 22 of that Act. Under s 23A the Director-General can issue guidelines in relation to a council's exercise of any of its functions. No such guidelines have been issued. Councils have land vested in them under the Roads Act and other legislation and hold land in fee simple. That statutory context does not prohibit or prevent a council as a landowner which has entered into a contract to sell the land from acting as consent authority in relation to the land.

1. There is no constraint in the EPA Act including under s 79C of matters which must be taken into account. (The Applicant argues that a reasonable bystander might infer that there might not have been impartial decision making under s 79C).

1. The EPA Act was amended in 2008 to introduce joint regional planning panels (JRPPs) under s 23G and IHAPs under s 23I. The Applicant argues that the Council could have referred the matter to an IHAP under s 23I(2) and a JRPP under s 23G(2)(a) - (c). Any of a council's functions as a consent authority can be conferred on a JRPP in an environmental planning instrument under s 23G(2). Section 23I(1) provides for the optional referral of a matter to an IHAP by a council. This is not compulsory and no obligation on a council to refer a matter to an IHAP arises under the EPA Act. This legislative framework does not require the Council to step aside and delegate to another body in this circumstance. The question is whether there is a disqualifying conflict of interest giving rise to an apprehension of bias in the circumstances of this case.

What knowledge is attributed to the fair-minded lay observer

1. The issue arises of what knowledge should be attributed to the fair-minded lay observer. There is no universal test which can be applied. Each case depends on its own circumstances. To rely on Laws v Australian Broadcasting Tribunal [1990] HCA 31; (1990) 170 CLR 70 or Ex parte H does not greatly assist as the question what are the circumstances of the case still has to be answered. The relevant approach is identified in Murlan Consulting Pty Ltd v Ku-ring-gai Council (No 4) [2010] NSWLEC 95 at [65] and requires reference to matters in the public domain. The following matters should be deemed as within the knowledge of the fair-minded lay observer.

• The Council is the owner of part of land referred to in the Second Respondent's DA
• The Council entered into a contract to sell the land to the Second Respondent which contract is on foot
• No suggestion is made that the sale is not at a proper market price
• A general understanding of the terms of the contract
• The Council's charter in s 8 LG Act has the obligation to act without bias especially where an activity of the Council is concerned
• The Council recognised it had a conflict of interest given its role as landowner and as regulator and the Council took steps to address that conflict by obtaining a peer review by a neighbouring council
• The Director's report was without partiality dated 17 September 2010, and was then publicly available and included the independent Harden Review
• The Director's report and attachments were before the Council when it made its decision on 27 October 2010
• The Director's report recommended conditional approval, as did the Harden Review
• ICAC has recommended steps such as those taken here are appropriate to deal with conflict of interest
• Familiarity with the provisions of the EPA Act and LG Act
• The Council considered Second Respondent's DA at an open meeting on 27 October 2010

1. The considerations applying in private hearings such as that in Ex parte H are different to matters heard in public as in a court or, in this case, a local council. In Gwandalan evidence attributed to the fair-minded lay observer before the Court were communications to or from the decision-maker. The varied approaches demonstrate that it is difficult to identify a uniform principle to guide every case.

1. In relation to the individual emails identified in Sch A of the SFAPOC, all are between Council officers and representatives of the Second Respondent. There is no evidence any were known to the Council, meaning the councillors. There is no attempt to establish lack of partiality on the part of individual Council officers. There is no authority to support the Applicant's case on this basis, that is that the knowledge of the Council staff is deemed to be the knowledge of the Council as a whole. Hot Holdings Pty Ltd v Creasy [2002] HCA 51; (2002) 210 CLR 438 demonstrates why that a nalysis is wrong. In that case a departmental officer had an interest of which the relevant minister was unaware. That knowledge was not attributed to the minister. The exchanges between the Second Respondent and council officers even if at general manager level are not relevant circumstances in the mind of a fair-minded lay observer as these cannot be regarded as reasonably within the knowledge of the decision-maker.

1. In Calardu Penrith Pty Ltd v Penrith City Council [2010] NSWLEC 50 the allegation of bias on the basis of prejudgment was attributed to the council as a whole in a development assessment process. In that case at [155] Biscoe J found that there was no suggestion that the council would "rubber stamp" a DA and the fair-minded lay observer would be apprised of all the material before the council and that the council engaged external consultants to undertake an assessment.

