JMH Living Design Pty Ltd v Sutherland Shire Council

[1999] NSWLEC 260

Reported Decision: 106 LGERA 167

Land and Environment Court

of New South Wales

CITATION:

JMH Living Design Pty Ltd V Sutherland Shire Council [1999] NSWLEC 260

PARTIES

APPLICANT
JMH Living Design Pty Ltd

RESPONDENT
Sutherland Shire Council

NUMBER:

10941 of 1998

CORAM:

Bignold J

KEY ISSUES:

Section 56A Appeal :- s 56A Appeal- "Cluster housing development" - meaning of development standard relevant thereto. Misconstruction of LEP an error of law.

LEGISLATION CITED:

Land and Environment Court Act 1979 s 56A

DATES OF HEARING:

10/26/1999

DATE OF JUDGMENT DELIVERY:

12/03/1999

LEGAL REPRESENTATIVES:

APPLICANT:
Mr A Galasso, Barrister

SOLICITORS:
Dunhill Madden Butler

RESPONDENT:
Mr G Newport, Barrister

SOLICITORS:
Abbott Tout

JUDGMENT:

TABLE OF CONTENTS

A. INTRODUCTION 1-6
B. DID THE COMMISSIONER MISCONSTRUE THE LEP? 7-92
C. DID THE COMMISSIONER MISDIRECT HIMSELF AS TO HIS TASK OF DETERMINING THE SEPP No 1 OBJECTION? 93-99
D. DID THE COMMISSIONER DENY THE APPELLANT PROCEDURAL FAIRNESS? 100-111
E. CONCLUSIONS AND ORDERS 112-116

IN THE LAND AND Matter No . 10941 of 1998

ENVIRONMENT COURT OF Coram : Bignold J.

NEW SOUTH WALES 3 December 1999

JMH LIVING DESIGN PTY LTD

Appellant

v

SUTHERLAND SHIRE COUNCIL

Respondent

JUDGMENT ON S 56A APPEAL

Bignold J:

A. INTRODUCTION

1. This is an appeal pursuant to s 56A of the Land and Environment Court Act 1979 (Court Act) against the decision of Commissioner Watts dismissing an appeal brought pursuant to s 97 of the Environmental Planning and Assessment Act 1979 (EP&A Act) against the Council’s deemed refusal of a development application for a cluster housing development comprising four detached dwellings on land known as No 19 Binda Rd, Yowie Bay, being lot 2 in DP 515472, having a site area of 2,626m2 (the development site).

2. As is apparent from his reasons for judgment published on 4 August 1999, the Commissioner dismissed the appeal because he found that the Appellant’s objection under State Environmental Planning Policy No 1 —Development Standards (SEPP No 1) was not well founded (at par 38 of his reasons), having earlier identified as “the salient issue” (at par 18) whether that objection should be upheld.

3. The present appeal is limited to questions of law: vide the Court Act s 56A.

4. In the Notice of Motion instituting the appeal, the Appellant alleged the following errors of law in the Commissioner’s judgment:
1. By construing the definition of cluster housing in the SSLEP as one:
a) imposing a limit on the number of dwellings permissible on the subject land; and
b) requiring the lodgement of an objection pursuant to SEPP 1.
2. By construing the relevant development standard as one described in the definition of cluster housing in the SSLEP.
3. By construing the relevant development standard without regard to the provisions of the SSLEP taken as a whole.
4. By his construction of the term conventional subdivision, as that term is referred to in the definition of cluster housing in the SSLEP.
5. By failing to take into account matters relevant to the construction of the term conventional subdivision (as that term is referred to in the definition of cluster housing in the SSLEP) as contained in an SEPP 1 objection filed in support of the development application
6. By the method adopted for the determination of the SEPP 1 objection, namely that it was to be viewed as against a base of a 2 allotment standard.
7. By his formulation and recital of the issue(s) relevant to the SEPP 1 objection filed in support of the development application.
8. By relying upon material extraneous to the evidence and submissions adduced by the parties, namely Plan B annexed to his determination.
9. By failing to afford to the parties the opportunity to address (whether by evidence of submissions(s)) material not adduced by the parties, namely Plan B to his determination.

