CHS PTY LTD and CITY OF COCKBURN - [2012] WASAT 4

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: STRATA TITLES ACT 1985 (WA)

CITATION: CHS PTY LTD and CITY OF COCKBURN [2012] WASAT 4

MEMBER: DR B DE VILLIERS (MEMBER)

HEARD: 9 DECEMBER 2011

DELIVERED : 9 JANUARY 2012

FILE NO/S: CC 884 of 2011

BETWEEN: CHS PTY LTD
Applicant
AND
CITY OF COCKBURN
Respondent

Catchwords:

Strata title Certificate for subdivision Conditions imposed by local authority on a strata subdivision Can conditions be imposed if construction has been completed?

Legislation:

City of Cockburn Town Planning Scheme No 3
Interpretation Act 1984 (WA), s 19(2)(b), s 19(2)(f)
Strata Titles Act 1985 (WA), s 25, s 25(3), s 25(4), s 27(4)

Result:

Application is successful

Category: B

Representation:

Counsel:

Applicant: Mr B Grubb
Respondent: Mr D McLeod

Solicitors:

Applicant: Metaxas & Hager
Respondent: McLeods Barristers & Solicitors

Case(s) referred to in decision(s):

Newbury District Council v Secretary of the Environment [1981] AC 578
Project Bluesky v Australian Broadcasting Authority [1998] HCA 28

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

CHS Pty Ltd undertook a development of eight grouped dwellings within the jurisdiction of the City of Cockburn. After completion of the construction, CHS Pty Ltd applied for the grouped dwellings to be subdivided into strata title. The City of Cockburn approved the subdivision but imposed a condition that required CHS Pty Ltd to enter into a legal agreement with the City of Cockburn, to contribute towards the cost to provide community infrastructure. The City of Cockburn said that it had the power, pursuant to s 25(4) of the Strata Titles Act 1985 (WA), to impose such a condition. CHS Pty Ltd challenged the condition and said it can only be imposed prior to the commencement of construction. Existing dwellings are therefore exempt.
CHS Pty Ltd sought an order to set aside the condition. CHS Pty Ltd contended that:
a)Such a condition could only be imposed if it was issued prior to commencement of construction and, in this case, construction had already been completed when the condition was issued; and
b)Amendment No 81 to the City of Cockburn's Town Planning Scheme No 3 did not have retrospective application and could therefore not be applied to the development undertaken by CHS Pty Ltd.
The City of Cockburn contended that the condition was lawful since at the time of the issuing thereof the City of Cockburn had a seriouslyentertained planning proposal under consideration and that proposal ultimately culminated in Amendment No 81 to the City of Cockburn Town Planning Scheme No 3. The approval of the strata subdivision on 2 September 2011 was made subject to the condition being complied with.
The Tribunal found that the application had to succeed on the basis that conditions imposed on new strata subdivisions, pursuant to s 25(4) of the Strata Titles Act 1985 (WA), specifically apply to new developments where an application for subdivision is made prior to construction. In these proceedings the construction of the eight grouped dwellings, the subject of the subdivision, had been completed prior to the application and the condition could therefore not be imposed.
Orders were therefore made that Condition 2 is declared to be invalid and the amount of $21,116.69, plus all the interest accrued thereon, must be paid back to CHS Pty Ltd within 21 days from the date of these orders.

Issue

The question raised by CHS Pty Ltd (CHS) is whether Condition 2 imposed by the City of Cockburn (City) in reply to the application by CHS to subdivide a group housing scheme into a strata title scheme, was lawful.
CHS seeks orders that:
(a)Condition 2 is invalid; and
(b)An amount of $21,116.69, plus all the interest accrued thereon, must be paid back to CHS Pty Ltd.

Background

The application was lodged on 15 July 2011. The first directions hearing took place on 4 August 2011 at which the matter was referred for mediation. The mediation was not successful. Final programming orders for the dispute to be heard were made on 22 September 2011. The hearing took place on 9 December 2011 and the decision was reserved on the same day. Both parties made written and oral submissions.

