Cooke v Tweed Shire Council

[2024] NSWCA 50

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Cooke v Tweed Shire Council [2024] NSWCA 50

Hearing dates:

21 February 2024

Date of orders:

11 March 2024

Decision date:

11 March 2024

Before:

Ward P at [1];
Gleeson JA at [2];
Basten AJA at [3]

Decision:

(1)   To the extent necessary, grant the appellant leave to appeal from the judgment and orders made in the Land and Environment Court on 11 July 2023 (declarations) and on 22 September 2023 (costs).

(2)   Direct that the undated further amended notice of appeal be filed within 7 days of the delivery of this judgment and dispense with any further procedural steps in relation to the notice of appeal.

(3)   Extend the time for filing the first respondent’s notice of contention dated 20 February 2024 and grant the first respondent leave to rely upon it in the appeal.

(4)   Dismiss the appeal.

(5)   Order that the appellant pay the first respondent’s costs of the proceedings in this Court.

Catchwords:

APPEALS – judgment of Land and Environment Court – standard of review – characterisation of land use – evaluative judgment – correctness standard applied

ENVIRONMENT AND PLANNING – civil enforcement proceeding – Local Environment Plan – permissible uses not requiring consent – characterisation of land use – cultivation of low-THC hemp – processing hemp leaves – production of goods for sale – whether cultivating hemp was “horticulture” or “extensive agriculture” – whether processing ancillary or incidental to cultivation activities – uses requiring consent – processing plant agricultural products for commercial purposes – “rural industry” – separate uses or one integrated purpose

Legislation Cited:

Environmental Planning and Assessment Act 1979 (NSW), s 3.13

Hemp Industry Act 2008 (NSW), s 5

Land and Environment Court Act 1979 (NSW), s 56A, 57, 58

Environmental Planning and Assessment Regulation 2000 (NSW), Sch 3, cl 37A

Hemp Industry Regulation 2016 (NSW), cl 10

Tweed Local Environmental Plan 2014

Uniform Civil Procedure Rules 2005 (NSW), r 51.40

Cases Cited:

Baulkham Hills Shire Council v O’Donnell (1990) 69 LGRA 404

Bronger v Greenway Health Centre Pty Ltd t/as Greenway Plaza Pharmacy [2023] NSWCA 104

Chief Commissioner of State Revenue v Godolphin Australia Pty Ltd [2023] NSWCA 44

Costa v The Public Trustee of NSW [2008] NSWCA 223

Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157

GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore [2023] HCA 32; 97 ALJR 857

Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30

People for the Plains Inc v Santos NSW (Eastern)Pty Ltd [2017] NSWCA 46

Singer v Berghouse (1994) 181 CLR 201; [1994] HCA 40

Toner Design Pty Ltd v Newcastle City Council [2013] NSWCA 410

Tweed Shire Council v Cooke (No 2) [2023] NSWLEC 98

Category:

Principal judgment

Parties:

Proceedings 2023/253053
Dolph Cooke (Appellant)
Tweed Shire Council (First Respondent)
Darko Kovac (Second Respondent) (Submitting appearance)
Peter Anthony Van Lieshout (Third Respondent) (Submitting appearance)

Proceedings 2023/253064
Dolph Cooke (Appellant)
Tweed Shire Council (First Respondent)
Kempcove Pty Limited (Second Respondent) (Submitting appearance)

Representation:

Counsel:
N Hutley SC / C Ireland / A Jucha (Appellant)
R Lancaster SC / J Farrell (First Respondent)

Solicitors:
CJM Lawyers (Appellant)
Sparke Helmore Lawyers (First Respondent)

File Number(s):

2023/253053; 2023/253064

Publication restriction:

N/A

 Decision under appeal 

Court or tribunal:

Land and Environment

Jurisdiction:

Class 4

Citation:

[2023] NSWLEC 73

Date of Decision:

11 July 2023

Before:

Pain J

File Number(s):

2021/364584; 2021/364656

HEADNOTE

[This headnote is not to be read as part of the judgment]

The applicant, Dolph Cooke, sought leave to appeal from a judgment of the Land and Environment Court (LEC) declaring that he (and others) were in breach of the Environmental Planning and Assessment Act 1979 (NSW) in using land for purposes requiring Council consent without obtaining such consent. The principal issue raised on appeal was whether the primary judge (Pain J) erred in characterising the applicant’s use of the land as rural industry, which required consent.

The applicant and his associates operated a business selling hemp-infused products (such as olive oil and beeswax). This involved (i) growing hemp and (ii) harvesting, processing, infusing and packaging the products on two parcels of land within the Tweed local government area in northern New South Wales. The first respondent, the Tweed Shire Council, commenced civil enforcement proceedings in the LEC on the basis that, although the applicant held a licence to cultivate low-THC hemp, the processing, infusion, and packaging activities and the erection of structures on the land without consent was unlawful development under the Tweed Local Environment Plan (Tweed LEP).

The primary judge upheld the Council’s claim, concluding that the ultimate purpose of the land use was to sell the hemp-infused products, and that the applicant would not be growing hemp if it were not to be processed, infused and packaged for sale. The primary judge determined that the use of the land was “rural industry”, being the processing of plant agricultural products for commercial purposes, which required development consent that had not been obtained.

The applicant sought leave to appeal from that judgment, which was granted. The issues for determination on appeal were:

(i)    the appropriate standard of review on appeal;

1. the identification of uses permissible without consent; and

2. the proper characterisation of applicant’s use of the land.

