Chesher & Anor v Eurobodalla Shire Council (No 2)

[2007] NSWLEC 21

Land and Environment Court

of New South Wales

CITATION:	Chesher & Anor v Eurobodalla Shire Council (No 2) [2007] NSWLEC 21
PARTIES:	APPLICANTS Peter Ronald Chesher Deborah Margaret Chesher RESPONDENT Eurobodalla Shire Council
FILE NUMBER(S):	20982 of 2005
CORAM:	Pain J
KEY ISSUES:	Local Government approval :- whether application to discharge to council sewage treatment facilities should be approved having regard to public interest - what conditions can be imposed on a section 68 approval - consideration of environmental protection, protection of public health
LEGISLATION CITED:	Local Government Act 1993 s68, s89, Dictionary Local Government (General) Regulation 2005 cl 31 Protection of the Environment Administration Act 1991
CASES CITED:	Chesher v Eurobodalla Shire Council (2006) 145 LGERA 300; Council of Casino v Eljo Pty Ltd & Solo Waste Australia Pty Ltd (trading as Richmond Waste), (unreported, Supreme Court of New South Wales Court of Appeal, Mahoney ACJ, Clarke and Beazley JJA, 19 September 1996); Eljo Pty Ltd and Solo Waste Australia Pty v Casino Council 84 LGERA 373
DATES OF HEARING:	23/10/2006 (written submissions - Respondent) 03/11/2006 (written submissions in reply - Applicant)
DATE OF JUDGMENT:	6 February 2007
LEGAL REPRESENTATIVES:	APPLICANTS Mr G Gleeson (solicitor) SOLICITOR Morton & Harris RESPONDENT Mr D Baird (solicitor) SOLICITOR Maddocks Lawyers

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Pain J

6 February 2007

20982 of 2005 Peter Ronald Chesher and Deborah Margaret Chesher v Eurobodalla Shire Council (No 2)

JUDGMENT

1 Her Honour: In Chesher v Eurobodalla Shire Council (2006) 145 LGERA 300 (Chesher No 1) I considered the Court’s power to approve an application by the Applicants under s 68 of the Local Government Act 1993 (the LG Act) for the disposal of effluent waste at the Council’s three sewage treatment plants (STPs). Having answered a question of law in favour of the Applicants in that decision it was then necessary for me to consider whether the application should be approved having regard to the public interest under s 89 of the LG Act (see [31] – [61] of Chesher No 1).

2 At [62] I said it was clear from my comments in [58] and [61] that I required further submissions from the parties before I could reach a final decision. At [58] I noted that there had been no submissions about the scope of conditions able to be imposed on the s 68 approval sought by the Applicants in order to deal with a number of the issues raised by the Council in opposing the Applicants’ application. I noted at [58] that the Applicants were seeking to have the s 68 approval issued subject to the same conditions as had previously applied. I stated that what had to be explored in the submissions was the extent to which, if at all, conditions can be imposed on a s 68 approval relating to the collection of human effluent waste and the inspection of on-site sewage management systems.

3 At [61] I stated I was not able to reach a conclusive view on the basis of the arguments presented whether the grant of the s 68 approval sought by the Applicants did interfere with the contractual obligations of the Council unless the Council’s legal powers to bind the owners of private on-site sewage management systems were clarified in relation to cl 8.2.2 and 8.2.3 of the proposed tender contract. Relevant background concerning the Council’s tender process for the provision of all waste collection services in the Shire and the terms of the exclusive Eurobodalla Shire Provision of Waste and Recycling Services Contract (the Contract) intended to be awarded to Mr Staples, the successful tenderer, is set out at [6] – [9] of Chesher No 1. The Contract has not been entered into because the outcome of these proceedings is yet to be determined. The relevant legislation is set out at [10] – [19] of Chesher No 1.

