Day v Pinglen Pty Ltd

[1981] HCA 23

HIGH COURT OF AUSTRALIA

Mason, Murphy, Aickin, Wilson and Brennan JJ.

DAY v. PINGLEN PTY. LTD.

(1981) 148 CLR 289

26 May 1981

Town Planning (N.S.W.)

Town Planning (N.S.W.)—Building regulation—Approval to erection of building—Approval void if work not substantially commenced within twelve months of date of approval—Substantial commencement—Whether construction of slab a substantial part of work—Standing of adjoining owner to seek declaration that approval void and injunction—Laches—Local Government Act 1919 (N.S.W.),s. 315.

Decision

May 26.
THE COURT delivered the following written judgment: -
This is an appeal by special leave from the decision of the Court of Appeal of the Supreme Court of New South Wales (Hope and Mahoney JJ.A., Samuels J.A. dissenting) upholding the decision given against the appellant by Kearney J. at first instance. The central question in the case is whether an approval in respect of a building work has become void for want of "substantial commencement" within the meaning of that term in s. 315 of the Local Government Act 1919 (N.S.W.), as amended ("the Act"). (at p292)

2. Since January 1980, the first respondent ("Pinglen") has been the owner of land at 1A Lavender Crescent, Lavender Bay. In April 1980 the third respondent, a builder, took possession of the site under a contract to erect six town houses. Approval for this building work had been given, in accordance with the provisions of Div. 4 of Pt XI of the Act, on 25 March 1976 by the second respondent the North Sydney Municipal Council ("the council"). Neither the second nor third respondents have taken an active part in the appeal. (at p292)

3. The appellant is the owner of a home unit in a block of flats adjoining the site in question. She claims that the proposed development, if it proceeds, will adversely affect the view of the harbour which hitherto she has enjoyed from her unit. In May 1980 she issued a summons seeking the following relief:

"1. A declaration that the development consent and building approval granted by the Secondnamed Defendant to Macfield (N.S.W.) Pty. Limited and dated 25 March 1976 in respect of development of No. 1A Lavender Crescent, Lavender Bay has lapsed and is void. 2. An order that the first and thirdnamed defendants be restrained from constructing a residential flat building on the land . . . without a valid consent from the secondnamed Defendant. 3. . . . 4. Such other order as the Court may think just and equitable."

Macfield (N.S.W.) Pty. Ltd. ("Macfield") was the owner of the land in question at all material times in 1976 and 1977. Later on it sold the land to another company Wodine Pty. Ltd. which in turn sold it to Pinglen. An interim development order made subsequently to the grant of building approval would now preclude consent being given to the proposed development, a consideration which emphasizes the importance of the present issue to the principal parties. Should that issue be resolved in favour of the appellant, then it will be necessary to consider other submissions which Pinglen has made as to why relief should not be granted. These supplementary submissions attack the standing of the appellant to bring the suit, challenge the propriety of an injunction on the ground of the appellant's delay in seeking relief and argue generally on discretionary grounds pertaining to the facts of the case that relief should not be granted. (at p293)