The Court (Basten AJA, Ward P and Gleeson JA agreeing), granting leave to appeal and dismissing the appeal, held:

As to the appropriate standard of review

1. The respondent’s submission that the review of findings as to the categorisation of land use engaged the restrictive approach in House v The King should not be accepted. The correctness standard should be applied: [34]-[36].

GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore [2023] HCA 32; 97 AJLR 857; Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 451; Costa v The Public Trustee of NSW [2008] NSWCA 223 applied. Singer v Berghouse (1994) 181 CLR 201; [1994] HCA 40; distinguished.

As to the identification of permissible uses

1. The first of two uses, permissible under the Tweed LEP without consent, was “horticulture” (a category of “intensive plant agriculture”). The sub-category in the definition, “cut flowers and foliage”, should be considered as a composite term. While hemp was a flowering plant, and was cultivated for its leaves, cultivating hemp did not constitute horticulture: [45]-[47].

2. The second use, permissible under the Tweed LEP without consent, was “extensive agriculture”. Growing hemp was the “production of [a crop] … for commercial purposes”, but that terminology did not extend to the processing of the agricultural product (namely, the crop), which was separately covered by the category of “rural industry”, which required consent: [41], [49]-[52].

3. Neither of the uses permissible without consent expressly encompassed “ancillary” activities. Nor could such an extension be implied to cover processing which was separately characterised as rural industry. Further, the use of land for “farm buildings” expressly picked up structures “ancillary to an agricultural use”, and required consent: [42], [43], [50].

As to the proper characterisation of the applicant’s use of the land

1. The activities carried out on the land could not be characterised as two separate activities, one of which (the growing of hemp) was dominant. Rather, the growing of hemp and its subsequent processing were part of a single integrated purpose – the selling of the hemp-infused products: [54]-[58].

Foodbarn v Solicitor-General (1975) 32 LGRA 157; Toner Design v Newcastle City Council [2013] NSWCA 410; Bronger v Greenway Health Centre Pty Ltd [2023] NSWCA 104; Baulkham Hills Shire Council v O’Donnell (1990) 69 LGRA 404; People for the Plains Incorporated v Santos NSW (Eastern) Pty Ltd [2017] NSWCA 46, applied.

1. The finding of a unitary/integrated purpose of the applicant’s activities meant that the separate uses of the land (one of which is impermissible without consent) cannot be distinguished from each other. Therefore, there was no scope to consider the applicant’s proposed alternative form of relief: [60]-[63].

JUDGMENT

1. WARD P: I agree with Basten AJA.

2. GLEESON JA: I agree with Basten AJA.

3. BASTEN AJA: In December 2021, when the underlying proceedings were commenced in the Land and Environment Court, the appellant, Dolph Cooke, held a licence pursuant to s 5 of the Hemp Industry Act 2008 (NSW), “to cultivate or supply low-THC hemp”. He carried on a business of growing such hemp which, on cultivation, was harvested, processed and infused into olive oil or beeswax. The infused products were sold to the public, both on-line and from a shop at a different location.

4. These cultivation and processing activities were carried on a site comprising two parcels of land at Kunghur in the Tweed local government area, which may be identified as Lot 34 and Lot 3 (together, “the Site”). The first respondent, Tweed Shire Council (the Council), formed the view that consent for the identified use of the Site was required under the Tweed Local Environmental Plan 2014 (Tweed LEP), and that the carrying on of the business and the placement of structures on the Site without consent constituted unlawful development. It commenced civil enforcement proceedings in the Land and Environment Court seeking declaratory relief and orders restraining the continued use of the land and requiring the demolition and removal of the offending buildings and structures. Separate proceedings were commenced in respect of each lot, as the ownership was not common to each. The proceedings were heard together.

5. Pursuant to a judgment delivered on 11 July 2023, Pain J granted the declaratory relief in the terms sought by the Council and stood over the applications for further orders to a date to be fixed. ^[1] The further hearing has not yet taken place. On 22 December 2023, a second judgment was delivered dealing with the costs of the proceedings which had resulted in the first judgment. ^[2] In substance, the appellant was ordered to pay the costs of the proceedings. ^[3]

   1. Tweed Shire Council v Cooke [2023] NSWLEC 73 (Tweed (No 1)).

   2. Tweed Shire Council v Cooke (No 2) [2023] NSWLEC 98 (Tweed (No 2)).

   3. The second respondent in the Lot 34 proceedings, Darko Kovac, was jointly liable for the costs of the proceeding, but was not an active party on the appeal.

6. On 10 October 2023 the appellant filed a notice of appeal in relation to each proceeding. On 4 December 2023 an amended notice of appeal was filed which did not affect the grounds relied upon but sought alternative relief in the event that the Court found that the cultivation of the hemp was permissible without consent, but the further processing of the hemp was not. At the hearing of the appeal, the appellant sought to rely on a further amended notice of appeal.

7. The declarations made by the primary judge did not finally dispose of the proceedings. If the appeal were for that reason an interlocutory appeal, leave was required pursuant to s 58(3)(a) of the Land and Environment Court Act 1979 (NSW). No objection was taken by the Council to the fact that leave had not been sought. On the point being raised at the hearing, senior counsel for the appellant orally sought leave, if that were necessary. ^[4] Leave was not opposed and there should be a grant of leave to appeal and appropriate consequential direction given. To the extent the Council opposed the filing of an amended notice of appeal, incorporating alternative forms of relief, the appellant should have leave to raise the new ground and proposed order, which were incorporated in a further amended notice of appeal, which may be treated as the notice on which the appeal should (and did) proceed.