5. On the hearing of the appeal, the Appellant’s argument encompassed the threefold grouping of the various grounds of appeal in the following propositions (which I have taken the liberty of reformulating in order to state the propositions in the conventional terminology of appealable legal error):
(i.) The Commissioner misconstrued the relevant provisions of Sutherland Local Environmental Plan 1993 (the LEP): grounds 1 to 5 inclusive;
(ii.) The Commissioner misdirected himself by defining otherwise than in accordance with law, the question of fact (concerning the SEPP No 1 objection) that he had to determine: grounds 6 and 7; and
(iii.) In making use of a documentary exhibit in a manner that was not canvassed or discussed at the hearing, the Commissioner had denied the Appellant procedural fairness or natural justice: grounds 8 and 9.

6. It will be convenient if I determine the present appeal by reference to each of these propositions, which I shall consider seriatim.

B. DID THE COMMISSIONER MISCONSTRUE THE LEP?

7. It is common ground that the Appellant’s proposed development was properly categorised for the purposes of the LEP as “cluster housing”.

8. That term is defined by the LEP as follows:

Cluster housing means three or more dwellings grouped on a site to take advantage of good building areas or views and to conserve large areas of open space. The number of dwellings on a site should be the same as the number of allotments that could be created through a conventional subdivision in the same zone.

9. It is also common ground that the development site is included in the Residential 2(e2) zone so designated by the LEP, and that within that zone “ cluster housing ” is one of the permissible purposes of residential development which may be carried out with development consent. Those permissible residential purposes are:

cluster housing; dual occupancy housing except on internal lots; dwelling houses; group houses: vide cll18 and 22F of the LEP.

10. It is to be noted that the LEP defines each of these residential purposes of development: vide cl 6 . The term “ internal lot ” is also defined by the LEP.

11. Additionally, the LEP recognises other forms of residential development that are not permissible within zone 2(e2), namely housing for aged or disabled persons; residential flats; town houses or villa houses: vide cl 18.

12. The LEP also defines each of these residential purposes (or categories) of development: vide cl 6.

13. It follows from the fact that the LEP permits in the Residential 2(e2) zone certain forms of residential development involving a plurality of dwellings (eg cluster housing) but prohibits other forms of residential development (eg residential flats) that the proper categorisation of the proposed development is an important task in determining a development application to carry out residential development involving a plurality of dwellings in zone 2(e2).

14. As I have noted, it was common ground that the Appellant’s development proposal was properly categorised as “cluster housing”, in contradistinction to other forms of residential development, involving a plurality of dwellings on a single lot, some of which are permissible in Zone 2(e2) eg dual occupancy (except on internal lots) and some of which are not permissible in that zone eg residential flats.

15. It is a matter of interest to note how the LEP distinguishes between the defined categories of residential development involving a plurality of dwellings on a single lot. As has been shown, “cluster housing” involves three or more dwellings grouped in a particular way or for a particular purpose, namely to take advantage of good building areas or views and to conserve large areas of open space.

16. “Dual occupancy housing” is defined to mean two dwellings on one allotment, and “residential flat” is defined to mean a dwelling within a building containing three or more dwellings, but does not include a “townhouse or villa house” which is defined as meaning “a dwelling on a site containing three or more dwellings, where each dwelling has an individual entrance and open space for the exclusive use of occupants of the dwelling”.

17. It is readily to be appreciated that the definitions of “cluster housing”, “residential flat” and “townhouse or villa house” have one common feature, namely that the development is located on a single site and comprises “three or more dwellings”. (By way of comparison, dual occupancy housing comprises “two dwellings” on one allotment.)

18. In view of the fact already noted that the LEP permits “cluster housing” within Zone 2(e2) but prohibits “residential flats” and “townhouses or villa houses”, it can readily be appreciated that some discrimination is required in concluding what is the proper categorisation of a proposed residential development that comprises “three or more dwellings” on an allotment or site (such as does the Appellant’s proposal).

19. However, there is no need to delve further into this matter because the problem concerning the term “cluster housing” that has manifested itself in the proceedings does not concern the question of distinguishing it from the various other types of categories of multi dwelling residential development on a single site or allotment. Rather, the problem entirely concerns the second sentence of the definition of “cluster housing” which reads:

The number of dwellings on a site should be the same as the number of allotments that could be created through a conventional subdivision in the same zone.