1. Basten JA in McGovern at [82] stated:

...The law with respect to bias, much of which has accumulated through cases considering the operations of courts and quasi-judicial tribunals, has developed a test of reasonable apprehension of bias which does not require either evidence as to actual causal connection between the prejudicial material or interest and the decision, nor any prediction about how the decision was in fact made: see Ebner v Official Trustee in Bankruptcy [2000] HCA 63; 205 CLR 337 at [6]- [8] (Gleeson CJ, McHugh, Gummow and Hayne JJ) and Zanatta v McCleary [1976] 1 NSWLR 231, 234 (Street CJ), 238-239 (Samuels JA). While a causal connection must be demonstrated (in a case involving conflict of interest) it is the capability to affect a decision, not the actual affectation, which must be established.

1. This passage confirms that there must be a causal connection demonstrated between the conflict of interest and the decision. The contract for sale of the Council's land and the DA in relation to land which includes the Council's land does not establish a causal connection, rather this must be demonstrated.

1. As recognised in McGovern proponents will lobby council officers and councillors to approve developments. The emails in SFAPOC 3(a2) Sch A to Council officers include attempts to do that but there is nothing unusual in that.

1. The knowledge imputed to a council from its officers is irrelevant. The emails in Sch A are not within the circumstances of which a fair-minded lay observer would be aware. Even if these were to be so regarded they must be established to be within the knowledge of the decision-maker, here the councillors. The final email in Sch A was sent at 4.50pm on 27 October 2010 when the recipient Mr Rowe, General Manager, was in a performance review and the Council meeting commenced at 5:00pm. The clear inference arises that this email could not have been known to any councillors before the meeting.

1. Even if the emails are deemed to be within the knowledge of the fair-minded lay observer they do not give rise to an apprehension of bias. They are properly characterised as chasing up a DA, frustration at the time taken in the assessment process, and individual Council officer's views about peer review not within the Council's knowledge. What was before the Council was a comprehensive Director's report available to the public from 17 September 2010 which included the Harden Review. The meeting was conducted in public.

1. It is unclear how the heritage issues play a role in the apprehended bias case. It is not legally sustainable and also on the facts no such inference can be drawn. If the fair-minded lay observer is aware of the contract and the Council ignores the advice on heritage that may give rise to an apprehension of bias but those are not the facts of this case.

1. Finally, the Court must consider whether the fair-minded lay observer with that knowledge might apprehend bias applying the might/might test. Such an observer would not so apprehend in all the circumstances of this case.

1. The ICAC report can be considered as part of the information known to the fair-minded lay observer. That report states that councils are often responsible for determining DAs affecting their own land and states that is not a corruption issue of itself. Options canvassed to avoid conflict between the development and regulatory roles include the type and scale of development and include the use of external consultants or officers from another council and referral to an IHAP.

1. Conflict of interest on its own as relied on in cl 3(a) and (a1) of the SFAPOC is not sufficient. The reasoning in Sidney Harrison reflects the lack of a contradictor, being determined when the council in question had already decided it should not consider the second DA and had written to the minister asking him to refer the matter to the special panel provided for in such cases in the SA legislation.

1. The observations of Spigelman CJ in McGovern at [26] of the low threshold which applies to conflicts of interest are made in the context of individual councillors. This case concerns a council as a corporate entity rather than any allegation of conflict of interest on the part of an individual councillor.

Apprehension of bias not established

1. The parties agree that the Council in exercising its regulatory functions under the EPA Act must afford procedural fairness and that this entails a duty to act in a way which does not give rise to an apprehension of bias. As this was agreed and the question of whether this arises as a statutory or common law obligation was not raised, I will not consider that issue but simply note the discussion of that issue in Sweetwater Action Group Inc v Minister for Planning [2011] NSWLEC 106 by Biscoe J at [146] - [147]. There is no dispute that the Council entering into a contract with the Second Respondent conditional upon the grant of development consent and determining the DA gives rise to a potential conflict of interest. The parties disagree on whether this is a disqualifying interest meaning that an apprehension of bias arises in relation to the Council's approval of the Second Respondent's DA in the circumstances of this case. McGovern confirms that the test to be applied is the might/might test in Ebner (quoted above at par 43), namely whether a fair-minded lay observer might apprehend that a decision-maker might not bring an impartial mind to an administrative decision.