4 I set out the relevant considerations under the LG Act at [44] – [51] of Chesher No 1 and I considered the application of s 89(2) in the context of the evidence presented in that phase of the proceedings. This required consideration of the factors identified under s 89(2), being ecologically sustainable development (ESD) principles and a requirement to give effect to the Applicants’ objectives to the extent these are compatible with the public interest. Under s 89(3), when considering the public interest the Council must consider (a) protection of the environment and (b) protection of public health, safety and convenience.

5 I note for completeness that at [43] of Chesher No 1 the items in Table C of s 68 are identified and I stated that items 1 and/or 2 were applicable. It is now clear that item 4, disposal of waste into a sewer of the Council, is most relevant.

Additional evidence

6 Since my decision in Chesher No 1 the Council has applied to the Court to reopen its case to allow further evidence to be tendered being that of Ms Krogh, Council officer and Mr Staples, the successful tenderer. This application was granted in part. As a result a further partial statement of Mr Staples dated 20 June 2006 was tendered in evidence. Mr Staples has changed his position since the original hearing and states that he will not perform the liquid waste collection services of the Contract if this s 68 approval is granted. This would include the servicing, emergency pumpout and inspection requirements for individual homeowners. He also states that he will not enter into that part of the Contract which requires him to service any emergency within a two hour period.

7 A partial statement of Ms Krogh dated 16 June 2006 was also allowed to be tendered in evidence. In Ms Krogh’s additional statement of 16 June 2006 she stated that the failure of Mr Staples to undertake all parts of the Contract would have a negative impact on the monitoring of on-site systems in the Shire, the prices for customers for liquid waste removal in the Shire, the provision of emergency pumpout services and concerns in relation to environmental protection issues as a result. If a customer in the Shire does not wish to use the single Shire contractor to service their liquid waste system they are free to use another contractor who will have to dispose of the waste outside the Shire.

8 A further affidavit of one of the Applicants, Mr Chesher, dated 22 September 2006 was filed in response to the further statements of Ms Krogh and Mr Staples. Mr Chesher stated that, in relation to monitoring of on-site systems, he is happy to negotiate with the Council in relation to procedures for undertaking monitoring. He states that the Council has data from which such monitoring can be undertaken as he provides log sheets disclosing the quantity of the effluent disposed. This information could be used by the Council to provide data. He noted that no contractor has authority to go onto private property to inspect an effluent facility without the property owner’s specific consent. The Council has made clear that it already retains a list of properties in categories of risk as these are attached to the Contract. As the Council already has this information there is no prejudice to Council’s intention to set up a monitoring system of on-site facilities if the log sheets provided by Mr Chesher are correlated with those provided by Mr Staples. In relation to best pricing arrangements there will be competition which is a guaranteed mechanism for controlling prices in any market. If Mr Chesher is unable to dispose of effluent at the Council’s STPs he would be unable to compete within the Eurobodalla market as the transportation costs of disposing of waste outside the Shire are prohibitive. It is disingenuous of the Council to say that customers can use other contractors because he cannot provide a cost effective service if he is unable to dispose of effluent at the Council’s STPs. Mr Chesher states that he has always been available to provide emergency services to the Council and has provided those services in the past. He does not agree that the Council may be subject to “any pricing regime”. There are other service providers within the Shire who have equipment which can be utilised for the service. Mr Staples will still have plant within the Shire which will be available to provide that service as he will still be performing other parts of the Contract. The Council has an established procedure requiring persons interested in contracting with the Council for plant hire to participate in a tender process every two years.

9 I now take these additional matters into account in addition to the matters referred to in Chesher No 1 at [31] – [33] in deciding whether I should grant the s 68 approval.

Council’s further submissions

10 The parties have filed further submissions in addition to those set out in Chesher No 1 at [34] – [38] (Council) and [39] – [41] (Applicants). The submissions of the Council include draft conditions which are far more extensive than the conditions which have applied to the s 68 approval held by the Applicants in the past. These include recording requirements in conditions 37 – 41. These require the maintenance of a log book and reporting requirements based on the categorisation of properties by their “riskiness” in terms of likelihood of overflowing septic systems. Emergency assistance obligations are also imposed in conditions 42 - 44. A $50,000 bond is required to be paid and there are numerous fees and charges specified (conditions 15 – 23).

