Hanave Pty Ltd v Waverley Council

[2025] NSWLEC 19

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Hanave Pty Ltd v Waverley Council [2025] NSWLEC 19

Hearing dates:

12 June 2024

Date of orders:

13 March 2025

Decision date:

13 March 2025

Jurisdiction:

Class 4

Before:

Pritchard J

Decision:

The Court:

(1) Declares that condition 10 of the development consent granted by the second respondent on 27 September 2023 in respect of development application no. DA-80/2023 lodged on behalf of the first and second applicant is invalid and of no force or effect.

(2) Orders the respondents to pay the applicants’ costs of these proceedings.

(3) Orders the parties to seek to have the proceedings relisted on a business date by no later than 14 days from the making of these orders for any further directions. Otherwise, the proceedings brought by the applicants are dismissed in their entirety.

Catchwords:

JUDICIAL REVIEW — whether the consent authority had power to impose a condition requiring an affordable housing contribution — operation of ss 4.17(1)(h) and 7.32 of the Environmental Planning and Assessment Act 1979 (NSW) — construction of cl 15A of the Environmental Planning and Assessment (Savings, Transitional and Other Provisions) Regulation 2017 (NSW) — whether invalid condition — whether the condition can be severed from the development consent

Legislation Cited:

Environmental Planning and Assessment Act 1979 (NSW) (as at 27 September 2023) ss 4.15, 4.17, 4.59, 7.11, 7.13, 7.32

Environmental Planning and Assessment Act 1979 (NSW) (repealed) ss 37, 94F, 94G, 101, Sch 6

Environmental Planning and Assessment Amendment (Affordable Housing) Act2000 ((NSW) Sch 1[3]

Environmental Planning and Assessment Amendment Act 2008 (NSW) (repealed) Sch 1, 3

Environmental Planning and Assessment Amendment Act 2017 (NSW) (repealed) Sch 12

Interpretation Act 1987 (NSW), ss 30, 30A and 32

Judiciary Act 1903 (Cth) s 78B

Land and Environment Court Act 1979 (NSW) s 25B

Statute Law (Miscellaneous Provisions) Act 2010 (NSW) (repealed)

Environmental Planning and Assessment (Savings, Transitional and Other Provisions) Regulation 2017 (NSW) cl 15A

Environmental Planning Regulation 2000 (NSW) (repealed) cl 15A

State Environmental Planning Policy (Affordable Rental Housing) 2009 (NSW) (repealed) cl 51

State Environmental Planning Policy (Housing) 2021 (NSW) cl 48

State Environmental Planning Policy (Sydney Region Growth Centres) 2006 (NSW) (repealed)

State Environmental Planning Policy (Western Sydney Parklands) 2009 (NSW) (repealed)

State Environmental Planning Policy No 10 - Retention of Low-Cost Rental Accommodation (1984 EPI 600) (NSW) (repealed)

Sydney Regional Environmental Plan No 26 – City West (1992 EPI 564) (NSW) (repealed)

Uniform Civil Procedure Rules 2005 (NSW) r 59.10

Waverley Local Environmental Plan 2012 (NSW) (as at 27 September 2023)

Cases Cited:

ADCO Constructions Pty Ltd v Goudappel ((2014) 254 CLR 1; [2014] HCA 18

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41

Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1; [1932] HCA 9

Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485; [1993] HCA 15

Balnaves Foundation Pty Ltd v Minister for Planning (No 2) [2018] NSWLEC 163

Bankstown City Council v Ramahi [2015] NSWLEC 74

Commonwealth v AJL20 (2021) 273 CLR 43; [2021] HCA 21

Community Action for Windsor Bridge Inc v NSW Roads and Maritime Services [2015] NSWLEC 167

Empire Waste Pty Ltd v District Court of New South Wales (2013) 86 NSWLR 142; [2013] NSWCA 394

Fairfield City Council v N & S Olivieri Pty Ltd [2003] NSWCA 41

Federal Steam Navigation Co Ltd v Department of Trade & Industry [1974] 2 All ER 97; [1974] 1 WLR 505

Greek Australian Finance Corporation Pty Ltdv Sydney City Council (1974) 29 LGRA 130

Hoxton Park Residents Action Group Inc v Liverpool City Council (No 3) (2012) 190 LGERA 119; [2012] NSWLEC 43

Institute of Patent Agents v Lockwood [1894] AC 347

King v Bathurst Regional Council (2006) 150 LGERA 362; [2006] NSWLEC 505

Kirk v Industrial Court of New South Wales (2010) 239 CLR 531; [2010] HCA 1

Kruse v Johnson [1898] 2 QB 91 (DC)

L & G Management Pty Ltd v Council of The City of Sydney (2021) 252 LGERA 31; [2021] NSWLEC 149

Local Democracy Matters Incorporated v Infrastructure NSW (2019) 237 LGERA 74; [2019] NSWCA 65

Maitland City Council v Anambah Homes Pty Ltd (2005) 64 NSWLR 696; (2005) 147 LGERA 234; [2005] NSWCA 455

Minister Administering the Water Management Act 2000 v Sharkey (2017) 226 LGERA 322; [2017] NSWCA 319

NZYQ v Minister for Immigration, Citizenship and Multicultural Affairs (2023) 97 ALJR 1005

Official Receiver of Bankruptcy v Todd, M (1986) 14 FCR 177; (1986) 70 ALR 119; [1986] FCA 630

R v Secretary of State for Social Security; Ex parte Britnell [1991] 2 All ER 726; [1991] 1 WLR 198

SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34

Tugun Cobaki Alliance Inc v Minister for Planning and RTA [2006] NSWLEC 396

Willoughby City Council v Blanc Black Projects Pty Ltd [2023] NSWLEC 54

Wilson v Commissioner of Stamp Duties (1988) 13 NSWLR 77

Yates v the State of Western Australia [2008] WASCA 144

Texts Cited:

Herzfeld and Prince, Interpretation (2nd ed, 2020, Thomson Reuters (Professional) Australia Limited)

Herzfeld and Prince, Interpretation (3rd ed, 2024, Thomson Reuters (Professional) Australia Limited)

Macquarie Dictionary, online ed

Oxford Dictionary, online ed

Category:

Principal judgment

Parties:

Hanave Pty Ltd (First Applicant)
Cadele Pty Ltd (Second Applicant)
Waverley Council (First Respondent)
Waverley Local Planning Panel (Second Respondent)

Representation:

Counsel:
J Lazarus SC and Y Truong (First and Second Applicants)
A Pickles SC and C Koikas (First and Second Respondents)

Solicitors:
Wilshire Webb Staunton Beattie (First and Second Applicants)
Gilbert Mane Solicitors (First and Second Respondents)

File Number(s):

2023/323047

Publication restriction:

Nil

JUDGMENT

Introduction

The rear DA consent dated 27 September 2023

Issues

Outcome

Relevant legislation and legislative history

Evidence in relation to the rear DA consent

Factual background in relation to the rear DA consent

(1) Whether the second respondent was authorised to impose an affordable housing contribution condition in the rear DA consent

Applicants’ submissions

Applicants’ submissions in relation to the operation of ss 4.17(1)(h) and 7.32 of the EPA Act

Applicants’ submissions in relation to whether clause 15A of the 2017 Regulation is of assistance

Applicants’ submissions in relation to the proper construction of cl 15A of the 2017 Regulation

Respondents’ submissions

Respondents’ submissions in relation to the validity of cl 15A of the 2017 Regulation

Respondents’ submissions in relation to the construction of cl 15A of the 2017 Regulation

Applicants’ submissions in reply

Applicants’ submissions in reply in relation to Pepper J’s findings in Balnaves

Applicants’ submissions in reply in relation to the 2021 SEPP (Housing)

Applicants’ submissions in reply in relation to the language of cl 15A

Applicants’ submissions in reply in relation to the consequences of the continued operation of cl 15A

Consideration of whether the second respondent was authorised to impose an affordable housing contribution condition in the rear DA consent

(2) Whether, if the affordable housing contribution condition in the rear DA consent is invalid, it can be severed from the rear DA consent

Applicants’ submissions in relation to the severability of condition 10

Respondents’ submissions in relation to the severability of condition 10

Applicants’ submissions in reply in relation to the severability of condition 10

Consideration of whether, the affordable housing contribution condition in the rear DA consent, having been found to be invalid, can be severed from the consent

Costs

Conclusion and orders

JUDGMENT

Introduction

1. Hanave Pty Ltd (the first applicant) and Cadele Pty Ltd (the second applicant) (together, the applicants) are the joint registered proprietors of land at 241 Bondi Road, Bondi located within the Waverley local government area (the property). The second applicant is a related entity of the first applicant, and both entities share two common directors and a common shareholder.

2. By summons filed on 12 October 2023 (the summons), the applicants commenced Class 4 judicial review proceedings seeking declarations that conditions imposed on two development consents (the consents) granted by Waverley Council (Council) (the first respondent) requiring contributions for affordable housing (the affordable housing conditions) were invalid in circumstances where they were not authorised to be imposed under the Waverley Local Environmental Plan 2012 (NSW) (WLEP), as required by ss 4.17(1)(h) and 7.32 of the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act).

3. The affordable housing conditions were imposed following decisions of the Waverley Local Planning Panel (the second respondent) in relation to DA-223/2021 made on 27 October 2021 (the front DA consent) pursuant to cl 51 of State Environmental Planning Policy (Affordable Rental Housing) 2009 (NSW) (SEPP (ARH)), and in relation to DA-80/2023 made on 27 September 2023 (the rear DA consent) pursuant to cl 48 of State Environmental Planning Policy (Housing) 2021 (NSW) (SEPP (Housing)). The challenged conditions were condition 11 of the front DA consent, and condition 10 of the rear DA consent.

4. In the summons filed on 12 October 2023, the applicants sought the following orders:

1. An order pursuant to r 59.10 of the Uniform Civil Procedure Rules 2005 that the time to commence these judicial review proceedings relating to condition 11 of the development consent granted by the Second Respondent on 27 October 2021 in respect of development application no. DA-223/2021 (Front DA Consent) lodged on behalf of the First and Second Applicants is extended to the date of the commencement of these proceedings.

2. A declaration that condition 11 of the Front DA Consent is invalid and of no force or effect.

3. A declaration that condition 10 of the development consent granted by the Second Respondent on 27 September 2023 in respect of development application no. DA-80/2023 lodged on behalf of the First and Second Applicant (Rear DA Consent) is invalid and of no force or effect.

4. An order that the Respondents pay the Applicants’ costs of these proceedings.

5. Such further or other orders as the Court thinks fit.

5. As is apparent from prayer 1 of the summons, the applicants also sought leave under r 59.10(2) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) to extend the time to commence judicial review proceedings fixed by r 59.10(1) (3 months) in relation to the front DA consent which was granted on 27 October 2021.

6. On 7 February 2024, the respondents filed their response to the summons, contending that the affordable housing conditions were valid because of the operation of cl 15A of Part 1B of Sch 4 to the Environmental Planning and Assessment (Savings, Transitional and Other Provisions) Regulation 2017 (NSW) (2017 Regulation) which “empowered the Second Respondent to impose a condition of consent” in relation to the front DA consent pursuant to cl 51 of SEPP (ARH) and in relation to the rear DA consent pursuant to cl 48 of SEPP (Housing) or, in the alternative, in the event that they were invalid, they were not severable.