Summary of facts

The facts giving rise to the application are generally agreed and can be summarised as follows. CHS lodged a development application on 11 December 2009 for the construction of eight grouped dwellings within the jurisdiction of the City. The proposed development was approved by the City on 15 February 2010 (DA09/0997).
The City granted the development application and issued a building licence for construction to commence on 21 June 2010. The construction was completed in March 2011.
On 11 April 2011 CHS sought approval for the scheme to be subdivided into survey strata title. The application was lodged pursuant to s 25 of the Strata Titles Act 1985 (WA) (ST Act). The City is the delegated authority to issue a certificate for approval of a strata plan on behalf of the Western Australian Planning Commission (WAPC) pursuant to s 25 of the ST Act. The City did not reply to the application within 40 days as is required by s 27(4) of the ST Act.
On 3 June 2011 the City approved the strata subdivision subject to two conditions. Condition 2 required CHS to enter into a legal agreement to contribute towards community infrastructure, as proposed by Amendment No 81 of the City of Cockburn Town Planning Scheme No 3 (TPS 3). At that stage Amendment No 81 had not yet been gazetted.
The public process leading to Amendment No 81 commenced on 27 July 2010 with community consultation. On 23 December 2010 the amendment was submitted to WAPC for Ministerial approval. Amendment No 81 was given final approval on 22 August 2011 and it was gazetted on 30 August 2011.
The certificate under s 25 of the ST Act for formal approval of the strata subdivision was issued on 2 September 2011.

Statutory framework

The statutory framework within which the application is brought is as follows.
Section 25 of the ST Act states:
Certificate of Commission
…
(3)An application for a certificate under this section shall be made to the Commission in the prescribed form and manner and, where a building is to be constructed or modified for the purposes of the strata scheme or a proposed strata scheme, the application shall be made prior to the construction or modification of the building unless the Commission otherwise agrees in a particular case.
(4)A certificate granted by the Commission under this section shall certify the approval of the Commission to the subdivision, re‑subdivision or consolidation, as the case may be, and shall be in the prescribed form and in the case of an application made prior to construction or modification of a building proposed to be divided into lots under the scheme, the Commission may grant a certificate unconditionally or subject to such conditions as are specified in the certificate.
…
Section 27 of the ST Act states:
Review of Commission decision
(1)In this section, application means an application to the Commission for approval or a certificate of approval, as the case may be
(a)under section 25 that the Commission approves the proposed subdivision in a strata plan or a plan of re‑subdivision for a strata scheme or approves the proposed consolidation in a plan of consolidation for a strata scheme;
…
(3)Subject to this section, an applicant may apply to the State Administrative Tribunal for a review, in accordance with Part 14 of the Planning and Development Act 2005, of
…
(b)the attachment of a condition under section 25(4) to the approval of the Commission.
…

Condition 2 of the Form 24 Strata Approval, dated 3 June 2011 states:
The applicant/owner entering into a legal agreement with the City of Cockburn to contribute towards the costs of providing community infrastructure as established through Amendment 81 (when gazetted) to the City of Cockburn's Town Planning Scheme No. 3, prior to endorsement of the Form 26 for the subject property.