1. Apart from Sidney Harrison , no Australian case alleging apprehension of bias by a whole council on the basis of conflict of interest was referred to by the parties. In Bonaccorso and Calardu the allegation of apprehension of bias by the councils as a whole was based on prejudgment in relation to development applications. These cases confirm that apprehension of bias on the part of a whole council can arise. It is not necessary to consider the views of individual councillors where the apprehension of bias is said to relate to the decision of the whole council. The principles identified in McGovern arose in a case where the actions of individual councillors were said to give rise to an apprehension of bias on the basis of prejudgment. The observations of Spigelman CJ in McGovern at [26] that the existence of a conflict of interest establishes a reasonable apprehension of bias almost as a matter of course, relied on by the Applicant's counsel, are strictly obiter as the facts of that case did not consider conflict of interest but prejudgment. In Marrickville Metro Shopping Centre Pty Ltd v Marrickville Council [2010] NSWCA 145; ( 2010) 174 LGERA 67 apprehension of bias based on alleged conflict of interest by individual councillors in relation to a rating decision under the LG Act was held not to be established in the circumstances of that case. The passage of Spigelman CJ at [26] in McGovern relied on by the Applicant was noted in that decision by Tobias JA at [149].

Exercise of the Council's functions in context of apprehension of bias rule

1. The need for the flexible operation of the apprehension of bias test in relation to non-judicial decision-makers was noted by Basten JA in McGovern at [71]. Basten JA referred at [75] to the need to consider the test in the operating environment of local government authorities with elected councillors, a diversity of functions including political functions under the LG Act, and as an administrative decision-maker able to approve individual developments. His Honour refers to Minister for Immigration v Jia Legeng [2001] HCA 17; (2001) 205 CLR 507 as an example of how standards will differ from those applicable to judges in relation to, in that case, ministerial decision-making because of the need to take into account the particular role and functions of the decision-maker. After citing further passages from Jia Legeng which emphasise that different considerations apply to non-judicial decision-makers, Basten JA concluded at [77] that councillors sitting on a local council are far removed in the exercise of their functions from a judge's functions.

1. The Council submits that the statutory context in which it operates must be considered in determining whether an apprehension of bias arises. The charter in s 8 of the LG Act is a broad provision, not directed to any particular circumstances. The Applicant focussed on the requirement that a council must act consistently and without bias where its own activities are concerned. That provides little guidance in assessing the particular facts of this case. The roles and functions of councils are identified in the LG Act at a relatively broad level. As considered in Marrickville Metro Shopping Centre Pty Limited v Marrickville Council [2009] NSWLEC 109 at [152] - [157] at first instance, the LG Act has provisions concerning conflict of interest both pecuniary and non-pecuniary in relation to individual councillors. There do not appear to be provisions in the LG Act or any other Act dealing with conflicts of interest of a council as a whole, whether pecuniary or non-pecuniary. It is common knowledge that councils in NSW have a number of statutory roles and responsibilities. The various functions identified in the LG Act include holding public land, which is classified under that Act as "community" and "operational" land. Operational land is land which need not be kept for community use. Under s 45 a council has no power to sell community land but this limitation does not apply to operational land. In this case the Council decided to sell operational land to the Second Respondent and a conditional contract was entered into on 15 August 2008. That other land is vested in the Council under the Roads Act inter alia is not material to my consideration.

1. The Council also makes regulatory decisions under other statutes including pursuant to the EPA Act in relation to individual development approvals. The key issue arising for determination is whether the accepted conflict of interest which arises for the Council in considering a DA in relation to land it owns and has entered into a conditional contract to sell, gives rise to an apprehension of bias applying the might/might test.

Knowledge attributed to fair-minded lay observer

1. In applying the might/might test, the issue arises of what knowledge should be attributed to a fair-minded lay observer. The answer to this question is not always clear cut as can be seen from the analysis in Dr Griffiths' article (referred to at par 46 above). The parties agreed the facts relevant to the negotiation of the contract for sale of the Council's land to the Second Respondent and the assessment process of the DA undertaken by the Council including its staff as set out earlier in the judgment. The issue arises of how much of this material is to be attributed to the fair-minded lay observer.

1. In McGovern Basten JA considered this issue at [78] - [83] observing that the proposition in Laws (at [87] per Mason CJ and Brennan J) that the knowledge to be attributed of the actual circumstances of the case involves three concepts: the general understanding the fair-minded lay observer is deemed to have, the information ascribed to the observer and that attribution is to decide whether there is a real possibility that he or she would apprehend that the decision-maker may have a closed mind.

1. In Murlan No 4 I had to answer the question of what knowledge to attribute to a fair-minded lay observer in the context of a court, there an acting commissioner of this Court. My analysis considered decisions which considered judicial and quasi-judicial decision-makers in S & M Motor Repairs Pty Ltd v Caltex Oil (Aust) Pty Ltd (1988) 12 NSWLR 358 , Najjar v Haines (1991) 25 NSWLR 225 and Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488 . Different considerations may well apply to the local council in this case but there is some commonality to a decision of a court in that the decision made is public, an important consideration in determining what level of knowledge is attributable to the fair-minded lay observer. I concluded at [65] that:

The level of knowledge to be attributed to a fair-minded observer as identified in the authorities must be applied in terms of matters that would be known to a member of the public having made some inquiries and having an understanding of relevant circumstances at a general level (so called notorious matters). As submitted by the Attorney and noted by Kirby J in Johnson at [54] there is not a uniform approach to the knowledge to be attributed to the fair-minded observer, and views will differ. Further, in Johnson Kirby J cautioned against attributing too great a level of sophistication to the fair-minded observer at [54], as the Attorney submitted (par 35 above).

