Claymont Westcapital Pty Ltd and East Perth Redevelopment Authority - [2008] WASAT 77

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: DEVELOPMENT & RESOURCES

ACT: EAST PERTH REDEVELOPMENT ACT 1991 (WA)

CITATION: CLAYMONT WESTCAPITAL PTY LTD and EAST PERTH REDEVELOPMENT AUTHORITY [2008] WASAT 77

MEMBER: MR D R PARRY (SENIOR MEMBER)

HEARD: 2 APRIL 2008

DELIVERED : 2 APRIL 2008

FILE NO/S: DR 72 of 2008

BETWEEN: CLAYMONT WESTCAPITAL PTY LTD
Applicant
AND
EAST PERTH REDEVELOPMENT AUTHORITY
Respondent

Catchwords:

Town planning - Application to amend development application by stipulating additional period of six months for substantial commencement - Development approval specified two years for substantial commencement - Application to extend time lodged one month before end of two-year period - Building licence issued one week after end of two-year period - Whether development approval has lapsed - Whether Tribunal has power to extend time after end of two-year period - Whether extension of time is consistent with orderly and proper planning - Whether approval of the application is futile

Legislation:

East Perth Redevelopment Act 1991 (WA), s 43, s 45
State Administrative Tribunal Act 2004 (WA), s 29

Result:

Development approval amended by specifying an additional period of six months for substantial commencement of the development

Category: B

Representation:

Counsel:

Applicant: Mr LA Tsaknis
Respondent: Mr MA Etherington

Solicitors:

Applicant: Pullinger Readhead Lucas
Respondent: Minter Ellison

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

Fazio & Anor v City of Fremantle (Unreported, SCWA, Wheeler C, 16 August 1996, CIV 2314 of 1995)

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The applicant obtained development approval from the respondent to construct a five-storey mixed use development. The local planning scheme said that the approval would lapse if the development is not substantially commenced within two years of the approval, unless the respondent specified a different period. The respondent did not specify a different period.
The applicant submitted working drawings to the respondent which were ultimately cleared by the respondent for a building licence. The building licence authority required a substantial number of items to be addressed before it would issue a building licence. While the applicant's architect and consultants worked on these items, progress was slow, because the consultants were busy. Ultimately, a building licence was issued to enable construction of the basement eight days after the end of the two-year period for substantial commencement.
Meanwhile, the applicant applied to the respondent almost a month before the end of the two-year period for an amendment to the development approval to stipulate an additional period of six months for substantial commencement. The local planning scheme expressly allowed the respondent to amend a development approval. On the day before the end of the two‑year period, the respondent refused to allow the amendment. On the day after the end of the two-year period, the applicant sought review of the respondent's decision.
The principal issues in the review were:
•whether the development approval has lapsed;
•whether the Tribunal has power to extend the substantial commencement period;
•whether an extension of the period is consistent with orderly and proper planning; and
•whether approval of the application would be futile, given that the respondent has commenced a process to repurchase the land from the applicant.
The proceedings were heard on an expedited basis. Following the hearing, the Tribunal gave an oral decision in which it allowed the application for review and extended the lapsing period by six months.
The Tribunal found that, subject to the pending application to extend the lapsing period, the approval lapsed. However, the Tribunal held that it has power to extend the period, because the application to amend the development approval was made while the approval subsisted.
The Tribunal determined that an extension of the lapsing period is consistent with orderly and proper planning, because:
•the planning framework has not changed substantially;
•the development would likely receive approval today; and
•the applicant actively and relatively conscientiously pursued the implementation of the approval.
The Tribunal found that it would be contrary to orderly and proper planning to refuse to extend the lapsing period, because it facilitates the carrying out of an appropriate development within a relatively short time.
Finally, the Tribunal determined that it would not be futile to extend the period. While the respondent has commenced the repurchase process, there is no certainty that it would exercise a purchase option, given its statutory objectives in terms of facilitating redevelopment in a prompt, efficient and appropriate way. However, even if title were ultimately transferred, the development could be substantially commenced in the interim and the applicant could ultimately again acquire title.
The Tribunal's reasons, taken from the transcript and edited in minor respects to aid clarity, were as follows.

Introduction

These proceedings involve an application brought by Claymont Westcapital Pty Ltd (Claymont) under s 45 of the East Perth Redevelopment Act 1991 (WA) (EPRA Act) for review of the decision of the East Perth Redevelopment Authority (EPRA) to refuse Claymont's application to amend a development approval by stipulating an additional period of six months for substantial commencement of the development.