20. The problem created by this sentence first manifested itself in the proceedings when the Council raised, as a preliminary question of law, whether the Appellant’s proposed development was prohibited development in terms of the LEP, or alternatively whether the second sentence in the LEP definition of “ cluster housing ” was a development standard.

21. The preliminary question came before Cowdroy AJ (as he then was) who in his reserved judgment published on 16 April 1999 held that the proposed development was not prohibited development ( at par 13) and that the second sentence of the LEP definition of “cluster housing” was a “development standard” within the meaning of the EP&A Act and SEPP No 1 (at par 14).

22. It is a matter of some interest to note how the preliminary question was debated before, and determined by, his Honour. At par 6 his Honour stated:

The critical issue is to establish whether the definition of cluster housing comprises a comprehensive definition, the failure to comply with any requirement thereof rendering the development prohibited as not being that type of development or whether it is a definition which includes a development standard.

23. After noting the existence of many cases decided either by this Court or by the Court of Appeal concerning “ development standards ”, (including Woollahra Council v Carr (1985) 62 LGRA 263 and North Sydney Council v P Mayoh Pty Ltd (1990) 71 LGRA 222) his Honour expresses the following conclusion at par 8 :

The first sentence of the definition defines explicitly what is meant by the term cluster housing . The second sentence however is not compatible with the elements of a definition. It specifies an objective to be achieved in the fulfilment of such development by prescribing the desired density and is quite independent of the meaning of cluster housing . The definition is not dependent upon the second sentence to give it efficacy unlike the standards which were considered in Carr and in Mayoh .

24. His Honour elaborates upon this conclusion in the following passages at par 9, par 10, par 11 and par 13 respectively :

In contrast to the terminology considered in Mayoh and in Carr , the words in the second sentence do not imply a prohibition. Rather they are indicative of a standard sought to be achieved in development. …….. ( par 9 )

The definition contained in the LEP of Cluster housing prescribes a minimum of three dwelling or more grouped on a site. Regard can be paid to the requirements of cl22F Housing in the 2(e2) Residential zone in the LEP. The minimum site requirements prescribed for cluster housing are as follows:-

(6) A minimum site area of 2000 sq. m. will apply to cluster housing development. ( par 10 )

Council’s argument assumes the minimum standard lot area requirement is 873m2 is to apply to the calculation of site area when the definition is applied. Since by definition cluster housing must consist of three dwellings or more, the minimum area required for a cluster housing upon the council’s argument would be 3 multiplied by 873m2 which is equal to 2619m2. This area exceeds the minimum area requirement prescribed by cl22F(6) of the LEP for cluster housing by 619m2 and thereby produces an incongruous result. Council’s argument is also predicated upon an assumption that the term an allotment is to be interpreted as a standard lot, but no foundation exists for such assertion. The term conventional subdivision is in itself a vague and undefined term. ( par 11 )

……….

This analysis confirms the submission of the applicant that the term should be is not to be read as must be. Once this conclusion is reached the second sentence of the definition comprises a development standard and although located within the definition of cluster housing, it does not have a dual function, applying the approach of Priestley JA in Carr and of Pearlman J in Scott Revay and Unn v Warringah Council (1995) 88 LGERA 1 at p6. Accordingly the development proposal is not prohibited. (par 13)

25. Significantly, the determination of the preliminary questions of law did not produce a concluded meaning of what his Honour had held to be a development standard. It is this lack which has ultimately compelled the Commissioner to grapple with the true meaning and effect of the development standard, a difficult task (as will appear) which was exacerbated by the equivocal approach adopted by the Appellant at the hearing before the Commissioner, in tendering, on a without prejudice basis, the SEPP No 1 objection, and in submitting to the Commissioner that such an objection was not legally necessary to sustain the permissibility of the proposed development.

26. In my opinion, it was simply not open to the Appellant to advance that argument before the Commissioner in view of Cowdroy AJ’s determination of the preliminary questions of law. Properly understood, that determination was that the Appellant’s development proposal as cluster housing was not prohibited by the LEP because what his Honour perceived to be “the desired density standard” enunciated in the second sentence of the definition of “cluster housing” was relevantly a development standard amenable to objection under SEPP No 1.