7. The matter was heard by me on 12 June 2024. At the hearing, the parties agreed that the most efficient approach would be first to consider prayers 3, 4 and 5 of the summons in relation to the rear DA consent which do not require the Court to engage in whether an extension of time to commence proceedings in relation to the front DA consent ought be granted. I have adopted this approach agreed by the parties.

8. At the hearing on 12 June 2024, a question also arose as to whether notices pursuant to s 78B of the Judiciary Act 1903 (Cth) should have been served. Mr Lazarus SC for the applicants submitted that there is an “unresolved question within this Court as to the appropriate test to apply, as to the proper construction of s 4.59 [of the EPA Act]”. Section 4.59 provides relevantly that the validity of a development consent cannot be questioned in any legal proceedings by any person in the Court except those commenced before the expiration of 3 months from the date on which public notice was given. Mr Lazarus drew attention to the decision of the chief judge in Brown v Randwick City Council ^[1] (Brown v Randwick) as authority for the proposition that any jurisdictional error is sufficient to overcome the privative provision in s 4.59 of the EPA Act. ^[2] In Brown v Randwick at [40] Preston CJ of LEC said that each of the grounds of challenge to the development consent and notification involved jurisdictional error. Section 101 (now s 4.59) was, therefore, ineffective to protect this consent and notification from these jurisdictional errors.

   1. (2011) 183 LGERA 382; [2011] NSWLEC 172 (Preston CJ of LEC).

   2. See Brown v Randwick at [37]-[39] (Preston CJ of LEC), citing Kirk v Industrial Court of New South Wales (2010) 239 CLR 531; [2010] HCA 1.

9. Mr Lazarus also referred to the alternative view of Pain J in Lu v Walding (No 2), ^[3] where her Honour held that s 101 of the EPA Act (now s 4.59) is not invalid in light of the principle in Kirk v Industrial Court of New South Wales (Kirk) ^[4] but is subject to the principle in R v Hickman; Ex parte Fox and Clinton. ^[5] Mr Lazarus submitted that in this case on “either approach … s 4.59 doesn’t have the effect of protecting the relevant decision [that is, the decision to grant the front DA consent], notwithstanding the fact that the challenge was brought outside the three-month time period”. Mr Lazarus submitted that r 59.10 of the UCPR does “not apply to proceedings in which there is a statutory limitation period for commencing the proceedings”.

   3. (2021) 249 LGERA 1; [2021] NSWLEC 21 (Pain J).

   4. (2010) 239 CLR 531; [2010] HCA 1.

   5. (1945) 70 CLR 598; [1945] HCA 53.

10. Mr Pickles SC for the respondents submitted that there is not a statutory limitation period for commencing the proceedings, because the proceedings concern a challenge to the jurisdictional power to have imposed the affordable housing conditions. The respondents also referred to the decision of the chief judge in Bankstown City Council v Ramahi ^[6] (Ramahi), and submitted that his Honour was there dealing with a circumstance in which there was no statutory limitation because there had been no notice under s 101 of the EPA Act. In this case, it was submitted, there had been notice “but it wouldn’t be a bar under s 4.59…because the challenge is a jurisdictional challenge to the power to impose the condition”. Mr Pickles submitted that “there is a requirement for [the Court] to consider r 59.10 in respect of the front DA”.

    6. [2015] NSWLEC 74 (Preston CJ of LEC).

11. The oral submissions of senior counsel for the parties in relation to the second respondent’s power to grant the front DA consent is extracted relevantly below, some of which are summarised above:

LAZARUS: …that then leads me to the question of the extension of time. As your Honour has earlier heard, this issue only relates to the challenge to the front DA consent granted in 2021. It's common ground, your Honour, so I don't need to address your Honour on this and I don't need to provide notices to the Attorneys General, that s 4.59 of the Act cannot bar proceedings commenced outside the three month time period.

Your Honour, I suspect I won't need to go into this given that it's common ground. There's a unresolved question within this Court as to the appropriate test to apply, as to the proper construction of s 4.59, and the view expressed by the Chief Judge in a case called [Brown v Randwick] is that any jurisdictional error is sufficient to overcome the privative provision in s 4.59, and that's based on the High Court's decision in Kirk.

The alternative view expressed by [Pain] J in a case called Lu - L-U - v Walding - W-A-L-D-I-N-G - [2020] NSWLEC 94^[7], is that no, Pallas Newco in 2004 determined this question by upholding the proper construction of what was then s 101, now s 4.59 of the Act, as being protected only where the three or four, depending on who you ask, Hickman principles are engaged. In this case, there's no dispute between the parties that on either approach, if there's no power - what used to be called simple ultra vires - if there's no power for the consent authority to impose the condition, s 4.59 doesn't have the effect of protecting the relevant decision, notwithstanding the fact that the challenge was brought outside the three-month time period.

…

LAZARUS: Your Honour, I know has dealt with this provision on a number of occasions, so 59.10(1) is the three-month time limit. It is extendable at the discretion of the Court in subs (2), and subs (3) are the mandatory factors, not the exclusive factors. It's subs (4) - or subs r 4, that's the relevant one for present purposes. This rule does not apply to proceedings in which there is a statutory limitation period for commencing the proceedings. And the dispute between us is whether, on our case, s 4.59 is a statutory limitation period for commencing the proceedings, notwithstanding the fact that in this - in the case of this particular challenge, it would not have the effect of barring it. Or, on the Respondents' case, section - because of the application of the Hickman principles, s 4.59 doesn't apply and, therefore, they say there is no statutory limitation period. Your Honour, that's not an unimportant question of construction.

LAZARUS: …in my submission, your Honour could determine the extension of time application on the assumption that the rule applies because if it doesn't apply, then we don't need to seek an extension. If the rule does apply, then your Honour either will grant the extension or not. It's only in that latter circumstance that this question of construction arises. In any event, as is said quite often in these kinds of extension of time applications, your Honour needs to determine whether we have an arguable case in any event in determining the extension of time. It can be wrapped up as part of your Honour's consideration of the other issues in our submission.

PICKLES: In these proceedings, there is not a statutory limitation period for commencing the proceedings, because these proceedings concern a challenge to the jurisdictional power to have imposed the conditions. And therefore, in these proceedings, there is no statutory limitation. While it's true that in Ramahi, his Honour was dealing with a circumstance in which the reason why there was no statutory limitation was because there had been no notice under s 101. In this case, it's not just a question of notice by which there's no statutory limitation period, it's because there has been notice, but it wouldn't be a bar under s 4.59 in these proceedings, because the challenge is a jurisdictional challenge to the power to impose the condition.

To that end, we say that there is a requirement for your Honour to consider r [59.10] in respect of the front DA.  Now, on that note, I would say at this juncture, that in light of the debate this morning, as to the way in which your Honour might deal with this, there may be some force in my learned friend's proposition.  That, because of the - a fact that part of the summons doesn't require that leave to extend time, that your Honour might decide to approach this in, as it were, an almost back to front way, in deciding that element of the case first.

…Deal with the question as a matter of substance, which arises on the rear DA in any event.  In that way, then, one would only consider the extension of time in the event that your Honour was inclined to uphold the summons, because that would be the only circumstance in which your Honour would need to.

7. This appears to have been a refence to Lu v Walding (No 2) (2021) 249 LGERA 1; [2021] NSWLEC 21).

12. Accordingly, as agreed by the parties and as noted above at [7], I have proceeded to consider the issues raised by the parties in relation to the rear DA consent, leaving to one side the question of an extension of time to challenge the front DA consent.

The rear DA consent dated 27 September 2023

13. On 20 September 2023, Council, the first respondent, issued a report to the second respondent recommending the imposition of an affordable housing contribution condition of $544,500 in relation to the rear DA consent.

14. On 27 September 2023, the Waverley Local Planning Panel, the second respondent, approved the rear DA consent. An affordable housing contribution condition of $435,000 was imposed in condition 10 as follows:

10. AFFORDABLE HOUSING CONTRIBUTION - PAYMENT IN ACCORDANCE WITH STATE ENVIRONMENTAL PLANNING POLICY (HOUSING) 2021

The Affordable Housing Contribution is as follows:

(a) Pursuant to clause 48(2) of State Environmental Planning Policy (Housing) 2021, the applicant must provide a monetary contribution towards the provision of affordable housing as the proposed development will or is likely to reduce the availability of affordable housing within the area.

(b)   The contribution of $435,000 payable for the provision of affordable rental housing under s7.33 of the Environmental Planning and Assessment Act 1979 for the purpose of mitigating the loss of low-rental accommodation proposed by the subject DA, shall be paid in one complete payment to Waverley Council prior to the issue of a Construction Certificate.

REASON: Unit 11 should be excluded from being considered an ‘affordable housing unit’ and the contribution rate reduced accordingly as the rent was only reduced to the ‘affordable’ housing range because of a temporary reduction during the Covid period.

Issues

15. In relation to the rear DA consent, the parties’ agreed issues for determination were as follows:

1. whether the second respondent was authorised to impose an affordable housing contribution condition in the rear DA consent in circumstances where the WLEP did not, at any relevant time, contain any provision authorising the imposition of such a condition; and

2. whether, if the affordable housing contribution condition in the rear DA consent is invalid, it can be severed from the rear DA consent.

Outcome

16. For the reasons that follow, I have found that:

1. the second respondent was not authorised to impose an affordable housing condition in the rear DA consent; and

2. the affordable housing condition can be severed from the rear DA consent.

Relevant legislation and legislative history

17. On 5 June 2000, Sch 1 of the Environmental Planning and Assessment Amendment (Affordable Housing) Act 2000 (NSW) (2000 Amending Act) came into effect, introducing s 94F into Division 6A of the EPA Act. Section 94F (as it then was) authorised a consent authority to grant consent to a development consent subject to a condition requiring the payment of a monetary condition to be used for the purpose of affordable housing: s 94F(2)(b). However, at the time s 94F was initially inserted, s 94F(3) provided that an affordable housing condition could only be imposed under s 94F if, inter alia, it was “authorised to be imposed by a regional environmental plan or a local environmental plan, and is in accordance with a scheme for dedications or contributions set out in or adopted by such a plan”: s 94F(3)(b).

18. Schedule 1[3] to the 2000 Amending Act (since repealed) provided as follows:

[3]   Part 4, Division 6A (sections 94F and 94G)

Insert after section 94E:

Division 6A Conditions requiring land or contributions for affordable housing

94F   Conditions requiring land or contributions for affordable housing

(1)  This section applies with respect to a development application for consent to carry out development within an area if a State environmental planning policy identifies that there is a need for affordable housing within the area and:

(a)  the consent authority is satisfied that the proposed development will or is likely to reduce the availability of affordable housing within the area, or

(b)  the consent authority is satisfied that the proposed development will create a need for affordable housing within the area, or

(c)  the proposed development is allowed only because of the initial zoning of a site, or the rezoning of a site, or

(d)  the regulations provide for this section to apply to the application.