1. In Calardu at [141] Biscoe J referred to Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411 to the effect that the knowledge attributed to the fair-minded lay observer should not be at the level of sophistication of an educated or informed citizen or a party involved in the decision-making process. At [142] his Honour also referred to Basten JA in McGovern at [83] that the might/might test is objective and not a test of what the person alleging bias thinks of the decision-making process.

1. The Applicant submitted that if the circumstances of the contract and the granting of development consent alone are considered (cl 3(a) and (a1) SFAPOC) that is sufficient to give rise to a disqualifying conflict of interest. Given clear statements in Laws inter alia that the fair-minded lay observer is to be taken to be aware of the relevant circumstances, it is not appropriate to limit the circumstances to be attributed only to the conditional contract and the grant of development consent as these do not exist in isolation (leaving aside the other part of the Applicant's case being the emails referred to in Sch A SFAPOC for the moment). They are but part of the relevant knowledge to be attributed to the fair-minded lay observer. Applying my finding in Murlan No 4 at [65], and the matters referred to by Basten JA in McGovern [78] - [83] of the different categories of knowledge to be attributed (referred to in par 80 above) the circumstances which the fair-minded lay observer is taken to know would include matters likely to be known to the general public together with a general appreciation of how local councils operate, including broad knowledge of their different functions. The matters which should be attributed to the fair-minded lay observer are identified in the Council's submissions (par 60 above). In particular, these are that the contract was entered into, and its terms included that finalisation was conditional on development consent being granted and either party could terminate if development consent was not granted. Further, the content of the Director's report assessing the DA and the Harden Review are assumed to be known. These were available to the public from 17 September 2010, the decision to approve being made at a public meeting on 27 October 2010. This material was available to all the councillors well before the time they made the decision to approve the Second Respondent's DA.

1. Turning now to whether the various emails between representatives of the Second Respondent and the Council's staff should be considered as within the knowledge of the fair-minded lay observer (SFAPOC cl 3(a2)), it is necessary to consider firstly whether these are to be considered as within the knowledge of the Council, in particular the councillors. No allegation of apprehension of bias on the part of individual Council officers is made in the Applicant's case. The emails are argued by the Applicant to be attributed to be within the knowledge of the councillors by inference as they are part of the Council's file. Hot Holdings and Gwandalan suggest that such material is not to be attributed to the Council and not therefore information imputed to the fair-minded lay observer. There is no evidence suggesting that these emails were drawn to the councillors' attention or that they were otherwise aware of them. As identified in the Council's submissions (at par 67 above), the last email relied on could not have reached the councillors before the meeting on 27 October 2010 because it arrived too late. In Hot Holdings the allegation of apprehension of bias was directed to a departmental officer who briefed the relevant minister, the minister being unaware of the officer's interest. The High Court (Gaudron, Gummow, Hayne, Callinan JJ and McHugh J and Gleeson CJ (in separate judgments) concurring) held that no apprehension of bias arose in relation to the minister's decision as a consequence of the officer's interest. The ministerial briefing notes prepared by the officer in question amongst others were taken into account as material that went to the decision-maker, unlike these emails. My primary view is that the emails are not to be considered as information known to the fair-minded lay observer as they were not demonstrated to be known to the councillors constituting the Council when the DA was approved in October 2010.

1. For completeness I will also consider in the alternative that the emails are deemed to be within the knowledge of the Council and therefore part of the circumstances of which the fair-minded lay observer would be aware. The Council argued that even if they were attributable to the Council as a whole their content suggests no more than inquiry by the Second Respondent on the progress of its DA, frustration of both the Second Respondent and the Council officers about the amount of time the DA assessment process was taking, and an individual officer's views that matters would proceed to a Council meeting on 22 September 2010 regardless of whether the peer review was received. That circumstance did not come to pass as the DA was removed from the agenda for that meeting at the Second Respondent's request and the Harden Review arrived by 17 September 2010. I therefore agree with the Council's submissions. Further, if this material is considered as within the knowledge of the fair-minded lay observer once again that cannot be in isolation from the whole of the DA assessment process undertaken by the Council staff. This took place over several months from receipt of the DA in April 2009, modifications of the DA were required by council staff and conditions of development consent were imposed to deal with impacts including in relation to heritage matters as identified in the statement of agreed facts. The Harden Review was received and was provided to the councillors well ahead of the meeting of October 2010 at which the DA was approved.