   4. CA Tcpt, 21 February 2024, pp 6(30), 47(30).

8. Although the proceedings in the Land and Environment Court ran for seven days in two tranches, including the hearing of expert evidence, there was little dispute as to the facts: indeed, there was a statement of agreed facts (although that was deficient ^[5] ), and an agreed chronology. Despite a discursive list of 15 grounds of appeal in a further amended notice of appeal relied on at the hearing, the focus of the submissions was on characterising the use of the land in accordance with the permitted uses under the Tweed LEP. The issues raised by that exercise can best be identified and addressed by reference to that statutory instrument.

   5. Lot 3 was agreed to be a road: the Court was told that the road had been closed.

Scheme of Tweed LEP

9. An LEP made under s 3.13 of the Environmental Planning and Assessment Act 1979 (NSW) may provide for development which does not require consent, may be carried out only with consent, or is prohibited:

3.18   Consents and concurrences

(1)   Without limiting the generality of section 3.14(1)(b), an environmental planning instrument may provide that development specified therein—

(a)   may be carried out without the necessity for consent under this Act being obtained therefor, or

(b)   may not be carried out except with consent under this Act being obtained therefor.

…

3.19   Prohibitions

Without limiting the generality of section 3.14(1)(b), an environmental planning instrument may provide that development specified therein is prohibited.

10. In standard form, the Tweed LEP contained a zoning map for land within the local government area and land use tables for each zone. Both lots are within the zone “RU2 Rural Landscape” and, as the statement of agreed facts succinctly noted:

“9   Within the RU2 zone:

(a)   ‘dwelling houses’, ‘farm buildings’ and ‘rural industry’ are permissible only with development consent,

(b)   ‘multi-dwelling housing’ and ‘secondary dwellings’ are prohibited, and

(c)   ‘intensive plant agriculture’ is permissible without development consent.”

When that document was prepared it seems that the appellant relied solely on the classification of intensive plant agriculture to justify his activities on the Site.

11. The text of the land use table for the RU2 zone relevantly reads as follows:

“Zone RU2 Rural Landscape

1   Objectives of zone

•   To encourage sustainable primary industry production by maintaining and enhancing the natural resource base.

•   To maintain the rural landscape character of the land.

•   To provide for a range of compatible land uses, including extensive agriculture.

•   To provide for a range of tourist and visitor accommodation-based land uses, including agri-tourism, eco-tourism and any other like tourism that is linked to an environmental, agricultural or rural industry use of the land.

2   Permitted without consent

Environmental facilities; Environmental protection works; Extensive agriculture; Home occupations; Intensive plant agriculture

3   Permitted with consent

… Dwelling houses; … Educational establishments; … Farm buildings; Farm stay accommodation; … Forestry; … Home businesses; Home industries; … Industrial retail outlets; Industrial training facilities; Information and education facilities; Intensive livestock agriculture; … Plant nurseries; … Roads; Roadside stalls; Rural industries; Rural supplies; Rural workers’ dwellings; Signage; Timber yards; … Turf farming; ….

4   Prohibited

Any development not specified in item 2 or 3.”

12. To avoid a finding that the activities carried out on the Site required development consent, the appellant relied upon the use of “intensive plant agriculture”, or, in the alternative, “extensive agriculture”. (In this Court, reliance on “extensive agriculture” was only raised in the belated further amended notice of appeal.) Each of these terms is defined in the Dictionary to the Tweed LEP.

13. The first argument relied upon the cultivation of hemp falling within the category of “intensive plant agriculture”. That term is defined as follows:

“intensive plant agriculture means any of the following—

(a)   the cultivation of irrigated crops for commercial purposes (other than irrigated pasture or fodder crops),

(b)   horticulture,

(c)   turf farming,

(d)   viticulture.”

14. The only relevant subcategory for present purposes was “horticulture”, which was also a defined term:

“Horticulture means the cultivation of fruits, vegetables, mushrooms, nuts, cut flowers and foliage and nursery products for commercial purposes, but does not include a plant nursery, turf farming or viticulture.

Note—

Horticulture is a type of intensive plant agriculture—see the definition of that term in this Dictionary.”

15. The appellant’s case with respect to this definition was that the cultivation of a hemp crop involved “the cultivation of … foliage … for commercial purposes”. The Council submitted that read in its grammatical context, the relevant category was “cut flowers and foliage”, a phrase not apt to cover a hemp crop.

16. The alternative case turned on the cultivation of hemp being “extensive agriculture”, which is defined as follows:

“extensive agriculture means any of the following—

(a)   the production of crops or fodder (including irrigated pasture and fodder crops) for commercial purposes,

(b)   the grazing of livestock (other than pigs and poultry) for commercial purposes on living grasses and other plants on the land as their primary source of dietary requirements, and any supplementary or emergency feeding, or temporary agistment or housing for weaning, dipping, tagging or similar husbandry purposes, of the livestock,

(c)   bee keeping,

(d)   a dairy (pasture-based) where the animals generally feed by grazing on living grasses and other plants on the land as their primary source of dietary requirements, and any supplementary or emergency feeding, or temporary agistment or housing for weaning, dipping, tagging or similar husbandry purposes, of the animals.”

17. Only the first element of the definition in par (a) was relied upon by the appellant. He submitted that the hemp plants cultivated pursuant to the licence under the Hemp Industry Act constituted a “crop” for the purposes of par (a) and that their cultivation constituted “the production of [a crop] … for commercial purposes”.