(2)  Subject to subsection (3), the consent authority may grant consent to a development application to which this section applies subject to a condition requiring:

(a)  the dedication of part of the land, or other land of the applicant, free of cost to be used for the purpose of providing affordable housing, or

(b)  the payment of a monetary contribution to be used for the purpose of providing affordable housing,

or both.

(3)  A condition may be imposed under this section only if:

(a)  the condition complies with all relevant requirements made by a State environmental planning policy with respect to the imposition of conditions under this section, and

(b)  the condition is authorised to be imposed by a regional environmental plan or local environmental plan, and is in accordance with a scheme for dedications or contributions set out in or adopted by such a plan, and

(c)  the condition requires a reasonable dedication or contribution, having regard to the following:

(i)  the extent of the need in the area for affordable housing,

(ii)  the scale of the proposed development,

(iii)  any other dedication or contribution required to be made by the applicant under this section or section 94.

(4)  A consent authority that proposes to impose a condition in accordance with this section must take into consideration any land or other sum of money that the applicant has previously dedicated free of cost, or previously paid, for the purpose of affordable housing within the area otherwise than as a condition of a consent.

(5)  Nothing in this section prevents the imposition on a development consent of other conditions relating to the provision, maintenance or retention of affordable housing. Such conditions may require, but are not restricted to, the imposition of covenants (including positive covenants) or the entering into of contractual or other arrangements.

94G   Provision of affordable housing

(1)  Land dedicated in accordance with a condition imposed under this Division must:

(a)  be made available by the consent authority for the purposes of affordable housing within a reasonable time, or

(b)  be transferred by the consent authority in accordance with any applicable direction under subsection (3).

(2)  A consent authority must:

(a)  hold any monetary contribution paid in accordance with a condition imposed under this Division (and any additional amount earned from its investment) for the purpose for which the payment was required and apply the money for the purposes of affordable housing in the area or an adjoining area within a reasonable time, or

(b)  pay the monetary contribution in accordance with any applicable direction under subsection (3).

(3) The Minister may give a direction, that applies generally or in any particular case or class of cases, to a consent authority:

(a)  requiring it to transfer land to a person nominated by the Minister, if it imposes a condition under this Division requiring dedication of the land, or

(b)  requiring it to pay a monetary contribution to a person nominated by the Minister, if it imposes a condition under this Division requiring the payment of the monetary contribution.

(4)  A person nominated under this section by the Minister must:

(a)  make available any land transferred to the person under this Division for the purposes of affordable housing within a reasonable time, and

(b)  apply any monetary contribution paid to the person under this Division (and any additional amount earned from its investment) for the purposes of affordable housing in the area concerned or in an adjoining area within a reasonable time.

19. On 31 May 2002, cl 58 of the Sydney Regional Environmental Plan No 26 – City West (1992 EPI 564) (NSW) (REP No 26) was amended to authorise the imposition of affordable housing contributions.

20. On 1 July 2009, s 94F of the EPA Act was amended by the Environmental Planning and Assessment Amendment Act 2008 (NSW) (2008 Amending Act). The 2009 amendments removed the reference in s 94F(3)(b) to “a regional environmental plan” (REP). As amended, s 94F(3)(b) provided that an affordable housing condition could only be imposed if it was “authorised to be imposed by a local environmental plan, and is in accordance with a scheme for dedications or contributions set out in or adopted by such a plan”.

21. On the same day that s 94F was amended by the 2008 Amending Act, namely 1 July 2009, cl 15A was inserted into the Environmental Planning Regulation 2000 (NSW) (2000 Regulation). Clause 15A provided as follows (emphasis added):

15A   Transitional provision relating to affordable housing

Until the commencement of Part 5B of the Act (to be inserted by Schedule 3 to the Environmental Planning and Assessment Amendment Act 2008), s 94F (3) (b) of the Act is to be construed as if the reference to a condition authorised to be imposed by a LEP (which before the commencement of Schedule 1 to that Act included a reference to a condition authorised to be imposed by a regional environmental plan) were a reference to a condition authorised to be imposed by a SEPP or a LEP.

22. On the same day, 1 July 2009, s 37 and Sch 6 cl 120 were also inserted into the EPA Act by the 2008 Amending Act such that all existing State environmental planning policies and existing regional environmental plans are, on the commencement day, taken to be environmental planning instruments made by the Governor under Division 2 of Part 3 of the Act. Section 37 provided:

37 Governor may make environmental planning instruments (SEPPs)

(1) The Governor may make environmental planning instruments for the purpose of environmental planning by the State. Any such instrument may be called a State environmental planning policy (or SEPP).

(2) Without limiting subsection (1), an environmental planning instrument may be made by the Governor to make provision with respect to any matter that, in the opinion of the Minister, is of State or regional environmental planning significance.

And cl 120 to Sch 6 provided:

120 Continuation in force of existing SEPPs and REPs

All existing State environmental planning policies and existing regional environmental plans are, on the relevant commencement day, taken to be environmental planning instruments made by the Governor under Division 2 of Part 3 of this Act, as amended by the amending Act.

23. Sch 3 of the 2008 Amending Act included provisions which sought to replace Part 4, Divisions 6 and 6A (which included s 94F) with a new Part 5B. The new Part 5B included a proposed s 116Y(4) which provided as follows:

116Y Conditions requiring land or contributions for affordable housing

(4) A condition may be imposed under this section only if:

(a) the condition complies with all relevant requirements made by a State environmental planning policy with respect the imposition of conditions under this section; and

(b) the condition is authorised to be imposed by a local environmental plan or State environmental planning policy, and is in accordance with a scheme for dedications or contributions set out in or adopted by the plan or policy.

24. On 31 July 2009, SEPP (ARH) came into effect.

25. On 1 March 2018, Schedule 12 to the Environmental Planning and Assessment Amendment Act 2017 (NSW) (2017 Amending Act) commenced, thereby repealing the 2008 Amending Act, which had contained Part 5B before that Part had commenced. In other words, Part 5B of the 2008 Amending Act, which included proposed s 116Y(4) in relation to requiring conditions for affordable housing, was repealed without those provisions having commenced. ^[8]

    8. Balnaves (Pepper J) at [38].

26. Clause 4A of the 2017 Regulation provided:

4A Interpretation—renumbered or relocated provisions of Act

(1) In this clause—

document means any Act or statutory or other instrument or any contract or agreement, and includes any document issued or made under or for the purposes of any Act or statutory or other instrument.

(2) A reference in any document (whether enacted, issued or made before or after the commencement of this clause) to a provision of the Act that has been renumbered or relocated by the Environmental Planning and Assessment Amendment Act 2017 is taken to be a reference to the renumbered or relocated provision. Anything done or omitted to be done under any such provision of the Act before it was renumbered or relocated is taken to have been done or omitted under the provision as renumbered or relocated.

(3) A reference in any document (whether enacted, issued or made before or after the commencement of this clause) to any such renumbered or relocated provision of the Act is taken to include a reference to the provision before it was renumbered or relocated.

(4) This clause is subject to any contrary intention in the provision in which a relevant reference occurs.

(5) In this clause—

relocated includes repealed and re-enacted, with or without modification.

Note—

See the concordance table of renumbered and relocated provisions at the end of historical notes to the in-force version of the Environmental Planning and Assessment Act 1979 on the NSW legislation website.

27. Also on 1 March 2018, cl 15A was transferred from the 2000 Regulation to the 2017 Regulation as a transferred provision pursuant to s 30A of the Interpretation Act1987 (NSW) (Interpretation Act). Clause 15A of Part 1B of Sch 4 provided:

15A Transitional provision relating to affordable housing

Until the commencement of Part 5B of the Act (to be inserted by Schedule 3 to the Environmental Planning and Assessment Amendment Act 2008), section 94F(3)(b) of the Act is to be construed as if the reference to a condition authorised to be imposed by a LEP (which before the commencement of Schedule 1 to that Act included a reference to a condition authorised to be imposed by a regional environmental plan) were a reference to a condition authorised to be imposed by a SEPP or a LEP.

28. On 26 November 2021, SEPP (Housing), came into effect, replacing SEPP (ARH). In Part 1 “Preliminary” of Chapter 2 “Affordable housing” of SEPP (Housing), cl 15 provides as follows:

15 Requirement for imposition of conditions—the Act, s 7.32(3)(a)

Before imposing a condition under the Act, section 7.32, the consent authority must consider the following—

(a)  affordable housing must aim to create mixed and balanced communities,

(b)  affordable housing must be created and managed so that a socially diverse residential population, representative of all income groups, is developed and maintained in a locality,

(c)  affordable housing must be made available to very low, low and moderate income households, or a combination of the households,

(d)  affordable housing must be rented to appropriately qualified tenants and at an appropriate rate of gross household income,

(e)  land provided for affordable housing must be used for the purposes of the provision of affordable housing,

(f)  buildings provided for affordable housing must be managed to maintain their continued use for affordable housing,

(g)  affordable housing must consist of dwellings constructed to a standard that, in the opinion of the consent authority, is consistent with other dwellings in the area.

29. In Part 3 “Retention of existing affordable rental housing”, cl 47 provides (emphasis added):

47   Reduction of availability of affordable housing

(1)  Development for the following purposes, in relation to a building to which this Part applies, is permitted with development consent—

(a)  demolishing the building,

(b)  altering or adding to the structure or fabric of the inside or outside of the building,

(c)  changing the use of the building to another use,

(d)  if the building is a residential flat building—strata subdivision of the building.

(2)  In determining whether to grant development consent, the consent authority must take into account the Guidelines for the Retention of Existing Affordable Rental Housing, published by the Department in October 2009 and the following—

(a)  whether the development will reduce the amount of affordable housing in the area,

(b)  whether there is available sufficient comparable accommodation to satisfy the demand for the accommodation,

(c)  whether the development is likely to result in adverse social and economic effects on the general community,

(d)  whether adequate arrangements have been made to assist the residents who are likely to be displaced to find comparable accommodation,

(e)  the extent to which the development will contribute to a cumulative loss of affordable housing in the local government area,

(f)  whether the building is structurally sound, including—

(i)  the extent to which the building complies with relevant fire safety requirements, and

(ii)  the estimated cost of carrying out work necessary to ensure the building is structurally sound and complies with relevant fire safety requirements,

(g)  whether the imposition of an affordable housing condition requiring the payment of a monetary contribution would adequately mitigate the reduction of affordable housing resulting from the development,

(h)  for a boarding house—the financial viability of the continued use of the boarding house.

(3)  Sufficient comparable accommodation is conclusively taken not to be available if, for the 3 months occurring immediately before the development application is lodged, the average vacancy rate in private rental accommodation for Sydney, as published monthly by the Real Estate Institute of New South Wales, is less than 3%.

(4)  The continued use of a boarding house is financially viable if the rental yield of the boarding house, as determined under section 48(4), is at least 6%.

30. Clause 48 of SEPP (Housing) provides:

48 Contributions for affordable housing—the Act, s 7.32

(1)  The following requirements are prescribed for the imposition of conditions on a development consent granted under this Part—

(a)  the consent authority must be satisfied the development will, or is likely to, reduce the availability of affordable housing in the area,

(b)  if the condition requires the payment of a contribution—the contribution must be determined in accordance with this section.