4. The primary facts are not in dispute. The consent and approval was given on 25 March 1976, and would become void "if the building work to which it refers is not substantially commenced within twelve months after the date of the approval" (s. 315). Although the section empowers the council to extend the approval beyond the time referred to, no extension was granted in the present case. The critical date, therefore, is 25 March 1977. No work of any relevance was undertaken on the site until a few days prior to that date. Preliminary engineering drawings covering the whole work had been prepared by Macfield's engineering consultants, and lodged with the council on 18 February 1977 for approval, but they were not in sufficient detail to serve as a basis for calling tenders for its construction, and no tenders were invited. Then on 21 March 1977 the consultants prepared a final plan covering only a reinforced concrete slab which represented part of the ground floor of one of the proposed units. This drawing was approved by the council on 22 March 1977. At that time a builder, Phillips Constructions Pty. Ltd. ("Phillips") was engaged on another building project for Macfield, and arrangements were made verbally for that company to lay the slab immediately upon receipt of the approved plan. The work required a small amount of excavation and levelling of the natural ground surface, the preparation of formwork, the placing of the steel reinforcement, and the pouring of the concrete. The steel was laid on 25 March, and the concrete poured on the same date. An officer of the council was present during the pour, and the Chief Building Inspector's report shows that approximately eight cubic metres of concrete was laid. The area of the slab is 7.125 metres square with a rectangular "bite" out of one corner measuring 3.3 metres by 2.2 metres. Its area amounts to approximately eleven per cent of the concrete slab area of the ground floor of the project. Phillips charged Macfield $2,127.17 for the work, but claimed that this only represented actual cost, and that if all items including profit of $1,000 had been charged the figure would have been in excess of $3,600. The appellant has challenged this figure, and there is evidence that a proper charge would have been about $900, or with profit, $1,200. The cost of the whole project as at March 1977 is estimated to have been approximately $350,000. (at p294)

5. It is common ground that while the slab as constructed is in accordance with the over-all design of the building work, that particular part of the work was undertaken out of the ordinary sequence. A feature of the work is the large amount of excavation of the site that is required, occupying eight weeks of an estimated total construction time of thirty-six weeks. In the normal course of events, this excavation would have proceeded first, followed by the erection of load-bearing brick walls which, of course, are required to be taken down to foundations and footings. The concrete flooring would have then been laid. Nevertheless, the learned trial judge accepted that "the topography of the site and the necessity for such extensive bulk excavation before any other part of the building work could be commenced, left the construction of the slab on the site roughly at ground level as an acceptable method of commencing the building work". The appellant claims that this conclusion is contrary to the evidence, but we think that all his Honour was intending to say was that it was the only course that as a matter of practicality was open to an owner who, being placed as Macfield was in March 1977, sought to keep his building approval alive by effecting a substantial commencement. Hope J.A. in the Court of Appeal was expressing the same thought when he said that the construction of the slab was probably the only way in which, in the time available, the building work could have been substantially commenced. (at p294)

6. The slab having been laid on 25 March 1977, no further work was carried out on the site until April 1980. By that time, the slab had suffered some deterioration, and for this reason coupled with the consequence of it having been constructed before the bulk excavation was undertaken and the walls built, its utility was brought into question. At the trial much attention was directed to its value in the resumed work of constructing the total building. The soil adjacent to one side of the slab has had to be excavated to a depth of two metres approximately, causing soil to fall away from under the slab, and requiring that the slab itself be underpinned before the walls are built. It is agreed that the most economical course to have followed in order to proceed with the further building work in April 1980 would have been to remove the slab completely, and to lay a fresh slab after the excavation of the site was completed and the walls erected. Indeed, the plans on which the third respondent tendered for the work envisaged removal of the slab. Now, however, the building has proceeded with the slab being incorporated into it, although at the cost of some additional time and expense. (at p295)

7. It is in these circumstances that the appellant argues that the approval for the building work lapsed in March 1977. In the first place, she says there was no commencement of the approved building work because the construction of the slab was an isolated act, complete in itself. The work was not done in part performance of a contract to construct the whole building. It lacked any rational relationship to the approved work because it was done out of sequence and by 1980 was more nuisance than it was worth. In the second place she says that if there was a commencement of the work, then that commencement was not substantial, because it was of negative value. (at p295)

8. On the other hand, Pinglen argues that the mere fact that work is done out of sequence cannot matter so long as it is referable to the total plan, and is substantial in amount, and that it is immaterial that the work does not continue without interruption. It claims the support of the authority provided by previous cases. To those we now turn. (at p295)