Background

On 12 July 2005, EPRA entered into a contract to sell Lot 204 on deposited plan 46285, known as Lot 204 Brown Street, East Perth (site), to Claymont Land Pty Ltd. Under the contract, Claymont is the nominee for Claymont Land Pty Ltd. Settlement under the contract took place on 15 August 2005.
Clause 28.5 of the contract requires that structural works must commence on the site in accordance with a development approval issued by EPRA and a building licence within 15 months of the date of settlement, relevantly, by 15 November 2006, and that practical completion must occur within 30 months of the date of settlement, relevantly, by 15 February 2008.
On 22 July 2005, Claymont applied to EPRA for development approval to construct a five‑storey mixed use development on the site. Over seven months later, on 27 February 2006, EPRA granted development approval to the proposed development subject to 21 conditions.
Clause 2.14 of the East Perth Redevelopment Scheme (EPRS) states as follows:
"If [EPRA] approves a development application, that approval shall lapse if the development has not been substantially commenced within two years of the date of the approval, provided that EPRA, in any case, may stipulate a period of more or less than two years, and in that event, the period so stipulated shall apply in place of the two years hereinbefore referred to."
In granting the development approval, EPRA did not stipulate a period of more or less than two years under cl 2.14 of the EPRS. Rather, the notice of development approval contains the following notation:
"If the development the subject of this approval is not substantially commenced within a period of two (2) years from the date of this letter, the approval shall lapse and be of no further effect."
Claymont's architect submitted working drawings to EPRA on 20 July 2006. Approximately seven weeks later, on 11 September 2006, EPRA requested further information. Claymont failed to provide information for over five months. Claymont provided information in response to EPRA's original request and in response to further requests during the period 15 February 2007 to 29 June 2007.
On 15 August 2007, EPRA cleared the working drawings and endorsed them for provision to the City of Perth (City), which is the responsible authority for a building licence.
Meanwhile, Claymont had difficulty in obtaining a builder. Mr IR Goodenough, a director of Claymont, gave evidence, which was not questioned or contradicted, that it took Claymont until April 2007 to engage a builder to coordinate various consultants and to get the development through the building licence stage. This builder was the fourth builder Claymont had approached.
In May 2007, an application for a building licence was lodged with the City, and approval was sought from the Fire and Emergency Services Authority (FESA). On 28 June 2007, the City provided an initial assessment requiring 68 items to be addressed before it would issue a building licence. The builder and consultants began to work on these items and to modify the engineering plans as required.
On 26 October 2007, the City issued a further list with an additional 29 items to be addressed.
Numerous sets of drawings were produced by the architect and provided to the City; however, Mr Goodenough gave evidence, which again was not questioned or contradicted, that progress was slow because the consultants were very busy. Mr SG Allerding, an experienced town planner who gave evidence on behalf of Claymont, confirmed that over the last two years, the capacity to obtain consultants of the type necessary to progress the carrying out of the approved development became increasingly difficult.
On 30 November 2007, Claymont obtained finance to construct the development.
On 29 January 2008, Claymont applied to EPRA under cl 2.17A(1) of the EPRS to amend the development approval by stipulating an additional six‑month period for substantial commencement of the development. Clause 2.17A(1) of the EPRS states as follows:
"If [EPRA] approves a development application subject to conditions, an owner or occupier of the land which is the subject of the approval may apply in writing to [EPRA] to revoke or amend:
(a)the approval, or
(b)one or more conditions of the approval."
On 30 January 2008, final engineering drawings were submitted to EPRA in relation to the approved development. On 7 February 2008, EPRA advised that the drawings were acceptable and that it would shortly be forwarding them to the City.
On 26 February 2008, EPRA refused to amend the development application for the following two reasons:
"1.An extension in time to the two year valid period of the planning approval would be inconsistent with [s] 43(c) of the [EPRA] Act, in that it would not be consistent with the requirements of orderly and proper planning within the Scheme Area.
2.An extension in time to the two year valid period for the planning approval would be inconsistent with objectives of the Scheme, being:
(a)to provide a system for the orderly control of development within the Scheme Area; and
(b)to facilitate the process of development and redevelopment within the Scheme Area."
The last day on which substantial commencement could take place under the development approval given by EPRA on 27 February 2006 to avoid lapsing was 27 February 2008. It is common ground that substantial commencement did not take place on the site on or before that day.
On 28 February 2008, Claymont commenced these proceedings for review of EPRA's decision made on 26 February 2008.
On 7 March 2008, the City issued a so‑called "forward works" building licence, which enables the construction of the basement and associated earthworks of the approved development. However, Mr Goodenough explained that the forward works building licence is subject to a condition that there be a subsisting development approval in place. Mr Goodenough also said that he understands that the building licence for the remainder of the approved development is awaiting one more outstanding item from a consultant, and it is expected that it will be issued by the end of this week.
On 19 March 2008, EPRA issued a notice of default to Claymont Land Pty Ltd under cl 30 of the contract for sale. That clause authorises EPRA to give written notice of a breach of a buyer's covenant, including covenants under cl 28, and to provide 14 days to remedy the breach, after which EPRA has a 30 day option to repurchase the land, essentially at the sale price, of 12 July 2005.
To date, Claymont has expended over $550,000 on the project that is the subject of the development approval granted to it by EPRA on 27 February 2006. Claymont has also pre‑sold 15 of the 21 units within the approved development, and its real estate agent currently holds in excess of $900,000 in deposits from purchasers of the units.