…

31. At the relevant time, namely, 27 September 2023, the date that the rear DA consent was approved (the relevant time), s 4.17(1)(h) of the EPA Act provided as follows in relation to the imposition of conditions of development consent:

4.17 Imposition of conditions (cf previous s 80A)

(1) Conditions—generally A condition of development consent may be imposed if—

…

(h) it is authorised to be imposed under section 4.16(3) or (5), subsections (5)–(9) of this section or section 7.11, 7.12, 7.24 or 7.32.

32. Also at the relevant time, s 4.59 of the EPA Act provided as follows in relation to the validity of development consents:

4.59   Validity of development consents and complying development certificates (cf previous s 101)

If public notice of the granting of a consent or a complying development certificate is given in accordance with the regulations by a consent authority or a certifier, the validity of the consent or certificate cannot be questioned in any legal proceedings except those commenced in the Court by any person at any time before the expiration of 3 months from the date on which public notice was so given.

33. At the relevant time, s 7.32 of the EPA Act provided as follows in relation to conditions requiring land or conditions for affordable housing (emphasis added):

7.32   Conditions requiring land or contributions for affordable housing (cf previous s 94F)

(1)  This section applies with respect to a development application for consent to carry out development within an area if a State environmental planning policy identifies that there is a need for affordable housing within the area and—

(a)  the consent authority is satisfied that the proposed development will or is likely to reduce the availability of affordable housing within the area, or

(b)  the consent authority is satisfied that the proposed development will create a need for affordable housing within the area, or

(c)  the proposed development is allowed only because of the initial zoning of a site, or the rezoning of a site, or

(d)  the regulations provide for this section to apply to the application.

(2)  Subject to subsection (3), the consent authority may grant consent to a development application to which this section applies subject to a condition requiring—

…

(b)  the payment of a monetary contribution to be used for the purpose of providing affordable housing,

…

(3)  A condition may be imposed under this section only if—

(a)  the condition complies with all relevant requirements made by a State environmental planning policy with respect to the imposition of conditions under this section, and

(b)  the condition is authorised to be imposed by a local environmental plan, and is in accordance with a scheme for dedications or contributions set out in or adopted by such a plan, and

(c)  the condition requires a reasonable dedication or contribution, having regard to the following—

(i)  the extent of the need in the area for affordable housing,

(ii)  the scale of the proposed development,

(iii)  any other dedication or contribution required to be made by the applicant under this section or section 7.11.

…

34. Section 30(1)(c) of the Interpretation Act provides as follows in relation to the effect of amendment or repeal of Acts:

30   Effect of amendment or repeal of Acts and statutory rules

(1)  The amendment or repeal of an Act or statutory rule does not—

…

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under the Act or statutory rule, or

35. Section 30A of the Interpretation Act provides in relation to transferred provisions:

30A   Transferred provisions

(1)  This section applies where a provision is transferred from an Act or statutory rule to another Act or statutory rule and an Act or statutory rule states that the provision is a transferred provision to which this section applies.

(2)  The transfer does not affect the operation (if any) or meaning of the provision, and accordingly the provision is to be construed as if it had not been so transferred.

(3)  This section applies whether or not the provision is modified, but has effect subject to any such modification.

36. Section 32 of the Interpretation Act provides in relation to the construction of instruments so as not to exceed the powers conferred by the Acts under which they are made:

32   Instruments to be construed so as not to exceed the powers conferred by the Acts under which they are made

(1) An instrument shall be construed as operating to the full extent of, but so as not to exceed, the power conferred by the Act under which it is made.

(2) If any provision of an instrument, or the application of any such provision to any person, subject-matter or circumstance, would, but for this section, be construed as being in excess of the power conferred by the Act under which it is made—

(a)  it shall be a valid provision to the extent to which it is not in excess of that power, and

(b)  the remainder of the instrument, and the application of the provision to other persons, subject-matters or circumstances, shall not be affected.

…

Evidence in relation to the rear DA consent

37. In relation to the rear DA consent, the applicants read the affidavit of Mr Edan Burke, property manager for the first applicant, dated 8 March 2024, and tendered the notice of determination of the development application for the rear DA consent dated 27 September 2023.

38. The respondents tendered the strategic referral responses for the rear DA consent development application dated 4 April 2023 and 5 July 2023, and a written direction of the Minister for Planning under s 94G(3)(b) of the EPA Act dated 2 October 2009. The written direction of the Minister provided as follows:

I, the Minister for Planning, being the Minister administering the Environmental Planning and Assessment Act 1979 ('the Act'), under section 94G(3)(b) of the Act:

(a) direct a consent authority for development described in Schedule A, which is proposed to be carried out on land described in Schedule B, to pay to the Chief Executive, Housing NSW, Department of Human Services a monetary contribution paid to the consent authority in accordance with a condition that is authorised to be imposed by the consent authority under clause 51(2) of State Environmental Planning Policy (Affordable Rental Housing) 2009; and

(b) revoke all previous directions under section 94G(3)(b) of the Act to the extent of any inconsistency with this direction.

Schedule A

Development described in clause 50(1) of State Environmental Planning Policy (Affordable Rental Housing) 2009.

Schedule B

Land in the local government areas of Ashfield, Auburn, Bankstown, Baulkham Hills, Blacktown, Blue Mountains, Botany, Burwood, Canada Bay, Camden, Campbelltown, Canterbury, Fairfield, Gosford, Hawkesbury, Holroyd, Hornsby, Hunters Hill, Hurstville, Kogarah, Ku-ring-gai, Lane Cove, Leichhardt, Liverpool, Manly, Marrickville, Mosman, Newcastle, North Sydney, Parramatta, Penrith, Pittwater, Randwick, Rockdale, Ryde, Strathfield, Sutherland, Sydney, Warringah, Waverley, Willoughby, Wollondilly, Wollongong, Woollahra and Wyong.

Factual background in relation to the rear DA consent

39. In relation to the rear DA consent, the parties relied on an agreed chronology and a statement of agreed facts from which the following background is largely derived.

40. On 3 April 2010, the applicants became the registered proprietors of the property located at 241 Bondi Road, Bondi.

41. On 15 June 2021, Shed Architects, on behalf of the applicants, lodged a development application with Council in relation to the front DA, seeking approval for “alterations and additions to the existing residential flat building, including conversion of two ground floor units to retail premises and front extensions and balconies on first and second floor levels”.

42. On 20 August 2021 at 12:22pm, Mr Burke, the first applicant’s property manager, sent an email to Council which said as follows:

…in part 8b of the deferral letter Joe has suggested that the development results in a loss of affordable housing and that a contribution [of] $94,575 be paid (subject to approval). Are you able to share the working or how this figure is calculated. We don’t believe this development results in a loss of affordable housing, so any clarification would be greatly appreciated.

43. On 20 August 2021 at 3:17pm, Ms Tina Wang of Council responded to Mr Burke’s email as follows:

Based on the information provided, it can be determined that apartments 1 and 2 would be lost as low rental dwellings. The rental for apartment 6 is likely to increase due to the enlargement, however whether it will exceed the median rental rate can not be determined...Clause 51 of SEPP (Affordable Rental Housing) 2009 sets out the formula to calculate the contributions payable based on the total loss of low rental bedrooms, multiplied by the replacement cost (average value of the first quartile of sales and strata properties in the local government area as specified by the 4 most recent editions of the Rent and Sales Report), and then multiplied again by 0.05.

44. On 27 October 2021, the second respondent, the Waverley Local Planning Panel, approved the front DA consent. The conditions of consent for the front DA consent included an affordable housing contribution condition in the amount of $94,575.

45. On 31 March 2023, Shed Architects, on behalf of the applicants, lodged a further development application with Council, seeking approval for “alterations and additions to residential flat building including extension of ground, first and second floor levels and new balconies to the rear”. This further development application was the subject of the rear DA consent.

46. On 13 September 2023, the applicants’ solicitor sent a letter to Council outlining the applicants’ position in relation to the lawfulness of the proposed affordable housing contribution conditions. The letter stated as follows:

...it is clear that the proposed Condition cannot be imposed as the requirements in s 7.32 of the [EPA Act] have not been met…the Condition can only be imposed where it is “authorised to be imposed by a local environmental plan, and is in accordance with a scheme for dedications or contributions set out in or adopted by such a plan”…Not only does [the WLEP] not include any provision authorising Council to impose the Condition, but the owners are concerned that Council has sought to impose it despite being well-aware that it cannot…

47. On 20 September 2023, Council issued a report to the Waverley Local Planning Panel recommending the imposition of an affordable housing contribution condition in the amount of $544,500 in relation to the rear DA consent.

48. On 26 September 2023, the applicants’ planners sent a letter to Council which provided as follows:

At the outset, the Owners maintain that Council cannot legally impose the affordable housing contribution condition for the reasons set out in their solicitor's letter dated 13 September 2023.

49. In their letter of 26 September 2023, the applicants’ planners proposed a correction to the contribution amount in relation to the rear DA consent to $435,000.

50. On 27 September 2023, the applicants’ planners made representations to the second respondent, the Waverley Local Planning Panel. The panel approved the rear DA consent for alterations and additions to the rear portion of the property, including the “extension of ground, first and second floor levels and new balconies to the rear”. The rear DA consent contained, inter alia, condition 10 which required the applicants to pay an affordable housing contribution in the amount of $435,000.

51. It was agreed that condition 10 of the rear DA consent was purported to be imposed pursuant to cl 48 of SEPP (Housing) as in force on the date the rear DA consent was granted.

52. It was also agreed that at the time condition 10 was imposed, the WLEP did not contain any provision which authorised the imposition of affordable housing contribution conditions. However, Council contended that condition 10 was authorised by SEPP (Housing) which had force by reason of cl 15A of the 2017 Regulation.

53. On 12 October 2023, the applicants commenced these proceedings seeking (amongst other things) a declaration that condition 10 of the rear DA consent was invalid. As at the date of hearing, the applicants had not paid any affordable housing contribution to Council in relation to the rear DA consent.

(1) Whether the second respondent was authorised to impose an affordable housing contribution condition in the rear DA consent

54. The first issue is whether the Waverley Local Planning Panel, the second respondent, was authorised to impose an affordable housing contribution condition in the rear DA consent, notwithstanding that the WLEP did not, at any relevant time, contain any provision authorising the imposition of such a condition.

Applicants’ submissions

55. The applicants’ submissions that condition 10 of the rear DA consent is invalid can be summarised as follows:

1. The second respondent’s power to impose affordable housing contribution conditions only arises where authorised by the WLEP: ss 4.17(1)(h) and 7.32 of the EPA Act. At all relevant times, the WLEP contained no provision authorising the imposition of any such condition.

2. Clause 15A of the 2017 Regulation is of no assistance to the respondents in circumstances where there is a clear legislative intention for affordable housing contribution conditions to be imposed only under an LEP or a SEPP.

Applicants’ submissions in relation to the operation of ss 4.17(1)(h) and 7.32 of the EPA Act

56. In relation to s 4.17(1)(h) of the EPA Act, the applicants submitted that the paragraph empowers the respondents to impose an affordable housing contribution condition only if authorised by s 7.32. That provision allows for affordable housing contribution conditions to be imposed if, inter alia, a consent authority is satisfied that the proposed development will or is likely to reduce the availability of affordable housing in an area where a need for affordable housing has been identified by a SEPP: s 7.32(1) and (2).