11 The Council submitted that it is in the public interest that a similar regime be imposed on the Applicants as is sought to be imposed under the Contract with Mr Staples. The Council argued that if the Applicants do not accept this regime the s 68 application should be refused. The conditions imposed will ensure similar environmental protection and community service obligations are afforded to the community as are afforded under the Contract. The Council also argued that the Contract will provide better environmental and public health protection than the conditions able to be imposed under the s 68 approval in any event, and that this s 68 approval should be refused.

12 Draft condition 42 requires the Applicants to be available to assist the Council in emergency pumpout situations. If such a condition is not imposed by the Court, the Council argued it will not be able to provide adequate services to the community as no contractor will be bound to provide Council with an emergency response service and the Council will have no guaranteed price structure for emergency pumpouts if required.

13 Draft condition 39 requires the assistance of Council to a limited extent in tracking properties. The requirements in the Contract in relation to waste tracking are more rigorous however. If this condition is not accepted by the Applicants and/or not imposed by the Court there will be no waste tracking system implemented. This will have potentially harmful environmental impacts.

14 Imposing a fair and equitable pricing regime under draft conditions 15 and 16 will encourage owners of septic systems to regularly attend to emptying these, reducing the risk of overflow. There will be no competitive market in any event given Mr Staples’ evidence that he will not undertake this part of the Contract if this s 68 approval is granted.

15 The response to the additional evidence of Mr Chesher dated 22 September 2006 by the Council was that it may authorise a contractor to carry out inspections on its behalf on private property under s 377 and s 378 of the LG Act. Under the Contract the Council can authorise a single contractor to carry out inspections but no such authority would be given by Council to an independent contractor otherwise not bound by the requirements of any contract. Tendering for plant hire is unrelated to a specific tender for specified waste removal services in the Shire. Ms Krogh’s evidence is that domestic sludge is the most difficult item to manage as it relies on householders to monitor their own systems to determine when desludging is required. Council, through the liquid waste services provisions in the Contract, sought a cost effective means of outsourcing the activities in a way which would minimise risk of environmental harm and protect public health

Applicants’ further submissions

16 The Applicants submitted that there is no supplementary evidence suggesting as a matter of fact that the grant of this s 68 approval will have adverse environmental and public health outcomes. The renewal of an existing approval is sought and there is no evidence that its granting will put the community at any greater risk of adverse environmental outcomes, rather the risk is hypothetical. The Council essentially argued that the grant of this s 68 approval would result in a lesser outcome for the community than would occur if Mr Staples were the exclusive contractor for the Shire, but there is no specific evidence of that. A grant of the s 68 approval would not prejudice the Council’s objective of the delivery of service “at the best possible price”. See Chesher No 1 at [54].

17 The further objective identified at [55] of the first judgment is the “minimisation of sewage overflows into the environment” and the Applicants argued that there is no evidence filed demonstrating that this grant of approval will lead to lesser environmental outcomes.

18 The third objective identified at [56] of Chesher No 1 is that the tendering process has the benefit of “a Shire-wide auditing process”. The Applicants argued the approach identified by Mr Chesher in his supplementary affidavit of 22 September 2006 allows this to be achieved in a way that is not cumbersome for the Council.

19 In relation to the objective identified at [57] of Chesher No 1, the prevention of cross-contamination of waste, the Applicants are seeking to collect only one type of waste. The likelihood of cross-contamination is remote.