18. If the appellant failed to succeed on one of those two arguments, the activities carried on at the Site must either have been prohibited activities or activities which could not be carried on without consent, consent not having been sought. The Council did not submit that the activities were prohibited, but rather that they were permitted with consent. Those matters included “dwelling houses”, “farm buildings” and “rural industries”. Although it is not necessary to consider that submission to dispose of the proceedings, the relevant definitions should be noted, as they are relevant to the scope of the uses permitted without consent.

19. The appellant accepted that, viewed in isolation, the buildings on the site were not buildings which could be constructed without consent: arguably, each structure had to be “ancillary or incidental to” a use permitted without consent. [6] The first two were straightforward:

“dwelling means a room or suite of rooms occupied or used or so constructed or adapted as to be capable of being occupied or used as a separate domicile.

…

farm building means a structure the use of which is ancillary to an agricultural use of the landholding on which it is situated and includes a hay shed, stock holding yard, machinery shed, shearing shed, silo, storage tank, outbuilding or the like, but does not include a dwelling.”

6. Tcpt, p 8(8), not pressing ground 12.

20. The definition of “rural industry” is more complex:

“rural industry means the handling, treating, production, processing, storage or packing of animal or plant agricultural products for commercial purposes, and includes any of the following—

(a)   agricultural produce industries,

(b)   livestock processing industries,

(c)   composting facilities and works (including the production of mushroom substrate),

(d)   sawmill or log processing works,

(e)   stock and sale yards,

(f)   the regular servicing or repairing of plant or equipment used for the purposes of a rural enterprise.”

21. The phrase in par (a), “agricultural produce industries”, is in turn defined to mean “a building or place used for the handling etc … for commercial purposes, of produce from agriculture ...”. Agriculture includes “extensive agriculture” and hence expressly brings within the definition of rural industry the treating of the produce from extensive agriculture. The scheme therefore distinguishes extensive agriculture (as an activity not requiring consent) from the processing of the product of extensive agriculture (which does require consent).

22. The primary judge was satisfied that the appellant’s activities fell within par (a) of the non-exclusive list of rural industries. The activities did not, of course, need to fall within any of the listed subcategories if they fell within the chapeau to the definition, as involving any of the activities listed, including handling etc, “plant agricultural products” for commercial purposes.

Issues on appeal

23. The appellant’s case was succinctly stated in written submissions in reply:

“… the Appellant has never submitted that there is not an ‘agricultural produce industry’ being carried out in the Land. … The point is this handling, processing and packing was ancillary to the cultivation of the hemp rendering Hemp Farming (intensive plant agriculture) as the best characterisation of what was occurring on the Land.”

24. This statement identified two propositions, first that the hemp farming fell within the definition of intensive plant agriculture and, secondly, that the processing was “ancillary to” that primary activity. A third proposition (alternative to the first) was that the cultivation of the hemp fell within the definition of extensive agriculture; again the processing was said to be “ancillary to” that primary activity.

25. The primary judge rejected the proposition that the production of the crop was separable from the processing activities, and was the primary activity carried out on the Site. The judge characterised the activities on the Site as serving a single integrated purpose. Indeed, the primary judge considered that the cultivation of hemp was not carried out “for commercial purposes”, when viewed in isolation from the production of the infused olive oil and beeswax products. ^[7] That was because the licence was subject to the conditions imposed by cl 10 of the Hemp Industry Regulation 2016 (NSW), which prohibited the hemp cultivated under the licence from leaving the property on which it was cultivated unless “substantially stripped of its leaves”: cl 10(1)(h).

    7. Tweed (No 1) at [120].

26. Further, the judge rejected the submission that “the processing and bottling of product using the hemp leaves is ancillary or incidental to the hemp plant growing”. ^[8] Rather, she concluded, the activities should be characterised as a rural industry, namely “agricultural produce industry”. ^[9]

    8. Tweed (No 1) at [123].

    9. Tweed (No 1) at [125].

27. However, the logically anterior question was whether the “primary” activity (cultivating hemp) fell within at least one of the two categories of activities not requiring consent. Only when that question has been answered affirmatively is it necessary and appropriate to ask whether the subsequent processes fell within the same category, because they were merely incidental or ancillary to that activity.

28. The primary position of both parties was that the use of the land should be characterised holistically, rather than as a combination of separate uses. An alternative case run by the appellant was that the whole of the land, other than a single building (building Z on Lot 3) was used for the cultivation of a crop or for horticulture, and that the processing operation took place solely in that building. If the processing operation required consent, then the Council should succeed, but only in respect of the activities in building Z.

29. The Council submitted that the alternative case was based upon a factual premise which should not be accepted. It submitted that, in addition to building Z on Lot 3, seven of the buildings on Lot 34 were identified in the statement of agreed facts as constructed for the purposes of an agricultural produce industry and used for that purpose. It was not clear from the written submissions in reply that the appellant pursued the limited alternative, but rather, it appears, accepted more broadly that the Court would injunct “secondary processing into saleable product on either Lot 34 or Lot 3, absent development consent being obtained for this secondary processing”. ^[10]

    10. See amended notice of appeal, proposed order 5A.

30. The primary position of both parties should be accepted, although the proposed holistic approach of the appellant differed from that adopted by the Council in a significant respect. The appellant’s case was identified succinctly in the following passage in his written submissions: after noting that the cultivation of hemp did not require consent, the submission continued: ^[11]

“The consequential processing activities on the Land rendering the harvested hemp into product such as an olive oil infusion and beeswax hemp balm are either just a species of the same ‘intensive plant agriculture’ genus or are ancillary and on either ground [do] not change the overall characterisation of the Hemp Farming to something else, or add a different independent use.”