Issues for determination

EPRA has identified the following four issues for determination in the proceedings:
1)Has the development approval lapsed?
2)If the development approval has lapsed, does the Tribunal have power under cl 2.17A of the EPRS to extend the substantial commencement period of the development approval?
3)If the Tribunal has power under cl 2.17A of the EPRS to extend the substantial development period, is the extension of the date an appropriate exercise of discretion, having regard to the requirements of orderly and proper planning under s 43(1)(c) of the EPRA Act and cl 2.10.(1)(d) of the EPRS, and the requirements of facilitating the process of development and redevelopment within the Scheme area under cl 1.10.(2)(b) of the EPRS.
4)Is approval futile, having regard to the repurchase process that has been instigated by EPRA under cl 30 of the contract?

Has the development approval lapsed?

The development has not been substantially commenced. Therefore, subject to the pending application under cl 2.17A(1) of the EPRS, the development consent lapsed at midnight on 27 February 2008.

Does the Tribunal have power under cl 2.17A(1) of the EPRS to extend the substantial commencement period?

Mr MA Etherington, counsel for EPRA, submits that the making of the application under cl 2.17A(1) on 29 January 2008 did not operate as a stay, and the development approval therefore lapsed on 27 February 2008. He submits that, "you can't amend what no longer exists".
However, Mr LA Tsaknis, of counsel, submits for Claymont that the making of the application under cl 2.17A(1) on 29 January 2008 conferred power on EPRA to amend the development approval by stipulating an additional period of six months.
It is implicit in cl 2.17A(1) that in order for EPRA to have power to amend a development consent, the consent must subsist when the application to amend is made. However, it is neither express nor implicit in cl 2.17A(1) that the consent must subsist absent that subclause when the power is ultimately exercised. Moreover, such an interpretation would defeat the obvious beneficial and facultative purpose served by the subclause and would be open to abuse.
If an application to extend a development consent is made to EPRA under cl 2.17A(1) while the consent subsists, then that subclause confers power on EPRA to determine the application, even if the consent would otherwise have lapsed in the interim. It is the making of a cl 2.17A(1) application, while the consent subsists, that confers power under the subclause.
Section 29(1) of the State Administration Tribunal Act 2004 (WA) (SAT Act) states that, in review proceedings, the Tribunal has the same functions and discretions as those exercisable by the original decision‑maker when making the reviewable decision. The Tribunal therefore has power to extend the substantial commencement period in the circumstances of this case.
Furthermore, and in any case, it is common ground that EPRA had power to extend the substantial commencement period when it determined the application on 26 February 2008. It is also common ground that Claymont has a right of review of that determination under s 45 of the EPRA Act. As noted earlier, s 29(1) of the SAT Act provides that the Tribunal exercises the same functions and discretions as were exercisable by the original decision‑maker in making the reviewable decision. Moreover, s 29(5)(b) of the SAT Act states that the original decision‑maker whose decision, as affirmed or varied by the Tribunal, or any substitute decision made by the Tribunal, is to be regarded as having had effect from the time when the decision reviewed would have had effect, unless the enabling Act states otherwise or the Tribunal orders otherwise.
Mr Etherington submits that the EPRS provides otherwise, because cl 2.17A(6) states as follows:
"A decision made by [EPRA] under subclause 2.17A(5) is to take effect from the date on which notice of the decision is given to the applicant (in accordance with subclause 2.17A(5))."
However, as Mr Tsaknis submits, this subclause appears to be principally directed to giving notice of a determination to an applicant. It is also clearly directed to the EPRA, not to the Tribunal on review. In my opinion, this clause does not constitute a provision of an enabling Act that states otherwise than the ordinary operation of s 29(5)(b) of the SAT Act. The Tribunal's decision in this review will therefore, subject to any particular order, have effect from 26 February 2008, when it is common ground the development consent had not lapsed.