Whether disqualifying conflict of interest

1. In addition to considering the circumstances from the point of view of the fair-minded lay observer as outlined in the previous section, it is helpful to consider the circumstances in Bonaccorso by way of comparison when weighing up if the circumstances in cl 3(a) and (a1) of the SFAPOC do give rise to an apprehension of bias. In that case the relevant local council had entered into a conditional contract for sale of several council houses. One condition provided that the council agreed to accept and approve any applications for demolition of all or any of the properties the subject of the contract, subject to conditions it might reasonably impose in accordance with its usual practice. Some of the houses were heritage items under the relevant local environmental plan. That condition of sale was the basis for a challenge on the ground of apprehension of bias on the basis of prejudgment. The issue was whether the fettering of the council's discretion in the condition might give rise to an apprehension of bias in the mind of the fair-minded lay observer who is assumed to know of the contractual provision (but is not assumed to have a detailed knowledge of the law). Biscoe J referred to three New Zealand cases where a council's contractual obligation to exercise its planning discretion powers a certain way was considered to determine if an apprehension of bias arose. In Lower Hutt City Council v Bank [1974] 1 NZLR 545 which is discussed at [125] - [127] the New Zealand Court of Appeal in Lower Hutt ( McCarthy P, Richmond and Speight JJ ) considered the multiple roles of councils in the context of determining that an apprehension of bias arose.

1. In light of the fettering of the council's statutory discretion Biscoe J held that the test of apprehension of bias applying the might/might test was met in the mind of the fair-minded lay observer. There is an important difference between this case and Bonacorsso and Lower Hutt , where the conditional contracts in issue fettered the councils' discretion in DA approval processes. Here, the condition set out at par 8(c) does not fetter the Council's discretion in granting development consent. Further, the contract specifically provides for either party to terminate the contract in the event that development consent is not granted. While Bonacorsso was argued on the basis of prejudgment it would appear that a conflict of interest could have been relied on as the council stood to gain financially under the contract for sale which in turn was dependent on the granting of development consent for the demolition of houses. The conflict of interest was clearly disqualifying given the fettering of the council's discretion under the conditions of the sale contract.

1. In Sidney Harrison , relied on by the Applicant, Debelle J in the Supreme Court of SA held that there was an apprehension of bias on the basis of the terms of the contract under which the relevant council obtained rent for the use of its land for an activity (mobile phone tower) if the council approved it. Sidney Harrison is not strong authority in that the council in question had already recognised that there was difficulty in its determining a second DA, the subject of the court challenge, in light of the potential financial benefit it would gain if that DA was approved. It had written to the relevant minister requesting him to refer the matter to a special development control panel provided for specifically in s 34 of the Development Act 1993 (SA) where conflict of interest situations arose (see [10]). Debelle J made the finding that a conflict of interest arose where there appeared to be no effective contradictor to the making of that order. There was apparently no need to consider the circumstances in detail or to consider what should be considered as within the knowledge of the fair-minded lay observer. As emphasised by the Council, the LG Act or any other NSW Act does not contain the same provision as s 34 of the Development Act.

1. In this case the procedure adopted by the Council to deal with the perceived conflict of interest was to have a peer review report prepared by a neighbouring council. The Harden Review was in the tender bundle of documents and appears to be comprehensive. It concluded that the grant of development consent was appropriate. No criticism of its preparation was made by the Applicant.

1. If the circumstances as discussed in par 83 and alternatively also par 85 are attributed to the fair-minded lay observer and that observer is assumed to have a general appreciation that a local council has to exercise multiple functions, I do not consider that observer might believe the Council might not have brought an impartial mind to the approval of the Second Respondent's DA. The necessary causal connection identified by Basten JA in McGovern at [82] is not established.

1. The Applicant submitted that the Council could and should have utilised the IHAP or JRPP mechanisms as provided since the amendment of the EPA Act in 2008. That there is provision in s 23I of the EPA Act for a matter to be referred to an IHAP as a matter of discretion on the part of a council does not mean that this Council was bound to pursue that course. Referral of a matter to JRPP requires that there be provision in an environmental planning instrument, not a mechanism that can be deployed on a case by case basis and not therefore a practical option in this case.

