Cavestock Group Pty Ltd v Minister for Planning

[2008] NSWLEC 208

Set aside by Appeal: [2008] NSWCA 249

Land and Environment Court

of New South Wales

CITATION:

Cavestock Group Pty Ltd v Minister for Planning [2008] NSWLEC 208

PARTIES:

APPLICANT
Cavestock Group Pty Ltd
RESPONDENT
Minister for Planning
RESPONDENT ON THE NOTICE OF MOTION
Newcastle City Council

FILE NUMBER(S):

10448 of 2008

CORAM:

Sheahan J

KEY ISSUES:

Interlocutory Relief :- freezing order

LEGISLATION CITED:

Recovery of Imposts Act 1963
Uniform Civil Procedure Rules 2005

CASES CITED:

Baulkham Hills Shire Council v Wrights Road Pty Ltd (2007) 153 LGERA 219
Denham Pty Ltd v Manly Council (1995) 89 LGERA 108
Frevcourt Pty Ltd v Wingecarribee Shire Council (2005) 139 LGERA 140
Frigo v Culhaci [1998] NSWCA 88
Kendall Street Developments Pty Ltd v Byron Shire Council (No.2) (2004) 138 LGERA 360
Patterson v BTR Engineering (Aust) Ltd and Others (1989) 18 NSWLR 319

TEXTS CITED:

Ritchie's Uniform Civil Procedure

DATES OF HEARING:

8 July 2008

 
DATE OF JUDGMENT: 

9 July 2008

LEGAL REPRESENTATIVES:

APPLICANT
Mr J Ayling SC with Mr M Seymour
SOLICITORS
Mallesons Stephen Jaques

RESPONDENT
Mr M McDonald, Solicitor of
Department of Planning

RESPONDENT ON THE NOTICE OF MOTION
Mr P Larkin with Ms C Amato
SOLICITORS
Sparke Helmore

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Sheahan J

9 July 2008

10448 of 2008 Caverstock Group Pty Ltd v Minister for Planning

JUDGMENT

1 His Honour: Caverstock Group Pty Ltd has moved the court for the following orders:

“ 1. Until further order, pursuant to Part 25.11 of the Uniform Civil Procedure Rules 2005, Newcastle City Council by itself, its officers, employees, agents or otherwise, be restrained from transferring, disposing of, or dealing with money obtained by it having on 23 June 2008 called upon the Commonwealth Bank to transfer money to its account under a bank guarantee delivered by the Applicant to the First Respondent on 21 December 2007.
2. Newcastle City Council pay the money referred to in (1) into the Court.
3. Costs be reserved.
4. Any further or other order the Court thinks fit.”

2 Newcastle City Council (“NCC”) is not – or at least not yet – a party to these proceedings.

3 Late on Friday 4 July Pain J made the following orders on an ex parte basis:

“1. Until further order, pursuant to Part 25.11 of the Uniform Civil Procedure Rules 2005, Newcastle City Council by itself, its officers, employees, agents or otherwise, be restrained from transferring, disposing of, or dealing with money obtained by it having on 23 June 2008 called upon the Commonwealth Bank to transfer money to its account under a bank guarantee delivered by the Applicant to the First Respondent on 21 December 2007.
2. The Applicant’s Notice of Motion filed 4 July 2008 is stood over until Tuesday 8 July 2008 before the Duty Judge at 11am.
3. The Applicant is given leave to serve this order by facsimile upon Newcastle City Council by notification to its Solicitors, Sparke Helmore Lawyers .”

4 Caverstock, NCC, and the Minister appeared before me yesterday (8 July) to argue the matter. The Minister chose to make no submissions, but was represented throughout the hearing.

5 The appeal itself was commenced on 6 May 2008. It concerns the refusal by the Minister (as the relevant consent authority) of a s.96 modification application made by Caverstock (as the project manager for the relevant Lee Wharf development in the Honeysuckle Precinct of Newcastle) to reduce the amount stipulated in the amended conditions of consent to be paid by way of s.94 contributions.