9. In United Dominions Corporation Ltd. v. Woollahra Municipal Council (1973) 1 NSWLR 616 , the builder to whom the contract for the approved building work had been let ceased work because of the financial instability of the owner. As the expiry date of the approval drew near, arrangements were made with the mortgagee to have sufficient work done to constitute a substantial commencement of the work. At first instance, Helsham J. directed his mind to the motive or intention of the owner or those acting on his behalf in doing the work, and held that there was no substantial commencement. The Court of Appeal reversed the decision. Jacobs P. said (1973) 1 NSWLR, at pp 618-619 :

"The words of s. 315 of the Local Government Act, 1919 envisage a commencement which is not substantial, but the difficulty has been to decide in what sense the word 'substantially' is used in s. 315. However, whatever meaning be given to the word, it is in my view unrelated to the motive or intention of the building owner in performing the work. The test of substantial commencement is an objective, not a subjective, one. There may be a sham commencement, and if the word 'substantially' were not in the section, it might have been necessary to conclude that an apparent commencement might be no commencement at all because the commencement was really a sham. However, the presence of the word 'substantially' means that the problems of a sham commencement may be put to one side. No commencement which is substantial will be capable of being regarded as a sham - the substance of the work done will preclude the necessity of examining the motives and intentions of the building owner . . . .

Before us it has been further submitted that commencement involves an activity which is a continuing activity, so that if there is no continuing activity there is no commencement: cf. Owendale Pty. Ltd. v. Anthony (1967) 117 CLR 539 . The difficulty which I find with this submission in its application to the present facts is that it either involves an examination of the intention to continue rather than the continuing of the building work, or it involves an examination of the conduct of the building owner after the period of twelve months has expired. The first of these views is not sustainable for reasons which I have attempted to express above, whilst the second view would require commencement to be judged by the conduct of the building owner at a time when it may have become illegal for him to continue the building work. This view cannot be sustained." (at p296)

10. In Drummoyne Municipal Council v. Page (1973) 2 NSWLR 566 the Court of Appeal reaffirmed what Jacobs P. had said in the United Dominions Case (1973) 1 NSWLR 616 . The test of substantial commencement is an objective, not a subjective one, and does not depend on the motive or intention of the building owner in performing the work. Jacobs P. summed up this aspect of the case (1973) 2 NSWLR, at p 573 :

"It is a question of degree in each case, but the obvious purpose of the provision is to require commencement within a limited time so that there will not be outstanding approvals of building applications and development applications with nothing more done for an indefinite period. Work of the value of $5,000 in such a case as this appears to me to be an earnest and a proof that work is under way and the purpose of the statutory provision is met."

This decision came on appeal to this Court, sub nom. Drummoyne Municipal Council v. Lebnan (1974) 131 CLR 350 . The appeal was dismissed. Gibbs J. (as he then was), with whom Barwick C.J., Menzies, Stephen and Mason JJ. agreed, affirmed that the test is "an objective one depending on what in fact has been done rather than on the intention with which it was done" (1974) 131 CLR, at p 360 , and continued (1974) 131 CLR, at p 361 : "However, to say that work has been 'substantially commenced' does not, in the natural meaning of those words, suggest that what has been done forms a large proportion of the whole work; something can be substantially commenced although it has not been substantially completed. For example, if, in the case of a large city building, work had been done that was in itself very extensive and costly, it would accord with ordinary usage to say that work had been substantially commenced, although what had been done formed only a small proportion of the whole work. The test to be applied for the purposes of s. 315 and cl. 38 (2) is whether the work or development the subject of the approval or consent has been begun by the performance of some substantial part of that work or development." (at p297)

11. We regard it as important that the clarification which these decisions bring to the concept of "substantial commencement" should not be disturbed. It is a criterion requiring to be applied very frequently by local authorities, developers and concerned neighbours, and one that carries important implications for property rights. A building approval, once given, confers a valuable right, and the test by which an owner may be dispossessed of that right should be one that is clearly understood and readily applied. (at p297)