1. A number of cases (see Laws ) have referred to the doctrine of necessity to justify the need for a decision-maker to exercise a particular power. As this doctrine was not relied on by the Council to justify its decision-making role under the EPA Act I have not considered its application in this matter.

1. The Council submitted that the ICAC report on corruption risk (par 71) should also be knowledge attributed to the fair-minded lay observer. I do not agree as that report is directed to corruption prevention and is not obviously a matter of public knowledge about which the fair-minded lay observer would be aware in the context of this case.

1. The Applicant's counsel also submitted that the treatment of heritage issues supported its case alleging apprehension of bias (see par 55 above). Quite how that can arise as a matter of law is unclear as no allegation of conflict of interest arises in relation to heritage matters. The Applicant's case as set out below is that there was a failure to deal with heritage issues. As I have not found that an apprehension of bias arises applying the might/might test to the circumstances in cl 3(a), (a1) and (a2) of the SFAPOC, I do not need to further consider this argument.

B. Ground of challenge - failure to consider mandatory relevant consideration, namely heritage issues

Applicant's submissions

1. As outlined in the SFAPOC and in the agreed facts set out above, the officers of the Council received written advices from two independent heritage consultants; on or about 27 May 2009 from Dr Kabaila and on or about 16 March 2010 from Ms Hubert, his successor. The substance of both of the heritage advices was not accepted by the officers of the Council involved in the assessment of the DA. Both heritage advices recommended, inter alia, that buildings facing Rossi Street should not appear from Rossi Street as two-storey buildings.

1. In or about mid or late March 2010, officers of the Council involved in the assessment of the DA determined that they, or alternatively, the Council, would not further consider or request redesign of the development so that the buildings facing Rossi Street would not appear as two-storey buildings. The Director's report recommended approval of the DA, subject to conditions. On 27 October 2010 the Council resolved to grant consent to the DA.

1. The Director's report stated (see par 30 above) that:

(a)   particular concerns of the independent heritage advisor related to "the height of units 13 & 14";

(b)   the Second Respondent had "redesigned the townhouses in order to incorporate the changes suggested by" Dr Kabaila; and

(c)   that the conditions proposed addressed all heritage issues raised by the advisor, prior to the issue of a construction certificate.

1. The report was misleading. A prime concern of both independent heritage advisors related to the two-storey appearance of the buildings (units 13 and 14 facing Rossi Street), which was to remain. The Second Respondent had not redesigned the townhouses to incorporate the changes suggested by Dr Kabaila; and the conditions proposed did not address all heritage issues raised by the advisors. In purporting to make the resolution to make the DA the Council adopted the Director's report. The Council failed to take into account mandatory relevant considerations, namely, all aspects of the heritage advices.

1. Relevant principles in relation to this ground of judicial review are identified in Premier Customs Services Pty Ltd v Botany Bay City Council [2008] NSWLEC 269 at [19] which states "Mere advertence to a matter required to be taken into consideration is not sufficient. T he consideration must be 'proper, genuine and realistic '".

1. The extracts from the first heritage advice set out at par 10 and 11 of the SFAPOC make clear that a major concern of that advice related to the two-storey appearance of the buildings. Dr Kabaila either stated or implied, several times, that the development should be single-storey to harmonise with the single-storey heritage cottages nearby. In the extract from the second heritage advice in par 19 and 20 of the SFAPOC, Ms Hubert identified that units 13 and 14 were still multistorey, notwithstanding the first heritage advice. She suggested redesign of those units. Units 13 and 14 were not redesigned. Those units, and some other units in the proposed development, remain two-storey (see Applicant's Bundle of Approved Plans, Drawing A-504). Although the height was reduced to 7m above the natural ground level, this did not fully address the concerns raised by the heritage advisors. It appears from the handwritten note set out at par 26 above that Council took the view that the DA had progressed "too far" for Ms Hubert's suggestion to be taken up.

1. The Director's report did not convey to the Council that the concerns and issues raised in the heritage advices had not been addressed. Rather, as the passages set out at par 97 above indicate, the Director's report gave comfort to the Council that the heritage issues that had been identified were addressed.

1. Those statements were misleading. A decision-maker may rely on a summary in order to have regard to a mandatory relevant consideration, but if this course is taken it must be an accurate summary. Where a decision-maker relies on a summary produced by another, in order to satisfy a mandatory requirement the summary must be fair and accurate per Parramatta City Council v Hale (1982) 47 LGRA 319 . In the absence of any indication to the contrary, it may reasonably be inferred that a council's resolution was based on material in the form of reports prepared by council officers before the relevant council when the resolution in question was passed: Dunlop v Woollahra Municipal Council [1975] 2 NSWLR 446 at 485. In this case, it should be inferred that the Council was guided by the Director's report.