20 The interference with the Contract cannot be a valid objection to the s 68 approval given that the Council does not enjoy monopoly rights under the LG Act and that the Council’s contract with Mr Staples cannot bind customers. No weight should be placed on Mr Staples’ altered position in his further evidence that he does not wish to enter into the Contract. Further, there is no evidence before the Court that the Contract is divisible so that Mr Staples can choose to perform only part of it. Further, the terms of the Contract expressly state that it is not to be construed as restricting or interfering with the exercise of the Council’s power as the consent authority.

21 A number of draft conditions submitted by the Council are opposed by the Applicants as they are beyond power in relation to a s 68 approval. The Court should not lend itself to an exercise calculated to protect the Council’s contractual position where the legislation does not confer on the Council monopoly rights. A s 68 approval seeks consent to transport waste over a public place and to dispose of waste into a sewer of the Council. The Applicants submit that conditions are constrained to matters of a technical nature specifically regulating the way the activities for which consent is sought are to be performed. There is no legal basis under the Act for the imposition of conditions which mirror the Contract conditions. Proposed conditions 15 and 16 which seek to regulate the price for the service are clearly beyond power. Proposed conditions 24 – 32 are onerous and exceed the current requirements under existing conditions. Proposed condition 37 is also onerous. Proposed condition 45 requiring a public risk policy of insurance is contrary to law as it appears to require the Applicants to indemnify the Council and would therefore be ultra vires. The draft conditions proposed by the Applicants are acceptable in the circumstances and the s 68 approval should be granted subject to these.

Finding

22 As stated in [44] of Chesher No 1 I must exercise my discretion in light of s 89(1) and (2) and I repeat [44]. I also repeat [50].

23 The Applicants argued that the Contract cannot act as a fetter on the Council, and the Court’s, exercise of discretion, as is specifically acknowledged in cl 52.2 of the Contract. That clause states that no term of the Contract is to be construed so as to fetter, restrict or otherwise interfere with the exercise of the Council’s power as a consent authority. Clause 8.2.4 Pt B Appendix B of the Contract states that the Contract does not confer exclusive rights (see Chesher No 1, at [8]).

24 As identified in Chesher No 1 at [48] the intended Contract with Mr Staples is relevant to consider under s 89(2)(a). That is clear from the decision in this Court at first instance in Eljo Pty Ltd and Solo Waste Australia Pty v Casino Council 84 LGERA 373 and as upheld on appeal as I refer to at [47] –[48] of Chesher No 1; see Council of Casino v Eljo Pty Ltd & Solo Waste Australia Pty Ltd (trading as Richmond Waste), (unreported, Supreme Court of New South Wales Court of Appeal, Mahoney ACJ, Clarke and Beazley JJA, 19 September 1996). I agree with the Applicants that the fact that the s 68 approval may interfere with the Contract alone is not a relevant matter and I do not take that matter into account. As observed by Bignold J in Eljo the maintenance of a monopoly for services is not a relevant matter of public interest given that the LG Act 1993 removed the statutory monopoly for the provision of waste services that had existed until then (see [48] and also [49]).

25 The tender process and Contract for waste services falls within the service responsibilities of the Council under the LG Act, as identified in Chesher No 1 at [10], [12], [32] and [42] and as identified in Eljo at 377, [26] of Chesher No 1.

26 Further to [61] in Chesher No 1, the Council does not have the legal power to bind the owners of private on-site sewage management systems as to the pumpout contractor they use. While the Applicants can therefore theoretically continue their business in that they can contract with whomever they choose, their evidence is that they will not be able to offer an economic service if they cannot dispose of waste at the Council’s STPs as they will otherwise have to travel too far. Effectively they will not be able to run their business in the Eurobodalla Shire if this s 68 approval is refused. The consequence of this is that Mr Staples will have a monopoly for the provision of these services in the Shire assuming no other contractor is granted a s 68 approval.

27 It is relevant to consider, in terms of public interest considerations under the LG Act, if the Contract is not proceeded with whether the objectives of the Council which caused it to engage in the tendering process for waste services giving rise to the Contract will be so frustrated and lead to such unacceptable outcomes when the public interest and ESD principles, if relevant, are considered, that these outweigh the public interest considerations in granting a s 68 approval.