12. The adoption of an objective test, to be applied as at the date when, in the absence of substantial commencement, the approval would become void, requires that evidence of events following the relevant date be treated with reserve. Such evidence will not often be found to be cogent. Thus, in the present case, evidence of the difficulties which the slab presented in 1980 is relevant only in so far as it bears on the utility of the slab when it was constructed in March 1977 and its then relation to the approved building work. Subsequent deterioration is wholly irrelevant. Furthermore, one must be conscious of the dangers of hindsight in using subsequent experience as an aid to the assessment of the value of the slab in 1977. It seems to us that, notwithstanding that the work was undertaken out of the normal sequence and thereby caused some difficulty in the remaining sequences, and that in 1980 it was not only lacking in utility but was an actual hindrance, the finding of the trial judge that when constructed the slab conformed to the approved plan and represented an acceptable method of commencing the project should be endorsed. (at p298)

13. However, it remains necessary to consider, applying an objective test, whether, firstly, there was a commencement of the building work, and if so whether that commencement was substantial. There are some persuasive indicators pointing to a conclusion that there was no commencement of the building work in March 1977. There was, of course, the construction of a concrete slab. But the detailed drawings for the approved project had not been prepared. Tenders had not been called, and no contract had been let. The casual arrangement by which a builder, already engaged in another project for the owner, transferred some of his men on to the site for the three or four days that were necessary to complete the particular work to which he was assigned strongly suggests that this was an isolated work which had no real relation to the building work for which approval had been given. The job was an end in itself. It was the construction of a concrete slab. Of course, it must be immaterial that the work did not continue beyond 25 March 1977, for the sound reasons given by Jacobs P. in the United Dominions Case (1973) 1 NSWLR 616 . We concern ourselves only with the facts that are open to objective determination on the relevant date. Pinglen relies on the authority of the United Dominions and Lebnan Cases (1974) 131 CLR 350 . However in the former, the planning had been completed and a contract let; only its execution was interrupted because of financial difficulties. In the latter, the plans were complete, but no contract for the work had been entered into; but that case must be seen in the light of its unusual facts. Although a building approval was current at the time, the local authority was asserting that the development consent had expired, with the result that everything that the owner did in the final months was done under a cloud of alleged illegality. (at p298)

14. Nevertheless, notwithstanding the considerations which we have mentioned, the fact remains that the slab did in fact form part of the approved work, and we are not prepared to find that there was no commencement. In doing so, we bear in mind the comment of Jacobs P. in the United Dominions Case to the effect that the requirement of "substantiality" will ensure that a commencement is in fact genuine. It makes for easier administration of the law embodied in s. 315 if in a case in which the work done is capable of forming part of the approved building work, the sole criterion for determination is whether the work actually done is a substantial part of the approved building work: cf.Gibbs J. in Lebnan's Case (1974) 131 CLR, at p 361 . (at p299)

15. We come then to this question of substantial commencement. As has been said, it is a question of degree. The facts must be such as to lead naturally to the conclusion that the commencement is not merely evident, but is substantial, that is, of considerable amount. The statutory purpose must be borne in mind. A substantial commencement involves a commitment of resources of such proportions relative to the approved project as to carry the assurance that the work has really commenced. We notice that Samuels J.A. questioned the use by the learned trial judge of the word "significant" in applying the criterion; with respect, we agree because it merely substitutes one word of uncertain content for another. Suffice it to say that in the present case we have no hesitation in concluding that the construction of the slab was not a substantial commencement. Pinglen pressed the analogy with the facts in Lebnan's Case but it is futile to seek an answer to one case in the facts of another. We have already referred to the unusual situation which existed in that case, and no doubt the positive obstruction by the council in refusing to inspect the excavations so as to enable the concrete to be poured before the time limit expired encouraged the taking of a favourable view of the work that was done. The statutory purpose must be borne in mind in determining the question of substantial commencement. In our opinion the concrete slab was not a substantial part of the approved work of six town houses costing an estimated $350,000. (at p299)