1. Although the heritage advices were themselves attached to the Director's report, there is nothing to suggest that any councillor read them and discovered that the statements in the Director's report were inaccurate. The councillors were deprived of a reasonable opportunity to consider the issues and concerns raised in heritage advices because they were wrongly informed that all of those issues and concerns have been addressed. See, in a similar context, Hale , where the Court of Appeal held that councillors had not had a "reasonable opportunity" to consider certain amendments to conditions and had thereby failed to have regard to the mandatory relevant considerations in what was then s 90 of the EPA Act.

Council's submissions

1. The Applicant has fallen into the error of adopting a formulation of "proper, genuine and realistic". Such a formulation is no longer favoured following the observations of Basten JA in Kindimindi Investments Pty Ltd v Lane Cove Council [2006] NSWCA 23; (2006) 143 LGERA 277 at [74]; also in Belmorgan Property Development Pty Ltd v GPT RE Ltd [2007] NSWCA 171; (2007) 153 LGERA 450 at [76]; adopted and applied by Tobias JA in Anderson v Director-General, Department of Environment and Climate Change [2008] NSWCA 337; (2008) 163 LGERA 400 at [51] and following.

1. Such epithets or formulations that are being judicially expounded with respect to the requirement in administrative law for the decision-maker to consider a relevant matter must be applied with caution ( Anderson at [57]). A relevant matter must be more than adverted to or given mere lip-service, but whether or not it can be judged that a matter has been considered is essentially an evaluative process based exclusively on what the decision-maker has said or written. That process is not assisted to any significant degree by resorting to formulations which purport to qualify what is an ordinary English word, namely "consider" ( Anderson at [58]). Tobias JA said at [59] - [60]:

Furthermore, the formulation that the decision maker must evince an understanding of the relevant matter may require no more than that he or she must not misdirect himself or herself as to the meaning of the particular matter required to be taken into consideration or context of the relevant statute.

... the process to be undertaken on judicial review is an evaluative one and a particular case may fall easily on one side of the line or the other.

1. If all the heritage material placed before the Council is considered there can be no suggestion of the Council being misled. The Director's report, the Harden Review, and two independent heritage advices were all provided to the councillors in September 2010. Further no inference can arise that there was not sufficient time to consider the material given that the Council decision was not made until 27 October 2010. The Applicant's argument is really a merits review of the Council's decision.

No failure to consider heritage advices

1. The appropriate principles to apply in judicial review proceedings raising the ground of failure to consider a mandatory relevant consideration have received much judicial attention. Authorities such as Weal v Bathurst City Council (2000) 111 LGERA 181 are cited for the requirement of "proper, genuine and realistic" consideration. More recently the observations of Basten JA in Kindimindi at [76] - [79] and Belmorgan at [76] - [78] have stated the need to apply that formulation with caution in order to avoid impermissible merit review. Basten JA's observations were referred to with approval in Anderson by Tobias JA (Spigelman CJ and Macfarlan JA concurring) at [54] - [57]. Tobias JA concluded at [58] that a relevant matter must be more than adverted to, see also [59] and [60] set out in the Council's submissions (par 105). An evaluative process is necessary without overly qualifying the ordinary meaning of "consider".

1. More recently again in this Court, Biscoe J in Capital Airport Group Pty Ltd v Director-General of the NSW Department of Planning (No 2 ) [2011] NSWLEC 83 considered the various expressions of the content of a statutory duty to "have regard to" or "to consider" at [98] - [100] referring to a number of Federal Court authorities, inter alia . His Honour stated at [100] as follows:

The High Court in Minister for Immigration and Citizenship v SZJSS [2010] HCA 48; (2010) 85 ALJR 306 at [26] approved the formula of Gummow J in Khan v Minister for Immigration and Ethnic Affairs [1987] FCA 457; (1987) 14 ALD 291 that the statutory duty to "consider" means to "give proper, genuine, and realistic consideration to the merits of the case", whilst noting the caution in Swift v SAS Trustee Corporation [2010] NSWCA 182 at [45] that those words should not be permitted to encourage a slide into impermissible merits review. No reference was made to a view earlier expressed by the Court of Appeal that it is preferable to avoid using that formula or similar descriptive formulae, but that the relevant matter must be more than merely adverted to or given mere lip-service: Anderson v Director-General Department of Environment and Climate Change [2008] NSWCA 337; (2008) 163 LGERA 400 at [51] - [58].