Is an extension of the date consistent with orderly and proper planning and the facilitation of development and redevelopment in the Scheme area?

The town planning expert witnesses, Mr Allerding for Claymont and Mr RJB Keys, the Planning Manager of EPRA, agree that the planning framework relating to the site has not substantially changed since the development approval was granted in February 2006. The planning experts also agree that, in light of this, the development application would likely receive approval if determined today. Mr Keys considers that possibly some minor modifications would be required to the development today to reflect architectural façade treatments such as awnings. However, the experts agree that new conditions, if required, could be imposed in this review application under cl 2.17A(3) of the EPRS. When pressed, Mr Keys did not consider that conditions were required if the application presently before the Tribunal were approved.
The agreement between the experts in relation to the planning framework remaining substantially unchanged since February 2006 is of particular significance, given the evidence of Mr Allerding, which was not questioned or contradicted, that:
"The inclusion of time limits on approvals has, in my experience, been intended to ensure that if changes occurred to the planning framework during the time of the approval, and if substantive development had not occurred, then an opportunity to review the circumstances of the approval could be contemplated."
The planning experts do not agree as to whether approval to modification of the development consent would be consistent with orderly and proper planning.
Mr Allerding considers that it would be consistent with orderly and proper planning. He says that, significantly, the planning framework has not changed, and that the development would be approved in substantially the same form if assessed today.
Mr Allerding says that East Perth is a redevelopment area in which the State seeks to actively facilitate and encourage new development. Although no construction has commenced on the site, Claymont has advanced the progressing of approvals in order to effect the development. From an orderly and proper planning perspective, Mr Allerding considers that the proposed development is consistent with the planning framework and that approval of the amendment would advance orderly and proper planning by facilitating the construction of an appropriate development promptly.
In this regard, Mr Goodenough gave evidence, which was not questioned or contradicted, that if the Tribunal were to grant the amendment as sought, construction activities can commence on the site within about four weeks.
Mr Keys considers that an extension would not be consistent with orderly and proper planning for a number of reasons.