6 The Minister’s consent dated 24 January 2007 requires that those contributions be paid to the Council. Development in the Honeysuckle Precinct is governed in a site specific way. The Minister is the consent authority, but the Honeysuckle Development Authority/Corporation (now the Hunter Development Corporation - “HDC” - the owner of the subject land) and NCC have roles, defined over time by/in various statutes, and in inter-partes agreements between those bodies. One of the matters which is the subject of detailed agreement is the management of ss.94 and 94A contributions. NCC has a Contributions Plan in place, and the current agreement provides for pooling, reconciliation and reporting of payments, and their disbursement. Under these arrangements most (perhaps all) of this developer’s monetary contribution would be contractually required to be passed by NCC to HDC.

7 The relevant condition of the Minister’s consent (B31 – Monetary Contributions) is in the following terms:

“ In accordance with Division 6 of Part 4 of the Act, the Applicant shall pay the following monetary contributions:
A total monetary contribution of $1,118,413 is to be paid to Council, pursuant to Section 94 of the Act, towards the provision of the following public amenities and public services within the locality, such contribution to be payable prior to the issue of the Stage 1 Construction Certificate in respect of the proposed development:
Service or Facility Contribution
Community facilities $144,534
Open space and recreation $935,579
Foreshore promenade $6,980
Section 94 management $19,831
Traffic management $11,489
Total $1,118,413
The amount of contribution payable under this condition has been calculated on the basis of current costs as at the date of consent and is to be indexed at the time of actual payment in accordance with the ‘Consumer Price Index’ weighted average of eight capital cities published by the Australian Bureau of Statistics each quarter. Any party intending to act on this consent should contact Council’s s.94 Coordinator, City Strategy Group, for determination of the indexed amount of contribution as at the date of payment ”.

8 That condition was modified by or on behalf of the Minister on 11 July 2007 to read as follows:

“ In accordance with Division 6 of Part 4 of the Act, the Applicant shall pay the following monetary contributions:
A total monetary contribution of $907,480 is to be paid to Council, pursuant to Section 94 of the Act, towards the provision of the following public amenities and public services within the locality, such contribution to be payable prior to the issue of the Stage 1 Construction Certificate in respect of the proposed development:
Service or Facility Contribution
Community facilities $144,832.00
Open space and recreation $762,219.00
Foreshore promenade $5,541.00
Section 94 management $15,541.00
Traffic management $9,131.00
Total $907,480.00
The amount of contribution payable under this condition has been calculated on the basis of current costs as at the date of consent and is to be indexed at the time of actual payment in accordance with the ‘Consumer Price Index’ weighted average of eight capital cities published by the Australian Bureau of Statistics each quarter. Any party intending to act on this consent should contact Council’s S96 (sic) Coordinator, City Strategy Group, for determination of the indexed amount of contribution as at the date of payment ”.

9 The Applicant has been seeking to negotiate a “credit” for public domain works already done (pursuant to an entirely separate consent, and with an estimated value of some $952,000), so that the amount to be actually paid to fulfil the amended condition would be reduced. The developer had, at the time the DA was being considered (13 April 2006), proposed an offset/allowance of $734,524 for “works in kind being contributed by the developer”, largely concerning “the Squareabout/Honeysuckle Drive reconfiguration works”.

10 On 15 May 2006 HDC acknowledged the developer’s right to seek an offset, but expressed the view that, as the “material public benefit” of the works had been overestimated, it would advise the Minister not to agree to the particular offset proposed.

11 Mr Stephen Austin QC was eventually engaged to provide an “independent evaluation” or “expert determination” of the dispute about the amount appropriate to be credited, and on 2 May 2007 he concluded as follows:

“ 115. The set off I would allow is:
Stage 3 Consent Condition B31 $1,118,413.00
less Squareabout works $952,267.35
less Land ceded to HDC $80,000.00
Total offset $1,032,267.35
Stage 3 Contribution adjusted
By this determination $86,145.65

116. In my expert determination the reasonable net monetary contribution pursuant to s.94 for Stage 3 is $86,145.65.”

12 If Caverstock succeeds in this appeal there is a possibility that the amount payable to NCC may be reduced even to nil. Rather than pay the stipulated amount challenged in the appeal, in order to obtain the construction certificate, Caverstock proposed on 21 December 2007 that Council accept a bank guarantee in the amount of $956,975 on certain conditions, including (1) that Council not make a claim on the guarantee until 20 June 2008, and (2) that, in the event of a reduction in the contribution payable, the “guarantee and/or any amounts in excess of the contribution amount as determined” be returned.