57. However, a condition cannot be imposed under s 7.32 unless each of the requirements of s 7.32(3) has been met: Willoughby City Council v Blanc Black Projects Pty Limited ^[9] (Blanc Black Projects) at [46] (Robson J). Relevantly, the applicants submitted, s 7.32(3)(b) provides that such a condition may be imposed only if it is “authorised to be imposed by a local environmental plan, and is in accordance with a scheme for dedications or contributions set out by such a plan”.

    9. [2023] NSWLEC 54 at [46] (Robson J).

58. The applicants submitted that there is no other power for a consent authority to impose an affordable housing contribution condition, whether pursuant to ss 4.17, 7.11 or 7.13 of the EPA Act, or otherwise. ^[10] As s 7.32 of the EPA Act specifically deals with affordable housing contributions, the principle of construction in Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia ^[11] “prevented” the second respondent “from seeking to rely on the broader language of ss 7.11 and 7.13 to impose the contribution condition in circumvention of s 7.32(3)(b)”.

    10. Fairfield City Council v N & S Olivieri Pty Ltd [2003] NSWCA 41 at [12]-[17] (Spigelman CJ); L & G Management Pty Ltd v Council of The City of Sydney (2021) 252 LGERA 31; [2021] NSWLEC 149 at [37]-[40] (Duggan J).

    11. (1932) 47 CLR 1 at 7; [1932] HCA 9 (Gavan Duffy CJ and Dixon J). In Minister for Immigration and Border Protection v Makasa (2021) 270 CLR 430; [2021] HCA 1 at [54], Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ referred to the "well-established principle of construction" that "when a statute confers both a general power, not subject to limitations and qualifications, and a special power, subject to limitations and qualifications, the general power cannot be exercised to do what is the subject of the special power".

59. As the WLEP did not contain any provision authorising the imposition of affordable housing contribution conditions at the time the rear DA consent was granted, condition 10 must be invalid, subject to consideration of the potential operation of the transitional provision in cl 15A of the 2017 Regulation.

Applicants’ submissions in relation to whether clause 15A of the 2017 Regulation is of assistance

60. While the applicants did not dispute that cl 15A of the 2017 Regulation was validly made, they submitted that the provision is no answer to the summons. That was submitted to be because, on its proper construction, cl 15A can apply only to development consents granted prior to 1 March 2018 when the Environmental Planning and Assessment Amendment Act 2008 (NSW) (2008 Amending Act), which contained Part 5B, was repealed. It followed, the applicants submitted, that cl 15A did not operate to authorise the imposition of affordable housing contribution conditions in the rear DA consent in the absence of any such provision in the WLEP.

Applicants’ submissions in relation to the proper construction of cl 15A of the 2017 Regulation

61. In relation to the construction of cl 15A of the 2017 Regulation, the applicants submitted, correctly, that the starting point for the ascertainment of the meaning of a statutory provision (or a statutory rule) is the text of the statute or rule, whilst at the same time having regard to its context and purpose. ^[12] For the following reasons, the applicants submitted that cl 15A can only apply to development consents granted prior to 1 March 2018.

    12. See eg SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 (SZTAL) at [14] (Kiefel CJ, Nettle and Gordon JJ).

62. As its heading suggests, cl 15A was intended to be a transitional regulation only, and was upheld on that basis in Balnaves Foundation Pty Ltd v Minister of Planning (No 2) ^[13] (Balnaves). In Balnaves, Pepper J at [92]-[93] held that the clause was “expressed to be temporary in its effect”, and that at the time it was made “the objective intention of Parliament was that Pt 5B would commence”. As Miller JA said in Yates v the State of Western Australia ^[14] at [174(9)]: “The word ‘transitional’ means ‘passing from one condition to another’ (Shorter Oxford Dictionary). They are meant to be ‘passing’ and not forever applicable.”

    13. [2018] NSWLEC 163 (Balnaves) (Pepper J).

    14. [2008] WASCA 144 at [174(9)] (Miller JA).

63. Referring to the legislative history, the applicants submitted that cl 15A was a transitional provision only intended to operate in conjunction with Part 5B of the EPA Act, which had not commenced at that time. It was not intended to have any independent field of operation, its operation being “intimately tied to those forthcoming provisions”. Its purpose was to “transition” from one statutory regime to another, ^[15] such that once the latter regime ceased to operate (or as in this case was repealed), the transitional provision itself has no further work to do. The word “until” in cl 15A suggested, the applicants submitted, “up to a time, or the occurrence of an event”, ^[16] namely, “that the clause would apply while Part 5B could still be enacted”.

    15. ADCO Constructions Pty Ltd v Goudappel (2014) 254 CLR 1; [2014] HCA 18 at [55] (Gageler J); Tugun Cobaki Alliance Inc v Minister for Planning and RTA [2006] NSWLEC 396 at [188] (Jagot J).

    16. See Official Receiver of Bankruptcy v Todd, M (1986) 14 FCR 177 at 189; (1986) 70 ALR 119 (Spender J) (in dissent); Commonwealth v AJL20 (2021) 273 CLR 43 at 72; [2021] HCA 21 at [49] (Kiefel CJ, Gageler, Keane and Steward JJ).

64. The applicants also referred to Local Democracy Matters Incorporated v Infrastructure NSW ^[17] (Local Democracy Matters) where the Court of Appeal held at [55] that general provisions in a transitional regulation cannot be construed in a manner inconsistent with an intention clearly expressed in the amending (and amended) legislation. In Local Democracy Matters, the appellant sought to rely on cl 83 of the 2000 Regulation (which provided a mandatory public exhibition period of 30 days) to argue that the development consent was invalid because the public exhibition only took place for 28 days. As cl 83 referred to s 89F of the EPA Act (which had been repealed at the time), the appellant argued that s 89F had been “relocated” with some modification under cl 4A(4) of the 2017 Regulation, which had a similar effect to s 30A of the Interpretation Act. In rejecting the appellant's argument, the Court said at [56]:

Whatever may have been the reason for the failure to repeal cl 83 of the EPA Regulation on 1 March 2017, when the EPA Amendment Act 2017 took effect, to read the general language of cl 4A(2) of the Transitional Regulation as maintaining the pre-existing position would subvert the intention clearly expressed in s 2.22 and Sched 1 [9] of the EPA Act. The object of the amendments was to bring about a relatively modest but nonetheless significant change in the mandatory public exhibition of State significant development applications. The minimum period of public exhibition was to be reduced from 30 to 28 days.

17. (2019) 237 LGERA 74; [2019] NSWCA 65 at [55] (Leeming JA, Sackville and Emmett AJJA).

65. In the present case, the applicants submitted, the repeal of Part 5B in the 2017 Amending Act, combined with the enactment of s 7.32, pointed to “a clear legislative intention for affordable housing contributions to only be imposed where authorised under an LEP and a SEPP (as is currently stated in s 7.32)”. That was because Part 5B included, inter alia, s 116Y(4)(b) which, had it commenced, would have allowed for affordable housing contributions to be imposed where authorised under an LEP or a SEPP. To construe cl 15A to apply indefinitely would be both contrary to the legislative intention of the 2017 Amending Act and leave s 7.32 of the EPA Act with no role to play. On the other hand, the applicants’ construction was not such as to render cl 15A of the 2000 Regulation otiose as it would still apply to development consents granted prior to 1 March 2018.

65. The respondents could not, therefore, it was submitted, rely on cl 15A of the 2000 Regulation to overcome the lack of authorisation for affordable housing contribution conditions under the WLEP as required by ss 4.17(1)(h) and 7.32 of the EPA Act.

Respondents’ submissions

Respondents’ submissions in relation to the validity of cl 15A of the 2017 Regulation

67. The respondents submitted that in Balnaves, Pepper J found that cl 15A of the 2017 Regulation was a valid exercise of the transitional regulation making power in s 159 (now s 10.15) and cl 1(1) of the then Sch 6 of the EPA Act. The respondents noted, correctly, that the applicants did not seek to challenge that finding. The respondents submitted that cl 15A “is a ‘Henry VIII clause’ that operates as an ‘indirect express amendment’ or ‘referential amendment’ in that the amending regulation provides that the principal Act is to be read as if it said something different from what it actually says or provides a ‘gloss’ on the principal Act”. ^[18] As the validity of cl 15A was not impugned, the respondents submitted, the starting point must be that cl 15A is valid and in force. I do not understand this to have been in dispute.

Respondents’ submissions in relation to the construction of cl 15A of the 2017 Regulation

18. Herzfeld and Prince, Interpretation (2nd ed, 2020, Thomson Reuters (Professional) Australia Limited) at [11.30] and [11.40].

68. In relation to the construction of cl 15A of the 2017 Regulation, the respondents submitted, again correctly, that the High Court has stated on many occasions that the task of statutory construction must begin with a consideration of the statutory text. ^[19] On a literal reading, cl 15A expands the ambit of s 7.32 of the EPA Act so that until the commencement of Part 5B, a reference to a condition authorised to be imposed by an LEP for affordable housing is a reference to a condition authorised to be imposed by a SEPP or an LEP.

    19. Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 31 at [47] (Hayne, Heydon, Crennan and Kiefel JJ).

69. The respondents also referred to the importance of context, including the general purpose and policy of the provision, as emphasised by the High Court. ^[20] The context of a provision includes the mischief it was designed to remedy or its purpose. As Pepper J held in Balnaves at [92(b)] in relation to cl 15A:

… the purpose and effect of cl 15A was to transition from a statutory regime whereby affordable housing contributions could be authorised under LEPs or REPs, to one where former REPs were deemed to be SEPPs, and pursuant to Pt 5B, affordable housing contributions were authorised under LEPs or SEPPs.

20. SZTAL at [14] and [25]-[39] (Kiefel CJ, Nettle and Gordon JJ).

70. As at the date on which the consents were granted, the 2008 Amending Act was yet to commence, and a literal construction means that s 7.32 of the EPA Act “must be read as if a condition of the kind imposed could be authorised by an LEP or a SEPP”.

71. The respondents submitted that the “essence” of the applicants’ construction of cl 15A that the repeal of the 2008 Amending Act leaves cl 15A with no further work to do should not be accepted. In Balnaves, Pepper J considered whether the repeal of the 2008 Amending Act had any implications for the application of cl 15A. Her Honour found that it did not, saying at [92(b)] (emphasis added):

(b) second, that Pt 5B, and therefore s 116Y, never came into effect does not matter. At the time that cl 15A was promulgated, the objective intention of Parliament was that Pt 5B would commence. Accordingly, the purpose and effect of cl 15A was to transition from a statutory regime whereby affordable housing contributions could be authorised under LEPs or REPs, to one where former REPs were deemed to be SEPPs and, pursuant to Pt 5B, affordable housing contributions were authorised under LEPs or SEPPs. It is erroneous to ascribe and apply, by use of hindsight, the current statutory regime - that is, the repeal of the 2008 Amending Act – to cl 15A in order to characterise its transitional (or otherwise) nature at the time of its enactment …

72. The respondents submitted that Pepper J, having answered the question concerning the consequence of the repeal of the 2008 Amending Act on the application of cl 15A, I was “bound to follow” her Honour’s decision “as a matter of judicial comity”, unless “satisfied” that her Honour was “clearly wrong”. ^[21] Pepper J’s approach at [92(b)], it was submitted, properly draws from the canon of construction that statutory provisions are to be construed in relation to such things that were known at the time of enactment, ^[22] it having long been established that savings and transitional provisions are ordinarily to be construed in this way. By way of example, in Minister Administering the Water Management Act 2000 v Sharkey ^[23] (Sharkey), the Court of Appeal held in relation to an order made under the Water Management Act 2000 (NSW), which relevantly declared that “…the rivers in the Murray Water Management Area that are downstream of the upper limit of the Hume Dam water storage and listed in the Schedule below are regulated rivers”, referred only to that part of the river as at the date of the order, and that subsequent changes in the riverbed which might alter the point along the river which was the upper limit of the dam water storage would not lead to changes in the part of the river that was “regulated”.