The EPRA was created to facilitate the orderly and timely redevelopment of a dilapidated and under‑utilised inner urban area. The two‑year substantial commencement period for development approval is consistent with the purpose and objectives of the redevelopment area. The circumstances occurring during the two years after the grant of the development approval and actions undertaken by Claymont "demonstrate their [sic] inability to complete development in an efficient and timely manner".
Mr Keys also says that an inability to obtain relevant approvals and commence development at the time of the expiry of the development approval "where no exceptional circumstances exist that are peculiar to the review site and beyond the applicant's control" provides doubt that the construction of the approved development will take place. Mr Keys considers that extending the established two-year time frame without sufficient justification is in conflict with the purpose of applying such a time frame, and would undermine EPRA's capacity to facilitate orderly development of the redevelopment area.
The Tribunal considers that amending the development consent by stipulating an additional period of six months for substantial commencement of the development is consistent with orderly and proper planning, because:
•the planning framework has not changed substantially;
•the development would likely receive approval today; and
•Claymont has actively and relatively conscientiously pursued implementation of the development consent to the point that it has a building licence to carry out substantial commencement in terms of the basement, it has a builder, it has accepted deposits for 15 units, and it is ready to start construction within about four weeks.
While there were some delays on Claymont's part, particularly an initial five‑month delay in responding to EPRA's request for information, it has generally negotiated a complex regulatory system, incorporating several statutory authorities, almost to time, in a difficult environment in terms of accessing builders and consultants. Claymont ultimately received the building licence only eight days after the end of the two‑year period for substantial commencement.
Furthermore, as Mr Tsaknis submits, it would actually be contrary to orderly and proper planning to refuse to approve the amendment, because it facilitates the carrying out of an appropriate development within a relatively short period of time.
While I accept Mr Keys' evidence that EPRA's practice is to limit consents to two years, EPRA clearly has power, both when granting an approval under cl 2.14 of the EPRS and subsequently by amendment under cl 2.17A, to substitute a longer period, where appropriate and consistent with orderly and proper planning.
There is no basis in legislation or in planning policy made under the EPRS to require that an applicant demonstrate "exceptional circumstances ... that are peculiar to the review site and beyond the applicant's control". In order to extend a period for substantial commencement, EPRA, or the Tribunal on review, must be satisfied that it is appropriate to do so in the particular facts and circumstances of the case, having regard to the matters for consideration in cl 2.10 of the EPRS, including the requirements for orderly and proper planning and the preservation of the amenities of the locality. In this case, it is appropriate to grant the extension, as it is consistent with orderly and proper planning.
This is not a case in which a developer has sat on its hands. Quite the opposite; the developer has, as I have found, actively progressed the development, and has done so in a relatively conscientious manner. The objective evidence does not support Mr Keys' opinion that the circumstances demonstrate Claymont's "inability" to complete the development in an efficient and timely manner.
An extension of six months in the particular circumstances of this case would not undermine EPRA's capacity to facilitate orderly development in the area. Indeed, as I have found, the opposite is the case. An extension of six months effectively means less than five more months in which to substantially commence. Given that Claymont has accepted deposits for a substantial number of the units, it is likely that the development will also be completed within a reasonable period of time.
Finally, I was referred to a passage from a decision of Commissioner Wheeler QC, as her Honour then was, in Fazio & Anor v City of Fremantle (Unreported, SCWA, Wheeler C, 16 August 1996, CIV 2314 of 1995) in which her Honour said at 14:
"[I]t is undesirable that a developer should have available for an indefinite time an approval in respect of a development which changing patterns of use or changing community attitudes might over time render inappropriate. It is in the interests of orderly and proper planning that an approval for building or for use, once obtained, should be acted upon or should expire within a reasonable time."
With respect, the Tribunal concurs entirely with this statement of principle. However, Claymont does not have, if the amendment application is approved, an indefinite period of time to commence a development which changing patterns of use or changing community attitudes might over time render inappropriate. Rather, Claymont would have less than five months, after a period of two years, of progressing the proposed and approved development to substantially commence. The planning experts agree that the development is appropriate in terms of the current planning framework. In the particular circumstances of this case, the Tribunal is satisfied that two and a half years is a reasonable period of time for substantial commencement.

Is approval futile?

Approval of the application is not futile. EPRA has not yet exercised an option to repurchase under cl 30. It is not at all certain that it will do so if the amendment application is granted and having regard to its statutory objectives in terms of facilitating redevelopment of the redevelopment area in a prompt, efficient and appropriate way. Significantly in this respect, as I have said, it is common ground that the approved development would be approved today by EPRA. Further, it is not at all certain that specific performance would be granted of a transfer under cl 30 of the contract in the particular circumstances of this case, not least of all because default could not be remedied until the determination of these proceedings.
Finally and in any case, even if title were ultimately transferred to EPRA, approval is not futile, as the development can be substantially commenced in the interim, and Claymont may ultimately again acquire title. There is no legal impediment that would preclude the retransfer of title to Claymont, even if it had defaulted in the performance of a covenant under the original contract.

Conclusion

Having regard to the matters set out in cl 2.10.1 of the EPRS, the Tribunal considers that it is appropriate, in the particular circumstances of this case, to amend the development consent so as to extend the lapsing period by six months.

Orders

I make the following orders:
1.The application for review is allowed.
2.The decision of the respondent made on 26 February 2008 to refuse to approve the application made under cl 2.17A(1) of the East Perth Redevelopment Scheme to amend the development approval granted by the respondent on 27 February 2006 for the construction of a five-storey mixed use development with undercroft at Lot 204 Brown Street, East Perth, by stipulating an additional period of six months for substantial commencement of the development, is set aside.
3.Pursuant to cl 2.17A(1) of the East Perth Redevelopment Scheme, the development approval granted by the respondent on 27 February 2006 for construction of a five‑storey mixed use development with undercroft at Lot 204 Brown Street, East Perth is amended by stipulating an additional period of six months for substantial commencement of the development, so that the development approval shall lapse if the development has not been substantially commenced on or before 27 August 2008.

I certify that this and the preceding [63] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR D R PARRY, SENIOR MEMBER