27. But for the second sentence of the definition operating as a development standard, his Honour presumably would not have concluded that the Appellant’s proposed development was not prohibited by the LEP. In other words, the answers to the two questions of law so determined by his Honour are properly to be regarded as essentially interrelated and interdependent.

28. In these circumstances, it was not open to the Appellant to advance his case before the Commissioner on the basis that the SEPP No 1 objection was not necessary. This is because the Appellant was bound by the determination of the preliminary questions of law, just as the Commissioner was bound to give effect to those determinations.

29. To put the matter in a slightly different way, the Appellant was bound by his conduct in the proceedings, including at the hearing on the preliminary questions of law where he adopted the following position, as recorded in par 4 of Cowdroy AJ’s reasons for judgment:

The respondent has submitted that a distinction must be drawn between matters of permissibility compared to matters which relate to the carrying out of a development. The applicant submits that the final sentence contained in the definition of cluster housing is a development standard and as such is amenable to an application under State Environmental Planning Policy No 1 ( SEPP 1 ). Accordingly the applicant says that the proposal is not one which is prohibited but one which can be considered with a SEPP 1 objection.

30. Accordingly, it is now not open to the Appellant in the present appeal to advance the case that his proposed development qualifies as permissible “ cluster housing ” development without the need to rely upon the dispensing power available under SEPP No 1 . On the contrary, the true effect of the determination of the preliminary questions of law was that the Appellant’s proposed development was only permissible as cluster housing development if the Appellant’s SEPP No 1 objection were upheld. If the objection were not upheld, the legal consequence was that the development did not satisfy the requirements of the development standard and in consequence, could not be legally permitted as “ cluster housing ”. In proceeding upon this basis, the Commissioner was clearly correct and was properly giving effect to the determination of the preliminary questions of law.

31. Accordingly, the first ground of appeal stated in the Appellant’s Notice of Motion must be rejected out of hand.

32. However, the difficult question of the true meaning of the development standard remains and raises the related question whether the Commissioner misconstrued the LEP.

33. The Commissioner deals with the question at par 22 to par 28 (inclusive) of his judgment.

34. Having outlined the expert testimony that was directed to the question (which probably was inadmissible on the question of the true construction of the development standard), the Commissioner expresses the following conclusions at par 27 and par 28:

Having considered the evidence and submissions I am of the opinion that the …term conventional subdivision may reasonably be assumed to mean subdivision of the land into two allotments. That, despite it being a vague and undefined term in the SSLEP, the standard for the number of allotments in a conventional subdivision , under that instrument would be two, in the circumstances of this case. The proposal is for four dwellings, an increase in the standard of 100%.

This conclusion has been reached despite the definition of cluster housing referring to three or more dwellings grouped together, and the minimum lot size for cluster housing being 2,000m2. Technically there cannot be a cluster housing development of two dwellings.

35. In concluding that a conventional subdivision of the development site would yield two allotments, it is apparent that the Commissioner was accepting the expert testimony which he summarises at par 22 to par 26 (inclusive). That testimony was based upon the approach of applying to the development site cl 22F(4) of the LEP which prescribes (i) the minimum lot size for a dwelling house within zone 2(e2); (ii) the minimum width of such a lot; and (iii) the minimum depth of such a lot.

36. It is to be noted that the development site comprising 2,626m2 would yield three lots if the minimum lot size of 873m2 were applied or two lots if the minimum lot size of 1,012m2 (applicable to an “internal lot” defined by the LEP as “a lot the only means of access to which is an access corridor … or a right of carriageway over another lot”) were applied.

37. The conclusion expressed by the Commissioner is somewhat elliptical in that it does not reveal a process of interpretation or of reasoning.

38. Nonetheless, the conclusion implicitly encapsulates a process of interpretation along the following lines, namely that the second sentence of the definition of “cluster housing” is stipulating the number of dwellings to be contained in the cluster housing development by reference to the number of allotments, namely two, that could be created by subdivision of the development site for development as dwelling house sites, with each allotment containing an area not less than the minimum area prescribed by cl 22F(4) of the LEP for a “standard lot” and for an “internal lot” respectively.

39. The Appellant submits that Commissioner’s conclusion necessarily involves a misconstruction of the relevant provisions of the LEP.