13 Works on the subject project commenced in January 2008.

14 On 7 March 2008 the modification application was refused by the Minister’s delegate on various stated reasons about which there is substantial dispute in these proceedings. The appeal was commenced and the Applicant invited both HDC and NCC to consider seeking to be joined in the proceedings. At the same time (13 June 2008) the Applicant proposed giving Council a new guarantee with a currency of 12 months, and asked NCC to “confirm that the Council will not call on the bank guarantee until the current proceedings are finally determined”. Proceedings seeking “an order from the Court restraining the Council from calling on the bank guarantee” were foreshadowed if Council did not “confirm” as requested.

15 There followed a series of letters between the solicitors acting for the Applicant on the one hand and for both NCC and HDC on the other.

16 Council asked for an indication of the grounds on which the Applicant would rely for such relief, and clarification of the currency date of the guarantee. In response the applicant sought a written undertaking that Council (1) would not call on the guarantee till the proceedings are resolved, and (2) would abide by any Court decision reducing the contribution. HDC advised it did not “intend, at this stage, to be joined as a party to the proceedings”.

17 On Council’s behalf the correspondence became gradually more aggressive in tone, and, on 23 June, immediately after the expiry of the six months, and while this correspondence continued, the Council wrote to the bank calling on the guarantee, without any notice to the Applicant. The Applicant, in turn, last week decided to make this current Rule 25.11 application (instead of bringing the foreshadowed Class 4 proceedings) without notice.

18 While Council may well have been within its rights in calling in the guarantee, there is no demonstrated need for it to do so, as the evidence indicates the availability to NCC of funds, far in excess of the amount involved in this dispute, upon which Council could call to fulfil any contractual commitments to HDC.

19 During yesterday’s hearing counsel for the Council declined several invitations by the Court to resolve the current impasse by undertaking that, in the event of the Applicant’s success in its appeal, Council would refund any excess of funds taken by Council pursuant to its calling in of the guarantee. Indeed, the Court was told only that Council would obey any order made by this Court for any moneys to be refunded, although it is common ground that this Court has no jurisdiction to make such an order. It was even put to me that the funds obtained may already be pooled, and so no longer able to be identified and refunded. They are now “public funds”, and if no refund is possible it was the Applicant’s “own fault”, the submission went.

20 This would appear to me to be precisely the type of attitude, and overall situation, that Mareva relief and Rule 25.11 are designed to remedy.

21 If the funds cannot or will not be refunded, despite the proven sound financial position of the Council, any decision of this Court favourable to the Applicant will be “unsatisfied”, as required by the Rule, which provides as follows:

“(1) The court may make an order (a freezing order), upon or without notice to a respondent, for the purpose of preventing the frustration or inhibition of the court’s process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied.
(2) A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets ”.

22 Rule 25.13 makes clear that “The Court may make a freezing order or an ancillary order against a respondent even if the respondent is not a party to a proceeding in which substantive relief is sought against the respondent”.

23 As Ritchie observes (in par 25.11.10), the power in Rule 25.11 is “complemented by the more specific provisions in r 25.14”, but I do not accept Mr Larkin’s submission that Rule 25.14 restricts Rule 25.11, such that it cannot apply to cases where a judgment debt is not the preferred or likely outcome. If that were so, the specific and intentional application of the provisions of Rule 25.11 to classes 1 to 3 of this Court’s jurisdiction would be a nonsense, given its general lack of power to make monetary orders, as such.

24 As the Court has a wide discretion in the substantive proceedings, I am satisfied, on the evidence about the public domain works relied upon, that the Applicant meets the test of having a “good, arguable case” in the proceedings. Also, in view of the position adopted by the Council, while the Applicant was seeking to negotiate in a less adversarial litigious environment, I am satisfied that the Applicant has a “good, arguable case” for the order to be made in this interlocutory proceeding, and also meets any “balance of convenience test”. If this latter test is to be expressed, as it now often is, in terms of the “balance of risk of injustice”, the Applicant clearly meets it, as the Council may end up having had the use of funds which the Applicant may be found not to have been properly required to contribute in the first place.