Contentions of the parties

The contentions of the City can be summarised as follows:
1)The land the subject of these proceedings is the subject of the obligations that rest on developers to make a contribution to community infrastructure pursuant to TPS 3. The liability to make a contribution arose:
• at the time of commencement of the development; or
• at the time of the approval of the strata plan.
2)CHS had to make an application for the strata subdivision prior to commencement of construction. However, CHS first completed construction and then applied for the subdivision. CHS should not be allowed to escape its obligations by such 'unlawful' action. (Mr McLeod, in oral submissions, described the actions of CHS as 'unlawful').
3)CHS delayed, purposefully, its application for strata subdivision and thereby attempted to escape the obligation to make a community infrastructure contribution. It has been a longstanding practice in Western Australia for new developments to make a contribution to community infrastructure.
4)At the time CHS sought strata subdivision, the proposed Amendment No 81 was a 'seriouslyentertained planning proposal' and the City therefore acted properly by requiring CHS to enter into a legal agreement to make the community contribution.
5)Any statement of Parliamentary intention in regard to s 25 of the ST Act must be read against the specific provisions of the ST Act and, in particular, s 25(4) which allows the Commission and therefore the City as delegated authority, to impose a condition of this nature.
6)Condition 2 was lawfully imposed, it is reasonable and certain, and it should be affirmed by the Tribunal. The application should therefore be dismissed.
The contentions of CHS can be summarised as follows:
1)The City did not have the authority to impose Condition 2 pursuant to s 25(4) of the ST Act after the completion of the buildings. Such a condition can only be imposed prior to the commencement of construction. This interpretation is consistent with the intention of Parliament as reflected in the second reading speech.
2)The reason why a condition, if any, should be imposed prior to the commencement of construction is to enable the developer to have certainty regarding conditions, costs and financing.
3)The gazettal of Amendment No 81 cannot be given retrospective effect by requiring that already completed buildings become the subject of the community levy. The fact that an application for the strata title subdivision was lodged after construction of the buildings had been completed does not enliven the authority of the City to impose conditions pursuant to s 25(4) of the ST Act.
4)Condition 2 was unreasonable and expressed in uncertain and imprecise terms.
5)Condition 2 is invalid and should be removed as a condition for strata title subdivision.