40. In particular, the Appellant argued that the Commissioner’s conclusion was contrary to the reasons for judgment of Cowdroy AJ in his determination of the preliminary questions of law, and fastened upon what his Honour had held to be “an incongruous result” (par 11) of applying to the development site the minimum lot size (873m2) for dwelling houses prescribed by cl 22F(4) of the LEP when cl 22F(6) prescribed a minimum site area of 2,000m2 for “cluster housing” development, which by definition involved at least three dwellings in a group.

41. Additionally, the Appellant fastened upon his Honour’s further conclusion (par 11) that “there was no foundation” for the Council’s argument that “the reference to allotments” in the development standard was a reference to a “standard lot” (as referred to in cl 22F(4) of the LEP) and his Honour’s observation that “conventional subdivision” is in itself a “vague and undefined term” (par 11).

42. Founding upon these observations of his Honour (which it is to be noted, do not attempt to provide a concluded meaning of the relevant development standard) the Appellant submitted that the Commissioner had in effect, bypassed his Honour’s judgment and in so doing, had arrived at a conclusion which involved a misconstruction of the LEP.

43. It is apparent from the Commissioner’s judgment that in the result, he adopted a construction of the second sentence of the definition of “cluster housing” that involved (i) “an incongruous result” as described by Cowdroy AJ and (ii) the acceptance of the proposition that the reference to ‘allotment” in the definition of “cluster housing” was intended as a reference to “residential allotment” for a dwelling house site having the minimum area prescribed by cl 22F(4) of the LEP, which Cowdroy AJ had described as “an assumption for which no foundation exists”.

44. Furthermore, it may be assumed for present purposes, that if Cowdroy AJ had been invited or required to essay the task of construing the development standard, he would not (having regard to his conclusions and observations on the Council’s argument) have construed it in the manner that the Commissioner construed it.

45. However, these are not matters that necessarily demonstrate a misconstruction of the LEP by the Commissioner. More emphatically, they do not demonstrate that the Commissioner has bypassed his Honour’s judgment, for the reasons, as I have been at pains to point out, that the determination of the preliminary questions of law did not provide a concluded meaning of the development standard, and the Commissioner was left with no choice but to determine the meaning of the development standard in the process of (or as a prelude to) evaluating the Appellant’s SEPP No 1 objection.

46. The question remains: Did the Commissioner’s conclusion necessarily involve a misconstruction of the development standard? Ultimately, I think it did, and a prima facie indication that it did appears, in par 28 of his reasons, where the Commissioner candidly recognised the intrinsic (if not impossible) difficulty created by his conclusion, namely that the definition of “cluster housing” meant “three or more dwellings grouped together” and that a group of two dwellings did not constitute “cluster housing”. (Indeed, a group of two dwellings on a single allotment constitutes “dual occupancy development” being an entirely separate category of residential development.)

47. In effect, the Commissioner has interpreted the development standard pertaining to “cluster housing” in a manner that negates the LEP definition, producing the result that a requirement specified in relation to the carrying out of a defined category of development, destroys the category.

48. A construction that produces such an unreasonable, if not absurd, result must be rejected, in favour of any reasonable competing construction.

49. The application of the development standard producing such a result as that reached by the Commissioner clearly demonstrates a misconstruction of the statutory definition of “cluster housing”. It is, with respect, an even more incongruous result than that which Cowdroy AJ held to be an incongruous result of applying to the statutory definition the requirements of cl 12F(4) of the LEP (prescribing a minimum lot size of 873m2 for a dwelling house lot) in the face of cl 12F(6) of the LEP which prescribes a minimum lot size of 2,000m2 for cluster housing development.

50. However, the double incongruity confirms the Commissioner’s misconstruction.

51. Clearly, the Commissioner’s misconstruction of the relevant provisions of the LEP is an error of law. It is not, as was submitted by the Council, merely an error of fact eg reflecting the Commissioner’s understanding of the undefined expression “conventional subdivision” contained within the statutory definition.

52. The proper interpretation of the development standard contained in the LEP is clearly a question of law, not a question of fact.

53. Moreover, the legal error infects the whole of the Commissioner’s judgment, because having concluded that the development standard operated in the present case so as to impose the requirement that the maximum number of houses in the cluster housing development was two, he proceeded to evaluate the SEPP No 1 objection on that basis.