11. Appellant’s written submissions, filed 7 February 2024, at par 9.

31. In identifying the error said to arise in the judgment below, senior counsel stated: ^[12]

“Her Honour’s purpose was to characterise the purposes of the uses of the land. And there may have been multiple uses – we accept. And then the question is if there were multiple uses, was one incidental and ancillary to the other.

…

And so our case is when you looked at this exercise, the cultivation of the hemp plant – its harvesting, which is incidental to its cultivation and its drying – were the overwhelming purpose of the land. And the monetisation which we called it – that is, creating the oil – was a subsidiary[,] [a]n important subsidiary but a subsidiary and incidental utilisation of the hemp. That’s what our case is. Her Honour never addressed that because she in effect stopped it at the outset. Her Honour said you cannot fall within horticulture and you also cannot fall within extensive agriculture because none of what you rely upon is for a commercial purpose. We say that’s just simply wrong.”

12. Tcpt, p 27(33).

32. The respondent contended that the primary judge had correctly identified the purpose of the activities carried out on the Site as the production of infused olive oil and other products for commercial sale. Further,

“… the physical acts involved in the manufacture of cannabis products included the growing and harvesting of the hemp, the construction and occupation of the buildings and the relevant processing activities. These activities were the means by which the … Site was ‘made to serve the purpose’ of the agricultural produce industry. The industry could not function on the land without the raw hemp materials, the buildings and the various production activities.”

Did the primary judge err?

Standard of review

33. Before dealing with the submissions that the primary judge was in error, it is necessary to identify the approach required on an appeal under s 58 of the Land and Environment Court Act. Two points are material. First, the appeal from a Class 4 proceeding in the Land and Environment Court is not restricted to an appeal from an order or decision of the Court on a question of law. ^[13] Secondly, the process of characterising a land use for the purpose of determining whether it is prohibited, or permissible only with consent, or permissible without consent, arguably involves an evaluative judgment. It was so identified in Toner Design Pty Ltd v Newcastle City Council. ^[14]

    13. Cf Land and Environment Court Act, ss 56A, 57.

    14. [2013] NSWCA 410; 198 LGERA 203 at [7], referring to Baulkham Hills Shire Council v O’Donnell (1990) 69 LGRA 404, 409 (Meagher JA).

34. The Council submitted that the standard of review was important and adopted the view expressed by me in Toner Design that the conclusion reached by the primary judge “will not be open to appellate review unless it can be shown that in some way the judge misconstrued the legislative test or otherwise made a decision which was not open on the facts”. ^[15] That approach should not be adopted. It was not the approach adopted by the majority in Toner Design, nor was the opinion necessary for the determination of the case. More importantly, such an approach would be inconsistent with the reasoning of the High Court in GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore. ^[16] Kiefel CJ, Gageler and Jagot JJ (Gleeson J agreeing)^[17] stated:

“16   … The line separating discretionary decisions (in which appellate review is confined to the House v The King standard) and other decisions (in which the ‘correctness standard’ applies) was identified as that between questions lending ‘themselves to differences of opinion which, within a given range, are legitimate and reasonable answers to the questions’ in which event ‘it would be wrong to allow a court of appeal to set aside a judgment at first instance merely because there exists just such a difference of opinion between the judges on appeal and the judge at first instance’, and questions to which there is but one legally permissible answer, even if that answer involves a value judgment.” [Footnotes omitted.]

15. Appellant’s written submissions, par 12.

16. [2023] HCA 32; 97 ALJR 857.

17. GLJ at [161].

35. GLJ involved an appeal to the High Court from the grant of a stay of criminal proceedings in this Court. There is no basis, however, for treating the description of the standard of review as differing from that which would apply in this Court on an appeal from a trial judge. The final sentence of the conclusion set out above referred to passages in the judgments of Gageler J and Nettle and Gordon JJ in Minister for Immigration and Border Protection v SZVFW. ^[18] The reasoning of Gageler J in SZVFW dealt with “an appeal from a final judgment of a primary judge sitting without a jury”. ^[19] This reasoning was consistent with that in this Court in Costa v The Public Trustee of NSW. ^[20] However, in dealing with appeals from findings involving a binary choice, but subject to evaluative judgment, a degree of uncertainty has arisen in this Court from the judgment of the High Court in a family provision case, Singer v Berghouse. ^[21] The joint reasons of Mason CJ, Deane and McHugh JJ, after identifying a two-stage process involving a “jurisdictional question” (as to whether or not to make an order) and a discretionary stage (as to the amount of the order) turned to the question of appellate review, noting that “the principles governing the review of a decision on the jurisdictional question are not settled”. ^[22] The joint reasons then expressly adopted a finding by Kirby P in this Court,^[23] that “principles that govern appellate review of discretionary decisions should apply”. Singer was noted in SZVFW^[24] as an example of a case where the discretionary standard was applied to an evaluative judgment resulting in a binary choice. Whether it was to be treated as a case which stood outside the general line of authority was not clear. Gageler J recognised the possibility of exceptions to the general principle:

“48   The course of High Court authority since Warren v Coombes has accordingly proceeded on a consistent understanding of how the line of demarcation is to be drawn between those of a primary judge's conclusions which attract the correctness standard of appellate review reaffirmed in that case and those which attract the deferential standard applicable to appellate review of an exercise of judicial discretion. Without excluding the potential for other considerations to affect the standard of appellate review in a particular category of case, the understanding provides a principled basis for making at least the principal distinction.”

18. (2018) 264 CLR 541; [2018] HCA 30 at [46]-[49] (Gageler J) and [85]-[87] (Nettle and Gordon JJ).