16. It becomes necessary for us now to consider the other matters advanced by Pinglen against the grant of any relief. The first of these is the standing of the appellant to maintain the proceedings. The parties agree that, there being no interference with a private right, the appropriate test is whether the appellant has a special interest in the subject matter of the action, being an interest over and above that enjoyed by the public generally: Australian Conservation Foundation Inc. v. The Commonwealth (1980) 146 CLR 493, at p 526 , per Gibbs J. (as he then was), and Mason J. (1980) 146 CLR 493, at p547 . However, they disagree on whether the test is satisfied. The learned trial judge appears to have accepted the appellant's claim that the proposed development would interfere significantly with her existing panoramic view of Lavender Bay, the Harbour and the city. It seems to us that this finding should be accepted. No doubt the interference would also reflect on the value of her property. Pinglen, however, then says that the lawful development of the site could also cause a comparable interference with her view, and argues that this means that the unlawful work has not in fact occasioned any special detriment to the appellant. We agree, with respect, with Samuels J.A. that the argument is unsound. The existence of an impending detriment threatened by an unlawful act is sufficient to confer standing to seek an injunction to restrain that act, without regard to theoretical possibilities in other circumstances: cf. Campbell v. Paddington Corporation (1911) 1 KB 869, at p 879 . Pinglen also argues that the service of a notice on the appellant pursuant to s. 342ZA of the Act with the consequent right to object to the grant of approval to the proposed development is a factor which militates against her right to bring the present suit because it identifies a different forum and a procedure which is exclusive of any other remedy. But s. 342ZA outlines a procedure which has application to a proposed development which is being pursued in accordance with the Act; there is no reason why it should preclude resort to the general law for relief from a threatened unlawful act. Both Kearney J. and Samuels J.A. considered that s. 342ZA served a purpose relevant to standing in another way, namely, by identifying the appellant as a member of a category of persons who were, at least potentially, specially affected by the proposed development. We accept that view. The appellant therefore has standing to maintain the proceedings. (at p300)

17. Pinglen then seeks to invoke the doctrine of laches. It claims that the appellant so delayed the institution of proceedings that it would now be unjust to Pinglen if the court were to intervene, the company having acquired the site in the belief that the building had been substantially commenced and having then proceeded with the building work. It is observed that the appellant could have acted at any time since March 1977, but did not institute the proceedings until May 1980. In June 1979 the appellant was present and gave evidence at a hearing by the Local Government Appeals Tribunal of an objection by Wodine Pty. Ltd., the successor in title to Macfield, to Interim Development Order No. 57 in its application to the site in question. At that hearing the council agreed with the owner that the building work for which approval had been given on 25 March 1976 had been substantially commenced within twelve months of that date and that the approval remained effective. It was then made clear to the appellant that if she wished to pursue the question of substantial commencement she would have to pursue it elsewhere. (at p301)

18. The appellant denies any neglect or undue delay on her part. She points to the local ferment involving residents and the council over many months as justifying her hope and expectation that the council itself would take a stand against the resumption of the work. It is clear that the view of the council conveyed to the Tribunal in June 1979 was not its last word on the subject. In October 1979, having taken advice from various consultants, the council sought to persuade the then owner to limit the proposed development. On 4 December 1979 Pinglen notified the council that it proposed to proceed with the building work approved in March 1976. On 11 December 1979 the Town Planning and Building Committee of the council resolved to recommend that injunction proceedings be instituted to restrain Pinglen from relying on the approval for the reason that substantial commencement had not occurred. However, this recommendation was not adopted by the council when it met on 18 December. The council resolved to confer with Pinglen in an effort to achieve a more satisfactory development, but further resolved that if any residents wished to take injunction proceedings they should seek a fiat from the Attorney-General for such purpose. (at p301)