28 The primary considerations of the Council in seeking to award the exclusive Contract for human waste collection services in the Shire identified in Chesher No 1 are:

(i) Ensuring consistent pricing for liquid waste removal across the whole Shire ([54]). I held at [54(iv)] that there was not conclusive evidence before me that this objective of the Council would not be met if the s 68 approval is granted. According to the additional statement of Ms Krogh this is necessary to ensure that householders are not charged on the basis of distance from an STP. This encourages owners of septic systems to regularly attend to emptying the waste and to reducing the risk of overflow. The Council wishes to deliver this service to its customers in order to encourage them to act in an environmentally responsible manner. The difficulty with that submission is that the Council cannot legally bind all of the customers in the Shire to use its preferred contractor as it is no longer a monopoly provider of waste services. Mr Chesher argued that a competitive market will inevitably lead to competitive prices as appears likely. Although Mr Staples says he will not undertake that part of the Contract Mr Chesher stated in his evidence there were other contractors in the Shire.

(ii) Ensuring a prompt and cost-effective emergency response when sewage overflows occur ([55]).

As noted in [55(i)] and confirmed by the additional evidence of Mr Staples this service will not be provided by him if this s 68 approval is granted. The Council therefore would not achieve its objective of ensuring an emergency response in a fixed time frame at a fixed price. Mr Chesher argued that he is available to provide emergency response services to the Council as he has done in the past. Once again by refusing this s 68 approval the number of contractors in the Shire will be potentially limited to one.

(iii) The imposition of a requirement for inspection of all properties with septic tank pumpout systems to determine, inter alia, frequency of the need for pumpout, a Shire-wide auditing process ([56]). My consideration in Chesher No 1 was directed to the tracking process for those properties where collection of sewage was taking place. That process of monitoring can be accommodated by one or more operators providing documentation to the Council for properties which have been serviced. That is reflected in the draft conditions proposed by the Applicants whereby duplicate log sheets would be provided to enable the Council to undertake the audit based on its own records. I accept the submissions of the Council that, according to Ms Krogh’s additional evidence, the monitoring of domestic sludge disposal is the most difficult task for the Council to manage. I note the Council’s advice that it is able to delegate its inspection functions under the LG Act and had intended to do so by the Contract so that Mr Staples had the necessary authorisation to enter private property to undertake the inspections. Mr Staples’ additional evidence is that he will not undertake this part of the Contract at all. What is potentially compromised if the s 68 approval is granted and the Contract not proceeded with is the on-site inspection of properties which have not been serviced to determine if there is a need for servicing, according to Ms Krogh’s additional statement. While additional conditions requiring the Applicants to provide duplicate log sheets will enable the properties actually serviced to be tracked, this does not address the inspection/auditing of all pumpout systems the Council considers necessary to prevent sewage overflows into the environment.

(iv) The prevention of cross-contamination of different types of waste. As noted at [57] of Chesher No 1 that is not an issue of concern given that the Applicants are seeking consent to dispose of only one type of waste.

29 As a result of the additional evidence of Mr Staples and Ms Krogh it is clear that the contractual arrangements sought to be made by the Council to achieve public health and environmental protection outcomes which would be adversely affected if the Contract is not proceeded with are in relation to the objective at par 28(iii) in relation to a Shire-wide auditing system in particular, and possibly objectives par 28(i) and par 28(ii) to a much lesser extent.

30 As the Applicants submitted there is no evidence of direct environmental and public health impacts which would result if this s 68 approval is granted to the Applicants, nor has that been argued by the Council. There is no suggestion that the Applicants cannot comply with the relevant conditions of a s 68 approval.