19. SZVFW at [36].

20. [2008] NSWCA 223 at [14]-[19] (Hodgson JA); [32]-[51] (Ipp JA), [56]-[97] (in my judgment).

21. (1994) 181 CLR 201; [1994] HCA 40.

22. Singer at 212.

23. Hunter v Hunter (1987) 8 NSWLR 568 at 576 (Hope JA and Priestley JA agreeing).

24. SZVFW at [45].

36. This issue was not addressed in GLJ. Arguably, Singer may be treated as anomalous, but explicable on the basis that the two stages of analysis required in relation to family provision claims are inextricably intertwined and involve the same set of statutory criteria. Whether or not that is sufficient, there is nothing in the reasoning of the High Court in SZVFW, adopted in GLJ, which would permit the categorisation of land use as a matter to be judged other than according to the correctness standard. The correctness standard was applied by this Court in undertaking a similar exercise in Chief Commissioner of State Revenue v Godolphin Australia Pty Ltd. ^[25] If there be error in that approach, it is an error which favours the appellant.

    25. [2023] NSWCA 44 at [47] (Kirk JA), [129] (Simpson AJA); cf [164] (Griffiths AJA).

General considerations

37. In a critical passage, ^[26] the primary judge addressed the characterisations of extensive agriculture (crop production for commercial purposes), intensive plant agriculture (horticulture) and rural industry (agricultural produce industry) in combination. If one could be sure that there was no overlap between the categories, that approach might well be beneficial; however, the safer course is to address the only two characterisations available to the appellant separately to determine if either applies.

    26. Tweed (No 1) at [117]-[119].

38. The appellant identified what was described as an error in the approach adopted by the primary judge in stating (and repeating) that the hemp leaves alone had no commercial value: “[t]he growing of the hemp is not the production of a crop for commercial production the hemp leaves alone having no commercial value.”^[27] That reasoning, the appellant submitted, led to a conclusion that neither characterisation was satisfied because each required that the agricultural activity be carried out “for commercial purposes”. The fact, the appellant submitted, that the hemp leaves themselves were not (and could not lawfully be) sold did not mean that they were not produced for a commercial purpose. The hemp leaves constituted an essential part of the infused olive oil and beeswax products, the commercial purpose of which was not in doubt.

    27. Tweed (No 1) at [118].

39. There may have been some infelicity of expression in the passages criticised by the appellant, but the judge’s statement was to be understood in the context of her holding that “the overall purpose for the collective activity being undertaken on the Development Site is the production for commercial purposes of the cannabis infused olive oil which is then sold”. ^[28] The passage complained of did not reveal a failure to address the issues in the case, as the appellant submitted.

    28. Tweed (No 1) at [120].

40. The appellant approached the matter on the basis that, where there were multiple uses, it was appropriate to identify the “dominant purpose” and determine whether the other activities were ancillary or incidental to that dominant purpose. There may be circumstances in which that approach is appropriate, but whether it is appropriate may depend upon the construction of the instrument being applied. It is therefore necessary to commence by considering the terms in the Tweed LEP and the context in which they appear.

41. In applying the Tweed LEP, the appellant’s case immediately faced three obstacles. First, the relevant uses do not expressly pick up ancillary or incidental activities. For example, extensive agriculture, involving the “production of crops … for commercial purposes”, does not identify subsequent processing, such as the milling of grain. To construe that language as permitting the milling of grain once harvested, depends upon an implication.

42. Secondly, there are textual reasons why such an implication should not be drawn. The processing activities engaged in by the appellant required the use of structures which fell within the definition of “farm building”. As noted above, that term meant “a structure the use of which is ancillary to an agriculture use of the landholding on which it is situated”. The use of the term “ancillary to” reflects the use of this term by the appellant, in the same context, but inconsistently with the implication relied on by the appellant. In other words, the Tweed LEP acknowledges that farm buildings may be characterised as ancillary to an agricultural use, but expressly provides that they require development consent.

43. Thirdly, the implication relied on by the appellant is inconsistent with the definition of “rural industry” which is broad and includes the processing of plant agricultural products for commercial purposes. The instrument would be incoherent if it expressly required development consent for such activities, but also permitted them without consent because they could be described as “ancillary to” a form of extensive agriculture which did not require consent.

Scope of horticulture

44. The primary characterisation relied on by the appellant was that the growing of hemp plants fell within the definition of “horticulture” and therefore constituted “intensive plant agriculture” permissible without consent. However, horticulture is not, either in its ordinary meaning or its defined meaning, synonymous with cultivation of a crop; the separate references to crops in the definitions of both intensive plant agriculture and extensive agriculture confirm the distinction. Producing hemp is more readily assimilated to production of a crop than horticulture, as defined.

45. Accepting that hemp leaves constituted a form of “foliage”, the Council submitted that the correct way to read the definition of horticulture was to treat the composite phrase “cut flowers and foliage” as one item. The cultivation of cut flowers for commercial purposes was not simply the cultivation of a flowering plant (angiosperm) but of a flowering plant which is cultivated for market as a bunch of cut flowers, with or without foliage. It is common practice for cut flowers to be marketed with foliage, including foliage from plants other than that which bore the flowers. It was not suggested in this Court, that there was any other common purpose for the cultivation of “cut flowers”. In that context, the combination of “cut flowers and foliage” indicates a single item within the defined class.

46. The syntax of the definition supports that conclusion. It is common practice in a list of more than two items to omit a comma after the last conjunctive or disjunctive; it is not common practice to omit a comma before the penultimate conjunctive. Accordingly, if cut flowers and foliage were to be treated as separate items, there would have been a comma after cut flowers. Because the last item in the list was nursery products, the absence of a comma after foliage accords with common practice. There is no oddity about identifying a single item involving two parts with a conjunctive.