19. The appellant and the other residents who were involved were notified of this decision in the ensuing weeks. However, they would not accept the decision as final. Public meetings were convened by the council and held on 2 February and 8 February 1980. At both these meetings resolutions were passed declaring the view that substantial commencement had not occurred, and calling on the council to take injunction proceedings. More investigations, reports, and debate followed, and on 8 April the council resolved to institute proceedings for an injunction. The resolution had no sooner been passed than a rescission motion was proposed, and on 11 April the resolution of 8 April was rescinded. The appellant was notified of this decision. On 17 April her solicitor wrote a letter to Pinglen to the effect that unless the excavation works, which had commenced on the site that morning, ceased, she would seek relief from the court. Pinglen had finalized its purchase of the site on 15 January 1980, and it entered into the contract for construction of the building work with the third respondent on 25 March 1980. (at p301)

20. As we have said, the summons was issued in May 1980, returnable on 27 May. No application was made for an interlocutory injunction but on the application of all parties, the hearing of the matter was expedited. (at p301)

21. In the light of this turbulent history we do not think it can be said either that the appellant has been guilty of laches or that Pinglen could have been unaware at any material time of the risk of litigation upon the question of the continued efficacy of the building approval. (at p302)

22. Finally, Pinglen appeals to the discretion of the court to withhold relief from the appellant. In the first place it argues that the appellant chose not to seek an interlocutory injunction, with the result that the construction of the building has continued and is now nearing completion, if not already completed. In the second place, it relies on the fact that of all the reported cases on the question of substantial commencement this is the first occasion on which the local authority has supported the developer in the belief that the building approval remained valid and effective because the approved work had been substantially commenced within the prescribed time. These submissions are not without substance, particularly in their application to the claim for an injunction. Of course, one can understand the dilemma of the appellant with regard to interlocutory relief, because of the virtual necessity to give an undertaking in damages as a condition precedent. On the other hand, Pinglen was entitled to place some reliance on the attitude of the council, notwithstanding its vacillation, it being the body which bears the primary responsibility for the administration of these provisions of the Act. The appellant has sought inter alia "such other order as the Court may think just and equitable", and it may be that the question of damages ought to be considered: see, generally, Halsbury's Laws of England, 4th ed., vol. 24, par. 934. In that event, different considerations will apply to those which we have discussed in the context of standing, and the measure of damage will have regard to the detriment if any which the appellant could suffer from a lawful development of the site. (at p302)

23. Counsel for the appellant requested the court, in the event of his client succeeding in the appeal, to make the declaration sought in the summons, restrain for the time being the first and third respondents from carrying on further building work, and remit the matter to the Supreme Court in order that consistently with the judgment of this Court such relief be granted to the appellant as she is entitled to in the events which have occurred prior to the final determination of the matter. We would accede to that request. There may be a question whether, in the light of the Land and Environment Court Act 1979 (N.S.W.) the matter should be finalized by the court established by that Act; if this is so, no doubt the Supreme Court will make the appropriate order. (at p302)

24. The appellant and Pinglen are agreed that in any event the second respondent should not be ordered to pay any costs in respect of the appeal. (at p303)

25. In our opinion, the appeal should be allowed with costs against the first respondent, and orders made as indicated. (at p303)

Orders

Appeal allowed with costs against the first respondent.

Order of the Supreme Court of New South Wales Court of Appeal Division set aside and in lieu thereof make the following orders:
1. That the appeal to that Court be allowed with costs against the first respondent. 2. That the judgment appealed from be set aside and that in lieu thereof:
(i) Declare that the development consent and building approval granted by the secondnamed defendant to Macfield (N.S.W.) Pty. Limited and dated 25 March 1976 in respect of the development of No. 1A Lavender Crescent, Lavender Bay has become void.
(ii) Order that the first and thirdnamed defendants be restrained until further order of a Court of competent jurisdiction from carrying on further building work on the land known as No. 1A Lavender Crescent, Lavender Bay, being the whole of the land comprised in Certificate of Title Volume 13875 Folio 78 without a valid consent from the secondnamed defendant. (iii) Order that the firstnamed defendant pay the costs of the plaintiff.

Remit the matter to the Supreme Court to proceed in accordance with the judgement of this Court.