31 What the Council is seeking to achieve is a preventative system to avoid sewage overflowing into the environment. In this matter there is the need to balance this objective with the valid objective of the Applicants in continuing their business of waste collection and disposal. These objectives must be considered in light of the provisions of the LG Act 1993 under which the Council no longer has a monopoly on the provision of waste services. The Contract states that it is not intended to be exclusive and that other contractors may operate. Yet by refusing the s 68 approval that is the outcome the Council will achieve. Although Mr Staples’ evidence is that he will not proceed with the Contract if the s 68 approval is granted, I agree with the Applicants that the grant of the s 68 approval of itself has no legal impact on the contractual obligations of either the Council or Mr Staples. The main impact appears to be economic. Nor do I consider that the Council’s tendering process is undermined in circumstances where the Council is not able to require all the potential customers under the Contract to use the single Shire contractor in any event. This simply reflects the circumstances under the LG Act 1993 whereby the Council no longer provides services on a monopoly basis. The regulatory function exercised under s 68 is separate from the service functions under the LG Act and I consider the extent to which the conduct of service functions can affect the exercise of regulatory functions must be very limited.

Imposition of additional conditions appropriate?

32 One issue I identified in Chesher No 1 is whether conditions can or ought be imposed on the s 68 approval which address Council’s objectives. Clause 31(1) of the Local Government (General) Regulation 2005 (the 2005 Regulation) states:

(1) It is a condition of an approval referred to in item 4 of Part C of the Table to section 68 of the Act (Dispose of waste into a sewer of the council) that:

(a) the activity approved, and
(b) any building or work associated or carried out in connection with the activity,

complies with any applicable standards established by any regulation in force under the Act or the Environmental Planning and Assessment Act 1979 .

33 Conditions able to be imposed on a s 68 approval are limited to those relevant to the approval. The proposed conditions include a provision reflecting cl 31. That is the only mandatory condition specified in the LG Act and 2005 Regulation.

34 I agree with the Applicants’ submissions that many of the draft conditions sought to be imposed by the Council are beyond power or are inappropriate in the context of a s 68 approval seeking permission to discharge to the Council’s STPs. As submitted by the Applicants, conditions would usually be directed to regulating technical issues concerning how the activity for which approval is sought, that is, discharging to the STP, is to be conducted. There are no submissions from the Council which deal with the issue of whether there is power to impose such conditions. It has said it has imposed conditions which seek to impose on the Applicants similar obligations to those under the Contract. I do not consider the conditions dealing with pricing for services and requiring that a bond be paid are appropriate, for example. The draft conditions proposed by the Applicants are similar to the existing conditions which applied in a previous s 68 approval but also require duplicate log sheets to be provided to the Council. There may be scope for additional conditions beyond those proposed by the Applicants to be imposed. As the conditions were provided with the parties’ further written submissions I need oral clarification from the parties about the scope of some of the conditions before deciding finally which can be imposed.

35 I must therefore consider whether in light of the public interest considerations I must take into account under s 89(3) of the LG Act, and ESD principles if applicable beyond these, I should grant the s 68 approval on the basis of conditions being imposed. The ESD principles are identified in the dictionary to the LG Act, and reflect the definition of ESD principles outlined in s 6(2) of the Protection of the Environment Administration Act 1991. While these are important principles I have not had any specific submissions in relation to their application in the circumstances of this case and I do not consider there are additional matters which need to be considered as a result of their application.

36 I have set out above at par 28 and 29 the extent to which I consider the Council’s public health and environmental protection outcomes will be compromised if the Contract does not proceed as the evidence suggests will occur if this s 68 approval is granted. While I have taken into account the objective most affected if the Contract does not proceed, being the implementation of a Shire-wide auditing system for properties not serviced by a contractor, I consider this s 68 approval should be approved given the structure of the service and regulatory functions under the LG Act. That objective can be achieved in other ways given the Council’s powers for entry and inspection under the LG Act. Environmental protection and public health objectives to the extent they need to be considered in relation to this s 68 approval can be appropriately dealt with by imposing conditions, in my view. I require further discussion with the parties about the scope of conditions to be imposed before finalising this matter.