54. It follows that this evaluation was necessarily flawed and must be set aside for error of law.

55. Having concluded that the Commissioner’s judgment is legally flawed because of his misconstruction of the LEP and that such legal error vitiates his judgment, the question of the proper construction of the development standard must, in my opinion, now be determined. I say this, notwithstanding the Appellant’s submission that it is not necessary for me in the context of the present s 56A appeal to construe the development standard, once I have concluded that the Commissioner’s judgment involves misconstruction, since that conclusion is sufficient in itself to dispose of the appeal.

56. If I were to accept the Appellant’s submission, it would mean that the present proceedings would have already involved three distinct hearings with the necessity for a fourth without the fundamental question of the proper interpretation of the development standard having yet been determined. The Appellant’s suggestion that on the further hearing of the appeal by the Commissioner (required as a consequence of the successful s 56A appeal) it would be open to the Commissioner to refer an appropriate question of law pursuant to s 36 of the Court Act only serves to highlight the necessity for the immediate determination of the proper construction of the development standard. The Appellant’s suggestion which could involve up to three further hearings in the proceedings, unwittingly (I assume) mocks from the standard mandated by s 38(1) of the Court Act for proceedings in classes 1, 2 and 3 of the Court’s jurisdiction to be “conducted with as little formality and technicality and with as much expedition, as the requirements of this Act and the proper consideration of the matters before the Court permit”.

57. Accordingly, it is, in my view, imperative that the remitter of the case to the Commissioner be upon the basis that the proper meaning of the development standard has been determined, and that he be required to determine the appeal (including the evaluation of the Appellant’s SEPP No 1 objection) upon the basis of the established meaning of the development standard.

58. The reluctance of the Appellant to proffer an interpretation of the development standard is perhaps understandable and reflects the essential interpretive difficulty created by the statutory language embodying the development standard. However, that difficulty must be encountered.

59. What then, is the true meaning of the development standard?

60. In my opinion, it is tolerably clear that the development standard is concerned with “the dwelling density” of cluster housing development. So much is clear from the expressed relationship between the number of dwellings in the cluster housing and the site area, ascertainable by reference to a stipulated index or reference point (which is the only source of uncertainty or doubt in the interpretation of the development standard).

61. Cowdroy AJ said (at par 8) that the development standard “specifies an objective to be achieved in the fulfilment of such development by prescribing the desired density”. I would respectfully agree, but in deference to the definition of “development standard” in the EP&A Act s 4, I would prefer to say that it “specifies a requirement” or “fixes a standard” in respect of dwelling or housing density.

62. In this respect, environmental planning instruments under the EP&A Act conventionally control residential or housing density in terms of dwelling units per hectare.

63. That is reflected in cl 8 of the Council’s Cluster Housing Development Control Plan (the DCP) which fixes the following “density” standards:
1. In 2(e1) zones, the maximum density is 15 dwellings per hectare;
2. In 2(e2) zones, the maximum density is 10 dwellings per hectare;
3. Council will consider a variation to the density requirements in environmentally sensitive areas to encourage Cluster Housing as an alternative form of development to conventional subdivision.

64. Similarly, cl 22F(4) of the LEP, in prescribing the minimum lot size for a dwelling house of 873m2, may be taken to be imposing a dwelling density standard of approximately 11.5 dwellings per hectare within zone 2(e2).

65. Again, it is apparent that the statutory language of the development standard is seeking to limit the number of dwellings that may be grouped in a cluster housing development of a site to “the number of allotments that could be created through a conventional subdivision in the same zone” (hereinafter referred to as “index or reference point”).

66. Problems emerge as to what is meant by this index or reference point. For example, what is intended by the reference to (i) “allotments”; (ii) “that could be created”; (iii) “a conventional subdivision”; and (iv) “in the same zone”?

67. Assistance in elucidating the meaning of these terms (considered both individually and as a compound expression) is to be gained from the fact that in terms of the LEP, “cluster housing” is a permissible form of multi dwelling residential development only in the Residential 2(e1) and 2(e2) zones.

68. This connecting (and limiting) fact naturally directs attention to the “zone objectives” and “description of the zone” for each of these zones specified in the development control table provided by cl 18 of the LEP.