47. In short, both common syntactical practice and context require that the definition of horticulture involves as one item “cut flowers and foliage”. That phrase does not sensibly include a crop of hemp, even if hemp is correctly identified as a flowering plant.

44. At the commencement of the appeal the appellant observed that this argument had not been run below and opposed the Council raising it to support the decision below by way of a contention. ^[29] However, the issue was (i) raised in the Council’s written submissions on the appeal, ^[30] (ii) addressed in the appellant’s reply, ^[31] (iii) the subject of a belated notice of contention, ^[32] (iv) the subject of a supplementary written submission filed by the appellant, and (iv) a question of the legal construction of a term in a statutory instrument. The notice of contention was filed out of time,^[33] but no prejudice arose from the late attention to formalities: the appellant lost no opportunity to call evidence because the contention did not turn on facts, nor an opportunity to make submissions. The Council should have an extension of time and leave to rely upon it in the appeal.

    29. CA Tcpt, p 5(8).

    30. Filed on 22 December 2023, pars 32-36.

    31. Filed 7 February 2024, par 23.

    32. Dated 20 February 2024.

    33. Time expired 28 days after the filing of the notice of appeal: Uniform Civil Procedure Rules 2005 (NSW), r 51.40.

45. As hemp farming does not constitute horticulture, no issue arises with respect to ancillary activities.

Scope of “extensive agriculture”

50. It is necessary to turn to the alternative ground relied on by the appellant, namely that his activities fell within the category of extensive agriculture. It must be accepted that farming hemp for commercial purposes falls within the class of activities defined as “extensive agriculture”, namely “the production of crops … for commercial purposes”. However, what is produced is a crop: it may properly be described as agricultural produce. The crop undoubtedly encompasses the leaves of the hemp plant, together with any other part of the plant which can be used for commercial purposes. However, the ordinary scope of that language does not include the result of processing the crop. A rice farmer produces rice, but not chocolate coated rice bubbles.

51. There may be activities which are ancillary to the production of a crop, such as harvesting the crop and storage pending transport to market, including the use of machinery and trucks to undertake those tasks. However, it does not follow that those ancillary activities are included within the primary definition. If, for example, those ancillary activities involve buildings on the land, those buildings will require development consent as “farm buildings”. That is because categorisation of an activity as “ancillary to” another activity tells one nothing about the status of the ancillary activity under the statutory instrument: that question can only be answered by reference to the express terms of the statutory instrument.

52. So far as the processing of the hemp leaves is concerned, it does not, in any event, naturally fall within the category of ancillary activities of the kind identified above. The Tweed LEP could, of course, provide a different answer to that question. However, the Tweed LEP does the opposite: it demonstrates a clear intention that such activities are not to be encompassed within the concept of production of a crop. Any “handling, treating, production, processing, storage or packing of … plant agricultural products for commercial purposes” falls within the definition of “rural industry”. (It is not necessary to examine the non-exclusive list of activities in the definition to reach that conclusion.)

53. This reasoning does not seek to provide an answer to a separate question (not raised on this appeal) as to whether any handling or storage of a crop (without any form of treatment, production or processing) which might otherwise constitute an activity ancillary to the production of the crop is, nevertheless, in the present context, a rural industry. Nor is it necessary to determine whether the activities carried out on the Site fell within the description of “rural industry”. The limited issue for present purposes is whether they fell within the classifications of “intensive plant agriculture” or “extensive agriculture”. As the primary judge correctly found, they did not.

Appellant’s reliance on authority

54. The appellant’s approach must be rejected as a matter of construction of the Tweed LEP. However, as the appellant sought to contend that his approach was consistent with case law, albeit dealing with other statutory instruments, it is necessary to address that submission briefly.

55. The starting point of the appellant’s submissions was the decision of this Court in Foodbarn Pty Ltd v Solicitor-General. ^[34] Foodbarn operated a cut-price supermarket selling both to the general public and (as wholesaler) to retail outlets. The trial judge had found as a fact that “the sale of goods by retail was a substantial purpose for which the premises were being used”, ^[35] which was sufficient to characterise the use as for the purposes of a “shop” which was not permitted within the zone. The three primary submissions raised by the appellant were rejected and the appeal dismissed. Two are material for present purposes. The first was that reference to “the purpose” of selling required a finding that that was the sole purpose. Glass JA rejected that submission on the following basis: ^[36]

“In circumstances where complex plurality is a recognizable feature both of activities (purpose) and motivation (reason), the selection of one component prefaced by ‘the’ does not imply to my mind that the formulated criterion requires it to be the only purpose or reason.”

34. (1975) 32 LGRA 157 (Glass JA, Hutley and Samuels JJA agreeing).

35. Foodbarn at 159.6.

36. Foodbarn at 160.4.

56. Glass JA continued, in a passage supportive of the approach adopted in these reasons: [37]

“This construction is enhanced by the context in which the phrase appears. An ordinance which sets out to provide a catalogue of activities some of which are permitted and others prohibited could hardly intend that the prohibited activity would be acceptable if it were allied to some other permitted activity. A prohibited purpose is equally repugnant to the planning scheme, whether or not it be carried out in isolation from other purposes.”