25 The authorities to which I was referred on both sides of this argument all point to the appropriateness of the Rule 25.11 order being made in this case.

26 While it is true that Kendall Street Developments Pty Ltd v Byron Shire Council (No.2) (2004) 138 LGERA 360 (“Kendall Street”) is clear authority for the principle that s.96 modifications do not operate retrospectively, that case turns on its own facts – an existing use claim sought to be reinforced after the event. It cannot, therefore, properly be taken to apply to a successful appeal in a matter such as this. If the relevant condition (B31) is modified as sought, the extent of monetary payment properly required to constitute compliance with the condition is redefined to take account of compliance in other respects (works already done), a totally different situation. The Kendall Street principles address proposed or completed works, or uses, not refinement of how s.94 contributions, properly imposed, are to be paid.

27 It is also true that the judgment of Gleeson CJ in Patterson v BTR Engineering (Aust) Ltd and Others (1989) 18 NSWLR 319, at 321-2, suggests that Mareva orders require that the Court find some element of misconduct or mischief on the part of the respondent to the application for the order. The mixing of funds in accordance with the HDC/NCC agreement, while appropriate to the accountability required for the expenditure of the funds, works a mischief in favour of the Council and against the Applicant, if it can be relied upon to ensure that a refund of any over-payment of contributions is not possible.

28 Mr Larkin also relied on Frigo v Culhaci [1998] NSWCA 88. All I draw from that Court of Appeal decision is reinforcement of the principle that Courts should not grant Mareva type orders “lightly”, and should use them only to preserve the status quo, not to unfairly advantage the beneficiary at the expense of the party burdened. I see nothing in the extract relied upon which indicates I should not grant the orders sought here.

29 Talbot J’s decision in Denham Pty Ltd v Manly Council (1995) 89 LGERA 108, and the decision of the Court of Appeal (per Beazley JA; Ipp and McColl JJA agreeing) in Frevcourt Pty Ltd v Wingecarribbee Shire Council (2005) 139 LGERA 140 (see pars [95]-[119] and especially [104]) reinforce how much at risk this Applicant will be, in the event of succeeding to any extent in the current appeal, that it will secure no benefit from that success, unless the order sought is granted.

30 In the event of the Applicant’s success, and in the absence of a responsible reaction to it on Council’s behalf, the Applicant may have to seek a remedy elsewhere. Mr Ayling submits that, as the Court of Appeal has held that s.94 contributions represent an “impost” under the Recovery of Imposts Act 1963, such a remedy might be found in an action under that Act. See Baulkham Hills Shire Council v Wrights Road Pty Ltd (2007) 153 LGERA 219. This is not a matter I need to decide, and I hope that the Council would not make it necessary for the Applicant to embark upon such a tedious search for a return of its money.

Orders

31 Order 2 sought in the Notice of Motion was not pressed on the Court beyond Mr Ayling’s submission that it is an option. An order that the money be paid into court may well be appropriate, indeed necessary, and the Applicant should have liberty to apply for such an order and argue its case more fully. Meanwhile, I am content to confirm Order 1 made by Pain J on 4 July (as sought in prayer 1 of the Notice of Motion).

32 The question of costs should be reserved as requested in the Notice of Motion. The view is certainly open that in all the circumstances of this case a Notice of Motion such as this should not have been necessary.

33 The formal orders of the Court will be:

1. Until further order, pursuant to Part 25.11 of the Uniform Civil Procedure Rules 2005, Newcastle City Council by itself, its officers, employees, agents or otherwise, be restrained from transferring, disposing of, or dealing with money obtained by it having on 23 June 2008 called upon the Commonwealth Bank to transfer money to its account under a bank guarantee delivered by the Applicant to the First Respondent on 21 December 2007.

2. The Applicant is granted liberty to apply on 48 hours in respect of Order 2 sought in its Notice of Motion filed 4 July 2008.

3. Costs are reserved.

4. Exhibit N1 is to remain in the Court file.