1. These authorities, which include the High Court in Minister for Immigration and Citizenship v SZJSS [2010] HCA 48; (2010) 273 ALR 122 ,suggest that applying "proper, genuine and realistic" consideration remains a useful test, whilst aware of the cautions expressed by the Court of Appeal of avoiding an impermissible merit exercise. Mere lip-service will not establish adequate consideration.

1. There is no dispute that heritage issues were a mandatory relevant consideration and that they were considered by the Council when it granted development consent. The specific failure relied on by the Applicant is that the Council was misled by the Director's report so that it failed to consider a matter raised in both independent heritage advices of the undesirability of the two storey appearance of units 13 and 14 from Rossi Street.

1. Viewed from an overall perspective, the consideration of heritage matters by the Council appears appropriate with two independent heritage advices obtained and modification of the DA required in response to the comments of the first heritage advice. Changes were made to the draft conditions of consent to give effect to two of three concerns raised by the second heritage advice. Part A condition 3 of the development consent required the proponent to obtain a construction certificate for all building works prior to any works commencing on site. Part C imposed conditions which had to be met prior to obtaining that certificate, including conditions (6) - (8) which dealt with heritage issues. Condition (7) required the height of units 13 and 14 to be reduced to 7m from the natural ground level. The Harden Review considered the assessment of heritage issues and concluded these were handled appropriately and could be dealt with by way of consent conditions. These reports and the Director's report were provided to the councillors well before the Council approved the DA.

1. The Applicant's submissions focus on one aspect of the two heritage advices to submit that there was misleading advice to the councillors in the summary of the Director's report which failed to refer to the unsatisfactory two-storey appearance of units 13 and 14 and therefore did not fully address the heritage concerns raised in the heritage advices. (The Director's report recommended the reduction in height of units 13 and 14 to 7m.) Hale is relied on to support that submission but I do not consider that is a fair description of the Director's summary of the heritage advices. That the Council staff considered that modification of units 13 and 14 could be achieved acceptably by a reduction in height is within their area of responsibilities and not a matter that is reviewable in judicial review proceedings. There is no obligation on the Council or its staff to adopt the advice of an independent expert consultant. The summary in the Director's report was not misleading in stating that the heritage advisors' concerns had been addressed.

1. Further, the whole of the heritage material before the Council must be considered. The Applicant's submissions (at par 102 above) that there is nothing to suggest the councillors read the reports reverses the usual presumption in such matters that the councillors are presumed to be aware of the matters on the council file before them, see for example Schroders Australia Property Management Ltd v Shoalhaven City Council [2001] NSWCA 74 at [72] (Ipp AJA (Spigelman CJ and Sheller JA concurring)) . The Applicant relied on older authority in Dunlop (1975) at 485 that the reports of council officers are a basis for attributing to the council the intentions and beliefs in the reports. Even applying that assumption does not confirm the Applicant's submission that the Director's report was misleading for the reasons already stated. The Applicant's submission that the councillors were deprived of a reasonable opportunity to consider the heritage issues because they were wrongly informed is not made out on the evidence of what was before the councillors. That material was available several weeks before the Council meeting at which development consent was granted. While Hale was relied on by the Applicant as addressing a similar context, the circumstances in that case were markedly different. The Court of Appeal (Street CJ and Moffitt P concurring, Reynolds JA dissenting) in that case considered that the councillors had not had a reasonable opportunity to consider substantial amendments to conditions as these were only tabled at the meeting of the council at which a decision to approve a very large project was made. Those circumstances are quite removed from this case.

1. As submitted by the Council, I consider this ground is really an argument about the merits of how heritage issues were considered and requires the Court to undertake an impermissible evaluative review of the merits. Review of the merits of a particular decision are outside the scope of judicial review proceedings. Well known authority includes Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 where Mason J stated at 42 "in the context of administrative law, a court should proceed with caution when reviewing an administrative decision on the ground that it does not give proper weight to relevant factors, lest it exceed its supervisory role by reviewing the decision on its merits" . Similarly, Brennan J said in Attorney-General (NSW) v Quin [1990] HCA 21; (1990) 170 CLR 1 at 35 - 36, " The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone."

1. The Applicant is unsuccessful on this ground as he has not made out the onus of proof he bears of demonstrating that there was a failure to consider a mandatory relevant consideration being all aspects of the heritage advices. There was no demonstrated failure of the Council to give proper, genuine and realistic consideration to the matters referred to in the heritage advices at the time it granted development consent.

Conclusion

1. The Applicant has not succeeded in either of the grounds of challenge. This Class 4 summons should be dismissed. Costs will be reserved.

Orders

1. The Court makes the following orders:

1. The summons filed on 28 January 2011 is dismissed.

2. Costs reserved.

Decision last updated: 07 September 2011