37. Ibid

57. The second submission required that the prohibited purpose should be the “dominant purpose”. Referring to two authorities, Glass JA accepted that “where a part of the premises is used for a purpose which is subordinate to the purpose which inspires the use of another part, it is legitimate to disregard the former and to treat the dominant purpose as that for which the whole is being used”. ^[38] He agreed that the same principle would apply where the dominant and subservient purposes both related to the whole and not to separate parts. The reasons continued: [39]

“But the trial judge specifically found that sales by retail were not ancillary to other purposes of the defendants and no attempt has been made to subvert that conclusion. Where the whole of the premises is used for two or more purposes none of which subserves the others, it is in my opinion, irrelevant to enquire which of the multiple purposes is dominant. If any one purpose operating in a way which is independent and not merely incidental to other purposes is prohibited, it is immaterial that it may be overshadowed by the others whether in terms of income generated, space occupied or ratio of staff engaged. The ordinance is nonetheless being disobeyed.”

38. Foodbarn at 161.2.

39. Ibid.

58. Beyond recognising the possibility that one purpose could subserve another dominant purpose, the circumstances in which that could arise were not important because Foodbarn was not such a case. However, where the ultimate purpose for which land is used is the production of goods for sale, steps in the course of the processing of material to create the goods are likely to be ancillary or incidental to the final production, if they are not part of the process of production itself. On the other hand, the separation of grain from chaff, or the grading of fruit or vegetables, may be seen as ancillary to the production of a crop for sale, although it may involve an industrial process. ^[40]

    40. See generally, Bronger v Greenway Health Centre Pty Ltd t/as Greenway Plaza Pharmacy [2023] NSWCA 104 at [41]-[42] (Beech-Jones JA, Brereton and Mitchelmore JJA agreeing).

59. Further support for these conclusions may be found in the reasoning in Toner Design, being a case in which a development application for seniors living involved the removal and storage of contaminated soil which rendered the development a designated development requiring an environmental impact statement. The proponent of the development contended that it was not a designated development because it fell within an exception for “ancillary development”. ^[41] The Court upheld a finding that, although the removal of contaminated soil would not have occurred but for the proposed seniors living development, the soil removal was not “ancillary to” that development.

    41. Environmental Planning and Assessment Regulation 2000 (NSW), Sch 3, cl 37A; Toner Design at [3].

60. An understanding of the present case is not improved by examples of other circumstances in which the analysis proposed by the appellant has been considered. ^[42]

    42. Baulkham Hills at 409-410 (Meagher JA); People for the Plains Inc v Santos NSW (Eastern) Pty Ltd [2017] NSWCA 46 at [141]-[143] (Ward JA).

Bifurcation of activities – alternative relief

61. The foregoing analysis assumes that there was a single integrated purpose for the activities on the Site. The primary judge so found, and was correct to do so. On the foregoing analysis, the only activity open to the appellant which could be carried on without consent was extensive agriculture involving the production of a crop of hemp. The fact that the commercial purpose for the hemp was the treatment and processing of the leaves to produce the infused olive oil and beeswax products justified that conclusion. However, the alternative relief sought by the appellant was intended to reflect the possibility that there could be separate and independent activities involving (i) production of a crop of hemp and (ii) processing of the hemp leaves into merchantable products. If that approach were accepted, the appellant submitted that relief could be crafted to permit the production of a hemp crop, while restraining the processing activities, absent consent. The absence of a lawful capacity to process the leaves did not remove the commercial purpose, although the commercial purpose might fail if consent were not obtained before the crop was harvested.

62. Ground 13A in the further amended notice of appeal sought alternative relief by reference to processing occurring in building Z on Lot 3. That form of the ground did not find its way into the draft orders, and, as noted above, the respondent resisted the argument that only building Z was involved in the processing of the hemp leaves. Proposed order 5A sought to give effect to the alternative course by accepting that there could be no “secondary processing” on either Lot 3 or Lot 34:

“5A   The Appellant is not to carry out secondary processing of hemp being the infusion of olive oil with hemp or other secondary processing into saleable product on either Lot 34 or Lot 3, absent development consent being obtained for this secondary processing.”

63. The appellant’s alternative approach raised two difficulties. First, it would be necessary to distinguish between three categories of building, namely (i) buildings which were ancillary to agricultural use of the land, (ii) buildings which were integral to the processing activities on the land and (iii) a dwelling. As has been explained, buildings which fell within the first category required consent. Buildings which fell within the second category were required for a rural industry and therefore required consent. ^[43] Any building constituting a “dwelling” was expressly excluded from the category of farm buildings and separately required consent. How an alternative declaration should be formulated is unclear. This exercise was not addressed on the appeal.

    43. No issue was raised on the appeal as to whether any of the structures were “exempt development”, an issue raised below.

64. Indeed, proposed order 5A is not in the form of a declaration. The primary judge made declarations and, so far, no restraining order. What the appellant may have intended is release of one activity from the undertakings which are presently in place. However, the declarations were posited upon a single integrated purpose and evidence as to the usage to which particular buildings and structures had been put. Once the finding as to a unitary purpose is upheld, there is no scope for some limited alternative form of relief based on separate uses, one of which is presently permissible without consent, and others not.

Orders

65. The Court should make the following orders:

1. To the extent necessary, grant the appellant leave to appeal from the judgment and orders made in the Land and Environment Court on 11 July 2023 (declarations) and on 22 September 2023 (costs).

2. Direct that the undated further amended notice of appeal be filed within 7 days of the delivery of this judgment and dispense with any further procedural steps in relation to the notice of appeal.

3. Extend the time for filing the first respondent’s notice of contention dated 20 February 2024 and grant the first respondent leave to rely upon it in the appeal.

4. Dismiss the appeal.

5. Order that the appellant pay the first respondent’s costs of the proceedings in this Court.

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Endnotes

Decision last updated: 11 March 2024