    21. See Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492; [1993] HCA 15 (Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ).

    22. Wilson v Commissioner of Stamp Duties (1988) 13 NSWLR 77 (Wilson v Commissioner of Stamp Duties) (Kirby P, Priestley and McHugh JJA).

    23. (2017) 226 LGERA 322; [2017] NSWCA 319 (Sharkey) at [41] (Meagher JA) (White JA and Emmett AJA agreeing).

73. Analogously, the respondents submitted, cl 15A of the 2017 Regulation was to be construed having regard to how it was intended to apply at the time it was “promulgated”, despite any legislative change that had occurred subsequently. Further, the respondents submitted, the applicants appeared to rely on Pepper J’s findings in Balnaves at [92]-[93] to contend that cl 15A should be treated as having only temporary effect. However, that was not, it was submitted, what Pepper J meant. At [93], her Honour described cl 15A as being “expressed to be temporary”, which the respondents submitted was “not the same thing as saying that it has that effect”. What was clear from [93] of her Honour’s reasons was that cl 15A was not transitional because it was temporary in effect, but because it was “consequent upon” or arose from the 2008 Amending Act. Close regard to the legislative history and the history of plan making in this context revealed that cl 15A still “has work to do”.

74. Moreover, the applicants’ submission that the legislative history disclosed that cl 15A was only intended to operate in conjunction with Part 5B of the EPA Act was the same submission made in Balnaves at [89], and rejected by Pepper J at [92]-[93] as “not the true characterisation of this type of provision”. In Balnaves, Pepper J referred to two reforms which were brought about by the 2008 Amending Act: first, to simplify the structure of planning instruments to remove REPs (at [28]); and secondly, to amend the statutory regime for developer contributions (at [35]). There was, at the same time, “a third strand of reform relevant to these proceedings”; namely, the creation of a new Statewide instrument addressing the need for affordable housing. The history of REPs and SEPPs that contained provisions for affordable housing underscored the “reasons for maintaining cl 15A as a transferred provision”.

75. Prior to the 2008 Amending Act, provisions for affordable housing were contained in LEPs and REPs. At the same time as the reforms to planning instruments were taking place, the regime for affordable housing was also undergoing change. On 31 July 2009, SEPP (ARH) came into force. It repealed the former State Environmental Planning Policy No 10 - Retention of Low-Cost Rental Accommodation (1984 EPI 600) (NSW) (SEPP 10), but went further by including, for the first time, a Statewide provision for contributions for affordable housing. Clause 51 of SEPP (ARH) was implemented for the purposes of s 94F of the EPA Act.

76. When first made, the respondents submitted, Sch 3 to SEPP (ARH) contained a number of amendments proposed to LEPs, REPs and SEPPs that contained affordable housing provisions. Sch 3 proposed, in some cases, to amend the provisions of those instruments to make reference to the provisions of the 2008 Amending Act, notably s 116Y. However, the provisions in Div 5B of the 2008 Amending Act had not commenced, nor the provisions in Sch 3 that proposed amendments to other instruments to make references to s 116Y.

77. However, one of the instruments proposed to be amended by Sch 3 to SEPP (ARH) was the Sydney Regional Environmental Plan No 26 – City West 1992 EPI 564 (REP 26). By reason of the 2008 Amending Act, that policy was deemed to be a SEPP. REP 26 was the only REP that contained affordable housing contributions provisions, in Part 4. By the time SEPP (ARH) was made, one month after the 2008 Amending Act came into force, Part 4 of REP 26 had become redundant. Accordingly, on 28 June 2010, Part 4 of REP 26 was repealed by the Statute Law (Miscellaneous Provisions) Act 2010 (NSW) because, by then, the affordable housing contribution provisions had been made in SEPP (ARH) (cl 51) which had Statewide application.

78. Other SEPPs amended by Sch 3 to SEPP (ARH) included SEPP (Sydney Region Growth Centres) 2006 and SEPP (Western Sydney Parklands) 2009 which were amended to omit reference to SEPP 10, and instead made reference to SEPP (ARH).

79. This history, the respondents submitted, demonstrates not only a move away from REPs to SEPPs, but a “deliberate move towards policy making for affordable housing at a State wide level by SEPP (ARH)”. This necessitated the making of cl 15A of the 2000 Regulation to take account, not only of the change from REPs to SEPPs, but of the fact that REP provisions relating to affordable housing contributions had been re-made in SEPP (ARH) and given Statewide application.

80. In 2021, SEPP (ARH) was repealed by SEPP (Housing). SEPP (Housing) contains in cl 48 the same provisions as in cl 51(2) of SEPP (ARH), It followed from this analysis, the respondents submitted that the operation of cl 15A is not only tied to the operation of Part 5B of the EPA Act, since repealed, but is consequent upon the 2008 Amending Act “to the extent to which it did come to fruition, along with cognate amendments to planning instruments which have continued the effect of affordable housing contributions in [SEPPs]”. Seen in this way, cl 15A “plainly still has work to do”. If cl 15A is disregarded, important provisions relating to affordable housing under the now repealed SEPP (ARH) and now SEPP (Housing) “would have no force”. Accordingly, the repeal of the 2008 Amending Act did not affect the intended continued operation of cl 15A.

81. Further, the respondents submitted, the applicants in effect seek to substitute the word “commencement” in cl 15A for the word “repeal”. In Western Australia v Commonwealth ^[24] at 251, Stephen J said “[t]o read words into any statute is a strong thing, and, in the absence of clear necessity, a wrong thing”. Further, a word may be substituted for another word “where without such substitution the provision is unintelligible or absurd or totally unreasonable; where it is unworkable; and where it is totally irreconcilable with the plain intention shown by the rest of the … statute”. ^[25] The use of the word “commencement” in cl 15A was “clearly deliberate” having regard to the transitional nature of the provision and the contents of Part 5B referred to therein. The use of the word “commencement” did not lead to the provision being unintelligible, absurd, unreasonable, unworkable or totally irreconcilable with the plain intention shown by the rest of the statute. The mischief cl 15A seeks to resolve is for affordable housing contributions to be capable of being imposed on a development consent under a SEPP. The applicants’ desire to narrow the scope of the provision would have the effect of substituting the word “commencement” in cl 15A for the word “repeal”. Further, as was observed in Local Democracy Matters at [55] (Leeming JA, Sackville AJA and Emmett AJA), repealed legislation can be re-enacted.

    24. See eg Western Australia v Commonwealth (1975) 134 CLR 201 at 251; [1975] HCA 46 (Stephen J).

    25. Federal Steam Navigation Co Ltd v Department of Trade & Industry [1974] 2 All ER 97 at 100; [1974] 1 WLR 505, 508 to 509 (Lord Reid).

82. The consequence of the applicants’ construction, the respondents submitted, is that cl 15A only applies to development consents granted prior to 1 March 2018. If that were the intention of Parliament, when the 2008 Amendment Act was repealed, cl 15A would have been amended to make that plain; or alternatively, cl 15A could have been repealed in its entirety. If cl 15A were repealed, there would have been no consequence to any right, privilege, obligation or liability acquired, accrued or incurred in relation to affordable housing conditions imposed under a SEPP pursuant to cl 15A, before 1 March 2018 because of the effect of s 30(1)(c) of the Interpretation Act. In circumstances where cl 15A remains in operation and has not been amended to make plain that its operation is terminated in so far as development consents granted after 1 March 2018 are concerned, the applicants’ construction of cl 15A could not be accepted.

83. Further, the respondents submitted, the applicants’ use of the word “indefinitely” to describe the operation of cl 15A was “misguided”. As the words of cl 15A make plain, the “referential amendment imparted by cl 15A on s 7.32 applies only in so far as Part 5B has not been commenced”. There is no “infelicity” in cl 15A continuing to have effect despite the 2008 Amending Act being repealed. The intent was for cl 15A to have an indirect express amendment of s 7.32 to read “LEP” as meaning “LEP or SEPP” and that function was not “thwarted” by the repeal of the 2008 Amending Act. Far from leaving s 7.32 with “no role to play”, cl 15A serves to widen the operation of s 7.32 to allow SEPPs to make provision for affordable housing contributions. It was not s 7.32 that was left with no role to play, rather without cl 15A, all of the provisions of SEPP (ARH) and SEPP (Housing) that make provision for affordable housing contributions would have no force.

84. To the extent the applicants relied on Local Democracy Matters in support of the proposition that a transitional regulation cannot be construed in a manner inconsistent with an intention clearly expressed in amending and amended legislation, the respondents submitted that unlike in Local Democracy Matters which concerned a direct inconsistency between two provisions covering the same subject matter (one requiring 28 days notice and the other 30 days notice), here there was no inconsistency. Here, cl 15A “deliberately” amends the way s 7.32 is to be read. This is not an inconsistency, rather an indirect express amendment which, if lawful, as it was found to be by Pepper J, is a permissible way of amending the principal Act. Unlike the factual situation in Local Democracy Matters, cl 15A cannot be said to be a “general provision” in the same way cl 4A(4) of the 2017 Regulation clearly was.

Applicants’ submissions in reply

85. In reply, the applicants summarised the respondents’ submissions in relation to the proper construction of cl 15A as follows: Pepper J determined in Balnaves that the repeal of the 2008 Amending Act had no effect on the operation of cl 15A. If cl 15A is disregarded, various provisions relating to affordable housing under SEPP (Housing) would have no force. The applicants’ construction of cl 15A is incorrect because it effectively seeks to substitute the word “commencement” for the word “repeal”. Clause 15A cannot be construed to apply only to consents granted prior to 1 March 2018 because that would otherwise have been made plain in cl 15A or it would have been repealed in its entirety. There is no infelicity in cl 15A continuing to operate notwithstanding the repeal of the 2008 Amending Act, in particular, there being no inconsistency between cl 15A and s 7.32 of the EPA Act such that Local Democracy Matters does not assist.

Applicants’ submissions in reply in relation to Pepper J’s findings in Balnaves

86. The applicants submitted that the respondents’ submission that Pepper J determined in Balnaves that the repeal of the 2008 Amending Act had no effect on the operation of cl 15A was plainly wrong. In Balnaves, Pepper J was concerned solely with the question of whether cl 15A was validly made. Her Honour was not asked to and did not consider the effect of cl 15A on development consents granted after the repeal of the 2008 Amending Act as the impugned consent in that case was granted on 15 March 2016: Balnaves at [1]. Her Honour’s finding that the repeal of the 2008 Amending Act had no effect on the validity of cl 15A was correct, since the validity of delegated legislation is to be determined at the time it was made: Balnaves at [44].