Consideration

There is agreement between the parties regarding the key events giving rise to the application. The question is whether s 25(4) of the ST Act empowers the City to impose a condition of this nature in a situation where construction has not only commenced, but been completed.
The Tribunal will first give its decision and then provide the reasons for its decision.
The Tribunal concurs with the contentions of CHS, namely that the City did not have the authority to impose Condition 2. Condition 2 should therefore be removed and the amount held in trust by McLeods Barristers and Solicitors should be returned to CHS.
The reasons for this finding are as follows.
The Tribunal understands the rationale, as explained by Mr McLeod for the City, as to why a community infrastructure contribution is payable by new developers. The contribution is applicable to new developments so as to relieve the pressure on local authorities to provide infrastructure associated with new developments. Mr McLeod also explained to the Tribunal that existing grouped dwellings are not required to contribute to the community infrastructure if they were to apply for strata title subdivision pursuant to s 25 of the ST Act. The community levy is only applicable to new developments. Mr McLeod sought to draw a distinction between grouped dwellings that were constructed some years ago in contrast to the scheme the subject of these proceedings which was only constructed recently. According to Mr McLeod, CHS acted 'unlawfully' by commencing construction of the grouped dwellings without first complying with the requirements of s 25(3) of the ST Act, according to which an application ought to be made prior to the commencement of construction.
The Tribunal is satisfied, however, that in these proceedings CHS commenced and completed the construction of the grouped dwellings pursuant to a development application and approval for 'grouped dwellings' and not for strata subdivision under s 25 of the ST Act. The approval to commence with the construction was granted by the City. There is no evidence before the Tribunal that CHS had, at the time when it applied for approval for grouped dwellings, intended to subdivide those dwellings into strata title, or that CHS deliberately attempted to circumvent the provisions of s 25(3) of the ST Act. The development approval granted by the City to CHS on 15 February 2010 made it clear that approval was given for the development of '8 grouped dwellings'. No mention was made at the time by CHS of a strata subdivision or by the City of the imposition of a community development levy. At the time CHS applied for and received approval for the construction of grouped dwellings, the City had no policy in place in regard to contributions towards community infrastructure and no condition was imposed by the City on CHS to make a contribution to community infrastructure. CHS proceeded to construct the grouped dwellings in accordance with the development approval and building licence granted and issued by the City. The Tribunal therefore does not agree with Mr McLeod that CHS had acted 'unlawfully' when they commenced with construction and, subsequently, after completion of construction, decided to apply for strata subdivision. CHS obtained development approval for the grouped dwellings on 15 February 2010, a building licence was issued on 21 June 2010 and the construction was completed in March 2011. CHS sought approval to convert from grouped dwellings to a strata scheme on 11 April 2011 after completion of the construction of the grouped dwellings.
The application for subdivision (Form 24 Strata Approval) was lodged on 11 April 2011. The application stated that there were eight brick constructed dwellings that would be affected by the subdivision (para 11(a) of Form 24). The application was lodged pursuant to s 25(3) of the ST Act. The requirement in s 25(3) of the ST Act is as follows:
… where a building is to be constructed or modified for the purposes of the strata scheme or the proposed strata scheme, the application [for a certificate] shall be made prior to construction …
In these proceedings it is not contested that the application for subdivision was lodged only after the completion of construction of the dwellings. CHS did not act 'unlawfully' it had approval from the City to construct grouped housing and that is what it did. In this regard, there is no difference between a grouped dwelling that has been in existence for 20 years and a grouped dwelling that has been in existence for 20 days in both instances a condition such as Condition 2 cannot be imposed since the construction had been completed prior to an application for subdivision.
This interpretation of the Tribunal, namely, that s 25(4) of the ST Act does not empower the City to impose a community development contribution on an existing grouped housing scheme, is consistent with Amendment No 81 of TPS 3 and the explanatory memorandum that accompanied it, for example:
1)Amendment No 81, as put to the Council of the City, explains under the signature of the Chief Executive Officer following the heading 'Method for calculating contributions', that '[e]xisting dwellings on a lot or lots to be subdivided or developed will be exempt from the contribution'. These were existing dwellings that had been recently completed pursuant to a development approval by the City. The development approval did not contain any condition regarding a contribution to a community infrastructure fund.
2)The Report prepared by the City in support of Amendment No 81 provides '[w]here land to be subdivided or developed already has a dwelling or dwellings on it, the existing dwellings will be exempt from the DCA contribution as the contribution is only in respect to new dwellings'. These were existing dwellings which should be treated the same way as dwellings that had been completed many years ago. The decision to subdivide in strata lots does not open the door for a community infrastructure levy to be imposed pursuant to s 25(4) of the ST Act for the mere fact that construction had recently been completed.
3)Amendment No 81, as approved by the City, provides under the heading 'Method for calculating contributions', that '[e]xisting dwellings on a lot or lots to be subdivided or developed will be exempt from the contribution'. This formalises the policy that had been developed by the City and is consistent with the provisions of s 25(4) of the ST Act, the recommendations of the Law Reform Commission and the second reading speech in Parliament.
4)Amendment No 81 sets out when an owner's liability to make the cost contribution arises:
6.3.13.2An owner's liability to pay the owner's cost contribution to the local government arises on the earlier of
a)the Western Australian Planning Commission endorsing its approval on the deposited plan or survey strata plan of the subdivision of the owner's land within the development contribution area;
b)the commencement of any development on the owner's land within the development contribution area;
c)the approval of any strata plan by the local government or Western Australian Planning Commission on the owner's land within the development contribution area; or
d)the approval of a change or extension of use by the local government on the owner's land within the development contribution area.
The liability arises only once upon the earliest of the above listed events.
The earliest opportunity upon which the liability could have arisen was when construction of the eight grouped dwellings commenced. At that stage there was no seriously entertained planning proposal and no condition attached to the approval issued by the City.
The Tribunal is satisfied, and it can be concluded from the above, that:
a)the existing grouped dwellings developed by CHS that it seeks to subdivide into strata title pursuant to s 25 of the ST Act are exempt from the community infrastructure levy; and
b)the community infrastructure levy has to be imposed at the earliest opportunity which in this case is commencement of the development.
At the stage when development of these grouped dwellings was commenced there was no condition attached for a community levy to be paid; there was no seriouslyentertained planning proposal on foot; and there is no evidence before the Tribunal that CHS had intended for the grouped dwellings to be subdivided into a strata scheme. The application for existing grouped dwellings to be subdivided therefore does not enliven the authority of the City to impose a condition such as Condition 2. Amendment No 81 does not have retrospective application in other words it only applies to new developments and not to existing developments that seek to be subdivided into strata title.