87. That finding was submitted to be of no assistance to the respondents, the issue in the present case being the proper construction of cl 15A, not its validity. That question necessarily involves consideration of the context of the provision and the legislative history, including the effect of the repeal of the 2008 Amending Act.

88. The respondents’ attempts to draw a distinction between Pepper J’s finding in Balnaves at [93] that cl 15A was “expressed to be temporary” as opposed to a finding that it is to be construed as being temporary in effect was submitted to “go nowhere” for the following reasons: (1) That cl 15A is expressed to be temporary is indicative of the legislative intention at the time the regulation was made for it to have such an effect, citing Pepper J at [92]. (2) As made clear by Lord Keith of Kinkel in R v Secretary of State for Social Security; Ex parte Britnell ^[26] at 202 (to which Pepper J referred in Balnaves at [71]): The function of a transitional provision is to make special provision for the application of legislation to the circumstances which exist at the time that legislation comes into force; the effect of the respondents’ construction was to make cl 15A permanent, rather than temporary or transitional, contrary to its clear intention. (3) There is no analogy between the present case and Sharkey.

Applicants’ submissions in reply in relation to the 2021 SEPP (Housing)

26. [1991] 2 All ER 726; [1991] 1 WLR 198 at 202 (Lord Keith of Kinkel).

89. Further, the applicants submitted, the respondents’ submission that the provisions of SEPP (Housing) would have no role to play if cl 15A did not apply ignores the balance of s 7.32(3) of the EPA Act. It is not the case that, without cl 15A, SEPP (Housing) would have “no force”. The “plain legislative intention” of s 7.32(3) of the EPA Act is that an affordable housing contribution condition can only be imposed if it complies with the requirements of the relevant SEPP and is authorised by an LEP. Many LEPs contain such provisions, such as the Willoughby LEP considered by Robson J in Blanc Black Projects.

Applicants’ submissions in reply in relation to the language of cl 15A

90. Further, in reply, the applicants submitted that contrary to the respondents’ submissions in circumstances where cl 15A is expressed to operate only “until” the commencement of Part 5B, which was repealed before that ever occurred, it was “difficult to see how the operation of [cl] 15A can be divorced from Part 5B”. The respondents were wrong to suggest that the applicants’ construction involves reading the word “commencement” in cl 15A as “repeal”. At the time cl 15A was promulgated, it was not intended that Part 5B would be repealed. Rather, the applicants were submitted to read cl 15A in “a commonsense way” so as to confine its operation (as a transitional provision) “for only so long as Part 5B was intended to be the new regime to which [cl] 15A was to assist in transitioning”.

95. The applicants submitted that any suggestion that condition 10 is not severable because it is fundamental and goes to the root of the development consent is misconceived and should be rejected. Having regard to s 32 of the Interpretation Act, the test of whether a condition can be severed from a development consent is whether that “would result in the residue operating differently to the manner in which the whole would have operated”. This raises whether the condition under challenge is “fundamental or goes to the root of the planning permission itself”. ^[32] The fact that a consent authority “may have come to a different decision if it had known that the levy ... was not enforceable does not mean that the consent will operate differently on the applicant or produce a different result”: King v Bathurst Regional Council ^[33] (King v Bathurst) at [93] (Jagot J).

    32. Community Action for Windsor Bridge Inc v NSW Roads and Maritime Services [2015] NSWLEC 167 (Windsor Bridge) at [127] (Brereton AJ); citing Maitland City Council v Anambah Homes Pty Ltd (2005) 64 NSWLR 695; (2005) 147 LGERA 234; [2005] NSWCA 455 (Anambah Homes) at [166]-[167] (Tobias JA) (Spigelman CJ and Ipp JA agreeing).

    33. (2006) 150 LGERA 362; [2006] NSWLEC 505 at [93] (Jagot J); citing Wechsler v Auburn Council (1997) 130 LGERA 134 at 137 (Talbot J).

96. In the present case, the applicants submitted, it was difficult to see how, if condition 10 is invalid, the rear DA consent would operate any differently. Condition 10 was submitted to be independent of any of the other conditions in the development consent, and the invalidity of condition 10 could not affect the validity of the rear DA consent as a whole.

Respondents’ submissions in relation to the severability of condition 10

97. The respondents submitted that if condition 10 is invalid, then the rear DA consent should also be declared invalid. That was submitted to be because condition 10 is a fundamental element of the consent in terms of how the impact of the proposed development on affordable rental housing “would be ameliorated”. It was fundamental to the DA that there be consideration under SEPP (Housing) of the impact of the development on the provision of affordable housing. This was mandated by consideration of cl 47 of SEPP (Housing). Having considered cl 47, as was mandatory, the second respondent “formed the view that the impacts needed to be ameliorated by the imposition of conditions requiring contributions”.

98. The significance of imposing condition 10 could be understood from the strategic referral responses to the rear DA consent dated 4 April 2023 and 5 July 2023. In the first respondent’s referral comment in relation to the rear DA dated 5 July 2023, the development was considered “likely to cause adverse social and economic effects on the general community” as at least one or more of the nine listed concerns raised in the referral response were “expected to occur”. The concerns raised included increased competition for affordable housing, potential loss of household diversity (socio-economic, structure, age and ethnicity), the displacement of existing residents who could no longer afford to live in the area, low income residents may be forced to compromise on their standard of accommodation in order to remain in the area which could lead to overcrowding, increased demand for publicly-funded social housing and rental assistance, and people may be becoming homeless.

99. The social and economic impacts of the development were mandatory relevant considerations under s 4.15(1)(b) of the EPA Act, and the proposed development could have been refused if the first respondent considered that the impacts of the proposed development were unacceptable. The first respondent nevertheless considered that this impact could be “somewhat mitigated” by the imposition of a condition levying contributions to be put towards affordable rental housing.

100. Condition 10 was submitted to go “to the root of the consideration” of the DA, and was a fundamental element that went to the first respondent’s views as to how the impacts of the proposed development on affordable housing could be ameliorated. There were, the respondents submitted, significant parallels between these proceedings and Greek Australian Finance Corporation Pty Ltd v Sydney City Council ^[34] (Greek Australian Finance Corporation) where Holland J held that a condition of development consent requiring a monetary contribution to be paid to the council towards the provision of public car parking was invalid. His Honour then considered whether the condition was severable so that the consent should be declared valid and the void condition excised, and held that it could not. By analogy here, the first respondent “considered or approved” the rear DA consent on the basis that the social and economic impacts of the proposal on affordable rental housing were acceptable “only because those impacts could be mitigated by the imposition of a condition levying contributions to be allocated towards the provision of affordable rental housing”. Applying Greek Australian Finance Corporation, condition 10 was fundamental to the DA, and, if declared invalid, the DA should also be declared invalid.

     34. (1974) 29 LGRA 130 (Holland J).

101. An alternative to declaring the DA invalid would be for the consent to be temporarily suspended and remitted to the first respondent pursuant to s 25B of the Land and Environment Court Act 1979 (NSW) (LEC Act) so that the second respondent might consider the acceptability of the impacts of the development on affordable rental housing in circumstances where contributions for affordable rental housing cannot be imposed to mitigate the impacts, “as originally contemplated”.

Applicants’ submissions in reply in relation to the severability of condition 10

102. In reply, the applicants submitted that the question is not whether condition 10 is fundamental to the granting of the rear DA consent, rather whether severance of the condition would result in the remainder of the consent operating differently. It did not matter, it was submitted, that the consent authority may have come to a different decision: King v Bathurst at [93] (Jagot J). The applicants submitted that the respondents had not grappled with this test, and that their reliance on Greek Australian Finance Corporation did not assist, citing, in particular, the approach of the Court of Appeal in Maitland City Council v Anambah Homes Pty Ltd. ^[35] The test in Greek Australian Finance Corporation was rejected in Community Action for Windsor Bridge Inc v NSW Roads and Maritime Services & anor [2015] NSWLEC 167 (Windsor Bridge) at [127] (Brereton AJ), citing Anambah Homes.

     35. (2005) 64 NSWLR 696; (2005) 147 LGERA 234; [2005] NSWCA 455 (Anambah Homes).

103. Further, the applicants submitted, the respondents’ suggestion that the consent be suspended under s 25B of the LEC Act was inconsistent with decisions in which such a course has been held to be inappropriate in circumstances where the invalidity of the consent (or, in this case, the condition of consent) was due to an absence of power: Hoxton Park Residents Action Group Inc v Liverpool City Council (No 3) ^[36] at [41] (Biscoe J). Here, this was not a technical breach, and there was no term that could be imposed by the Court, compliance with which would “validate the [condition]”.

Consideration of whether, the affordable housing contribution condition in the rear DA consent, having been found to be invalid, can be severed from the consent

36. (2012) 190 LGERA 119; [2012] NSWLEC 43 at [41] (Biscoe J).

104. In relation to the severability of a condition of consent, in the Windsor Bridge case at [127] Brereton AJ rejected the test in Greek Australian Finance Corporation citing Anambah Homes. In Anambah Homes, Tobias JA, Spigelman and Ipp JA agreeing) said at [166]-[167]:

166. In Sloane at 101, Cole J said this of s 32:

Provisions such as section 32 are to be approached consistently with the principles of interpretation enunciated by Dixon J in Bank of New South Wales v The Commonwealth [(1948) 76 CLR 1]. The court is required to have regard to the intention of the legislature, but if it appears that severance of an ultra vires portion of a regulation … results in the residue operating differently to the manner in which the whole would have operated, then, notwithstanding provisions such as section 32, severance can be effected. This is because the residue would operate differently to the apparent intention of the legislature.

167. In Wechsler at 137, Talbot J observed that the comments made by Dixon J in Bank of New South Wales v Commonwealth (1948) 76 CLR 1 and by Cole J in Sloane applied to s 32 of the Interpretation Act so that

[t]he test so understood is that if severance results in the balance operating in a manner which is different to that in which the whole would have operated, then severance cannot be affected. Such a test is to be distinguished from the test derived from [Kingsway Investments] … namely, whether the condition under challenge relates to matters fundamental to the development or goes to the root of the planning permission itself. Although the answer to some factual situations could be the same, the application of the different tests will not always bring about the same result.

105. In the Windsor Bridge case, Brereton AJ said at [127]:

Notwithstanding s 32, a condition cannot be severed if its severance would result in the residue operating differently to the manner in which the whole would have operated. This, rather than whether the condition under challenge is fundamental or goes to the root of the planning permission itself, is the test to be applied.

106. In King v Bathurst, Jagot J considered the severability of development consents for subdivision which contained conditions to require the payment of developer contributions for roadworks on a road which ran along the land owned by the applicants. The respondent council conceded these conditions were not made in accordance with its contributions plan under s 94 of the EPA Act. Jagot J at [91]-[94] said as follows in relation to the severability of conditions requiring monetary contributions held to be invalid:

91 I consider that it would be wrong to approach the question of severance as if the potential different legal operation of the consents if the s 94 conditions were severed is between consents that required the upgrading of Eusdale Road and consents that do not require the upgrading of Eusdale Road. Nothing in the s 94 conditions required the monetary contributions to be expended on the upgrading of Eusdale Road. The required comparison, in my view, is between consents for subdivision that unlawfully required the payment of a monetary contribution to the Council, and consents for precisely the same subdivision that did not unlawfully require the payment of a monetary contribution to the Council.