The Tribunal's finding is consistent with the recommendations of the Law Reform Commission and the second reading speech in Parliament regarding the intent of s 25(4) of the ST Act. The Tribunal may, consistent with s 19(2)(b) and s 19(2)(f) of the Interpretation Act 1984 (WA), take into consideration a report of the Law Reform Commission and/or the second reading speech so as to ascertain the meaning of any statutory provision. It is appropriate in these proceedings where there is a dispute about the exercise of a statutory authority, to consider the purpose of the Parliament when it enacted the provision (see: Project Bluesky v Australian Broadcasting Authority [1998] HCA 28). As pointed out by Mr Grubb for CHS, Parliament enacted s 25 of the ST Act as a direct result of the recommendations of the Law Reform Commission (1982). The Law Reform Commission recommended that conditions, if any, on a strata subdivision, should be imposed 'before construction commences' (1981/82 Vol 6 para 3.42). This sentiment is reflected in the second reading speech when the responsible Minister said:
[t]he Bill also provides, in clause 25, that in those cases where the requirement remains, the application shall be made prior to the construction or modification of the building rather than afterwards, as at present. [16 April 1985, page 2019]
Mr McLeod explained to the Tribunal that existing grouped dwellings are exempt from paying the community levy if they seek to subdivide into strata title so as to protect the proponents from the costs that may be associated with such a community levy. The purpose of s 25(4) of the ST Act is clearly that a developer should be aware of all the costs associated with a proposed construction so as to factor it into the total cost of a development. However, if a development is complete, the community levy cannot be imposed pursuant to s 25(4) of the ST Act.
In light of these findings there is no need for the Tribunal to consider the other contentions of the applicant, namely that Condition 2 was too vague and uncertain so as to make it fairly and reasonably related to the proposed development (see: Newbury District Council v Secretary of the Environment [1981] AC 578 at [600]).
The Tribunal therefore concludes that the City did not have the power to impose Condition 2 for the following reasons:
a)At the time development approval for eight grouped dwellings was granted in February 2010 there was not a seriouslyentertained planning proposal for a community infrastructure levy to be raised and there was no condition imposed on CHS to make a community infrastructure levy.
b)CHS commenced with and completed the construction of the eight grouped dwellings in terms of the development approval and building licence granted to it.
c)The application by CHS for the existing dwellings to be subdivided into a strata scheme was lodged after construction of the grouped dwellings had been completed.
d)The CHS grouped dwellings must be treated in the same way as any other existing dwelling/s that seek to be subdivided into strata title;
e)The application for subdivision into strata title of an existing construction does not enliven the authority of the City to impose a condition of the nature of Condition 2.
f)Amendment No 81 does not have retrospective working and cannot be imposed on existing dwellings that had been constructed before a seriouslyentertained planning proposal was under consideration.

Orders

1.The application is successful.
2.Condition 2 dated 3 June 2011 is invalid.
3.The City of Cockburn must, within 21 days from the date of these orders, issue a new Form 24 Strata Approval without Condition 2.
4.The amount of $21,116.69, plus all interest accrued thereon which is held in the trust account of McLeods Barristers and Solicitors, must be paid to CHS Pty Ltd within 21 days from the date of these orders.

I certify that this and the preceding [35] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
DR B DE VILLIERS, MEMBER