92 If, contrary to my view, the intention of Mr Swan and other Council officers to expend the monetary contributions on upgrading Eusdale Road affected the legal operation of the s 94 conditions, it would still be wrong to characterise the potential different operation of the consents as consents for subdivision enabling the upgrading of Eusdale Road and consents for subdivision not enabling the upgrading of Eusdale Road. As Mr Swan’s evidence disclosed, the Council had available funds to upgrade rural roads in its area, but decided as a matter of policy not to include the whole cost of upgrading Eusdale Road in its five year works program. Hence, the only difference before and after severance would be the removal of one funding source (s 94), which was not available to that extent in any event.

93 … I cannot accept the Council’s submission that the consents for subdivision would not have been granted but for the invalid conditions. The Council was never informed and, I infer, never understood that the monetary contributions that it was seeking to extract were beyond power. I can draw no inference that the Council would not have granted the subdivision consents had it appreciated the true legal position. The correspondence from the Taylors supports an inference (which I draw) that the Council had granted development consents for that subdivision in or about 2001 without having imposed the requirements for payments of monetary contributions above and beyond the s 94 contributions plan or the roadwork conditions. The Council’s s 94 contributions plan also supports the inference that the Council thought that requiring contributions of more than $3,500.00 per lot was “beyond reasonable”. While the Council apparently changed its mind for these subdivisions, there is no basis for me to infer that the Council would necessarily have refused the subdivisions consents, if properly informed about the law. I also consider the observation of Talbot J in Wechsler v Auburn Council (1997) 130 LGERA 134 at 137 applicable - namely, the fact that a “Council may have come to a different decision if it had known the levy … was not enforceable does not mean that the consent will operate differently upon the applicant or produce a different result. The determination of the Council remains a development consent within the meaning of the Act after severance”.

94 I am satisfied that severance of the purported s 94 conditions will not result in the balance of the consents operating in a manner different from that in which the whole would have operated. Both before and after severance, the consents will remain consents for the same subdivisions. Given my findings above, the s 94 conditions also cannot be seen as fundamental to, or going to the root of, the consents (see Anambah Homes at [164], citing Greek Australian Finance Corporation Pty Ltd v Sydney City Council (1974) 29 LGRA 130)...

107. Here, I find that the imposition of condition 10 in the rear DA was of significance to the first respondent. Council recognised the proposal’s contribution to the loss of affordable housing in the local government area. So much is clear from the strategic referral responses dated 4 April 2023 and 5 July 2023. Both documents gave “comment/advice on social planning matters” concerning the DA as it related to affordable housing. The strategic referral response dated 5 July 2023 stated that there would be a likely reduction in affordable housing at the property by the DA as the low rental dwellings ^[37] in the property at the relevant time, units 3, 7, 8, 11 and 12, would be replaced by dwellings with the potential to enable significantly higher rents to be charged. In relation to cl 27 of the SEPP (Housing) it stated that:

there will be a likely reduction of affordable housing by the proposal as the proposed development will significantly alter or add the structure or fabric of the inside or outside of the building, with the potential to enable significantly higher rents to be charged.

…

sufficient comparable accommodation is deemed to be not available to mitigate the impact of the proposal

…

The development is likely to cause adverse social and economic effects on the general community … This impact can be somewhat mitigated as the contributions to be levied from the development will be put towards affordable rental housing.

…

The proposed development will contribute to the incremental, long-term decline of affordable housing within the LGA as the development proposes to upgrade 5 units which are being rented at a rate identified as being affordable rental housing. This loss is intended to be offset by the contribution fees the developer is required to pay.

37. At the relevant time, cl 45 of the SEPP (Housing) defined a low-rental dwelling as:

108. Likewise, as the respondents submitted, it was mandatory for the consent authority, in determining whether to grant development consent, to consider cl 47 of SEPP (Housing), which came into effect on 26 November 2021, including “whether there is available sufficient comparable accommodation to satisfy the demand for accommodation” (cl 17(2)(b)) and “whether the imposition of an affordable housing condition requiring the payment of a monetary contribution would adequately mitigate the reduction of affordable housing resulting from the development” (cl 17(2)(g)). Further, as the respondents submitted, the economic and social impacts of the development were mandatory relevant considerations under s 4.15(1)(b) of the EPA Act.

109. However, the question which arises in relation to severability is not whether condition 10 was fundamental to the granting of the rear DA consent, but whether the severance of condition 10 will result in the balance of the consent operating differently. That the consent authority may have come to a different decision if it had known that condition 10 was not enforceable does not mean that the rear DA consent will operate differently on the applicants or produce a different result: King v Bathurst at [93] (Jagot J).

110. Moreover, the test for severability articulated by Holland J in the 1974 decision of Greek Australian Finance Corporation was rejected by Brereton AJ in the 2015 Windsor Bridge case at [127]. There his Honour said of the test to be applied that “a condition cannot be severed if its severance would result in the residue operating differently to the manner in which the whole would have operated”. This was the test to be applied, and not whether the condition under challenge is fundamental or goes to the root of the planning permission itself. As Tobias JA (Spigelman CJ and Ipp JA agreeing) observed in Anambah Homes (2005) at [164], since decisions including Greek Australian Finance Corporation, s 32 of the Interpretation Act 1987 had intervened, s 32(2) providing relevantly:

“32 Instruments to be construed so as not to exceed the powers conferred by the Acts under which they are made

(2) … If any provision of an instrument … would, but for this section, be construed as being in excess of the power conferred by the Act under which it was made:

(a) it shall be a valid provision to the extent to which it is not in excess of that power, and

(b) the remainder of the instrument … shall not be affected.”

111. In Anambah Homes, Tobias JA (Spigelman CJ and Ipp JA agreeing) considered whether an invalidly imposed condition of a development consent which required the respondent to dedicate land to the applicant council free of cost in non-compliance with its contributions plan made pursuant to s 94 of the EPA Act at the relevant time, could be severed from the balance of the development consent. Tobias JA at [169] held that severing the condition would not result in the balance of the consent operating in a manner which was different to that in which the whole would have operated, despite the council’s argument that it would not have granted consent in the absence of the condition (emphasis added):

169. The primary judge referred to the passages from the Council planners’ report to which I have referred (at 712 [85] supra) and which, as I have said, made it patently clear that the planners contemplated that Lot 1825 would be purchased by the Council from monetary contributions paid by the respondent pursuant to the consents granted to the various precincts in the Estate and that that was the basis upon which they recommended the granting of consent. Her Honour then held that it followed that the deletion of Condition 36 would not result in the balance of the consent operating in a manner which was different to that in which the whole would have operated as it was still open to the Council to acquire Lot 1825 for value either by negotiating its purchase or by compulsory acquisition. I agree with her Honour’s reasoning and her conclusion.

112. In Windsor Bridge, Brereton AJ considered whether a condition in the Minister for Planning and Infrastructure’s approval for a State significant infrastructure project, known as the Windsor Bridge replacement project, which required NSW Roads and Maritime Services to submit for approval by the Director-General a Strategic Conservation Management Plan for the project area (condition B1), was severable if it was invalid. In finding that condition B1 could not be severed from the Minister’s approval if it was found to be invalid, Brereton AJ said at [128]-[130]:

128. Removal of condition B1 would permit the Project to proceed to construction without the measures intended to mitigate its adverse impacts on cultural heritage. Essentially, measures designed and intended to mitigate the adverse impact would be removed. Prima facie, that would result in the Approval operating in a manner differently from that intended. However, RMS submitted that if condition B1 were severed, issues of heritage impact management would still be addressed by condition D5(e), which requires preparation of a Construction Heritage Management Sub-plan covering ground similar to the CMP referred to in condition B1, so that deletion of condition B1 would not result in the residue of the Approval operating substantially differently.

129. Condition D5(e) requires that RMS prepare and (following approval) implement, as part of a “Construction Environmental Management Plan (CEMP)” outlining the environmental management practices and procedures to be followed during construction of the project, a Construction Heritage Management Sub-plan prepared by appropriately qualified heritage consultants detailing how construction impacts on heritage will be avoided, minimised and managed. Like the CEMP generally, this is concerned more with the impact of the construction process and activities than with the permanent impact of the Project. Although I accept that there is some overlap, condition D5(e) does not cover the same territory as condition B1. For example, it does not stipulate that the Construction Heritage Management Sub-plan must include an identification of the heritage value of Thompson Square, the development of heritage design principles for the Project to retain the heritage significance of Thompson Square; specific mitigation measures for Thompson Square; and changes to the detailed design of the Project to mitigate heritage impacts. Moreover, it operates in respect of the construction process, whereas condition B1 is directed to matters to be attended to prior to commencement of any construction.

…

130. Accordingly, in my view, deletion of condition B1 would result in the residue of the Approval operating differently to the manner in which the whole would have operated. Importantly, the measures intended to mitigate adverse heritage impacts before construction commences, including refinement of the detailed design, would be removed. If invalid, condition B1 would not be severable.

113. Here by contrast, notwithstanding evidence and submissions in relation to the opinion of the first respondent concerning the significance of the imposition of an affordable housing condition requiring the payment of a monetary contribution to mitigate the reduction of affordable housing relating to the development, I am satisfied that severance of condition 10 will not result in the balance of the rear DA consent operating in a different manner from that in which the whole would have operated. Condition 10 is a monetary contribution condition, distinguishable from the condition in Windsor Bridge which required NSW Roads and Maritime Services to submit a Strategic Conservation Management Plan, which condition was found to be unable to be severed from the development approval as the removal of measures intended to mitigate adverse heritage impacts before construction commenced would have resulted in the residue of the approval operating differently to the manner in which the whole would have operated.

114. Like the contribution for roadworks in King v Bathurst which required the payment of a monetary contribution to the Council, both before and after the severance of condition 10, here the development consent for DA 80/2023 will remain for the same development.

115. For the foregoing reasons, I have determined that condition 10 is severable from the DA consent which remains unaffected thereby.

Costs

116. The parties made no submissions in relation to costs. The general rule is that costs follow the event to compensate the successful party in favour of whom the orders disposing of the proceedings are made.

Conclusion and orders

117. The Court:

1. Declares that condition 10 of the development consent granted by the second respondent on 27 September 2023 in respect of development application no. DA-80/2023 lodged on behalf of the first and second applicant is invalid and of no force or effect.

2. Orders the respondents to pay the applicants’ costs of these proceedings.

3. Orders the parties to seek to have the proceedings relisted on a business date by no later than 14 days from the making of these orders for any further directions. Otherwise, the proceedings brought by the applicants are dismissed in their entirety.

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Endnotes

low-rental dwelling means a dwelling that was let at a rental level no greater than the median rental level, as specified in the Rent and Sales report, during the relevant period in relation to a dwelling—

(a) of the same type, and

(b) with the same number of bedrooms, and

(c) in the same local government area.

Amendments

13 March 2025 - Typographical error to coversheet "Text cited" section corrected.

Decision last updated: 13 March 2025