69. The “zone objective” for the Residential 2(e2) zone is as follows:

A low density residential environment in an environmentally sensitive locality, which is:

a) free from any adverse impacts of commercial and industrial uses; and

b) protected from overdevelopment or visually intrusive development, especially where development is within view of any waterway or contains significant stands of remnant bushland.

70. The “description of the zone” for the Residential 2(e2) zone is as follows:

This zone applies to land with special environmental qualities that is generally located in foreshore areas and which should be protected. Development in this zone is characterised by one to two storey detached houses, many on large lots, with some cluster housing and dual occupancy housing scattered throughout the zone. Other common features are mature remnant bushland, moderate to steep land, waterviews, and in some cases, water frontage. Larger minimum lot sizes for subdivision and dual occupancy housing, as well as more restrictive floorspace ratio controls are imposed than in the 2(e1) zone to ensure this environment is not impaired by overdevelopment. The view of development from the waterway is an important feature in the assessment of applications.

71. Consideration of cl 18 leads in turn to a consideration of cl 22E and cl 22F of the LEP which deal specifically with “ housing developments ” within Zones No 2(e1) and 2(e2) respectively.

72. In each of these zones, the same residential (or housing) development is permissible, namely cluster housing, dwelling houses and dual occupancy housing.

73. Clause 22E and cl 22F adopt the same approach of prescribing the following controls in respect of permissible housing development, namely:
(i.) maximum floor space ratio and minimum landscaped area;
(ii.) minimum lot size for a dwelling house;
(iii.) minimum lot size for attached and detached dual occupancy;
(iv.) minimum lot size for cluster housing.

74. Whereas, the minimum lot size prescribed for “cluster housing” is the same for both zones (ie 2,000m2), the minimum lot size for a dwelling house is 557m2 for zone No 2(e1) compared with 873m2 for zone 2(e2), indicating a much lower dwelling density for the latter zone, which is consistent with the zone objective expressed in cl 18 of the LEP.

75. Each clause prescribes as the minimum lot size for dual occupancy development the same minimum size as is respectively provided for a dwelling house in each of the zones. In respect of this permissible type of housing development, it is to be noted that cl 25 of the LEP prohibits the subdivision of a site developed by dual occupancy housing into two allotments. Thus, although dual occupancy development on a minimum sized lot would involve a housing density twice that of a dwelling-house development on the same lot, there is no change in the number of lots involved in such disparate developments, namely one. This is an important factor in determining the housing density fixed by the development standard which is expressed in terms of "number of allotments".

76. Given the apparent purpose of the development standard (ie to fix a density standard), it is not difficult to infer that the stipulated index or reference point is intended to apply the residential density fixed for dwelling house development within the same zone (in which the development site is included) stipulated by cl 22E or cl 22F of the LEP as the case may be. However, in order to so infer, it is necessary to read into the statutory language words that do not appear, to the effect that the statutory phrase including the words read into it (these are highlighted and placed in brackets) would read as follows:

be the same as the number of allotments that could be created through a conventional subdivision ( of the site for the purposes of creating allotments for development by dwelling houses where the allotments have the minimum area prescribed by cl 22E(3) or cl 22F(4) as the case may be, of the LEP ) in the same zone ( in which the site is included ).

77. In my judgment, to so interpret the index or reference point is a legitimate purposive interpretation which is justified, having regard to the following factors:

(i.) the clear purpose of the development standard to fix a dwelling or housing density standard;

(ii.) where that standard is ascertainable by direct reference to the dwelling density standard fixed by cl 22E and cl 22F for zones 2(e1) and 2(e2) respectively prescribing the minimum lot size for dwelling house development;

(iii.) where those prescribed minimum lot sizes indirectly limit the type of “ subdivision ” permissible within the Residential 2(e1) and 2(e2) zones (as to which see later); and

(iv.) where that result accords with the express “ zone objectives ” and “ zone descriptions ” stated by cl 18 in respect of the Residential 2(e1) and 2(e2) zones respectively.

78. However, this interpretive result is subject to two possible qualifications:-
(i.) the result must not yield a number that is less than three (because otherwise, the defined category of “cluster housing” is thereby destroyed); and
(ii.) the result must not be inconsistent with the operation of cl 22E(5) or cl 22F(6) of the LEP each of which prescribes a minimum site area of 2,000m2 for cluster housing development.

79. It was the failure to appreciate these qualifications that essentially explains how the Commissioner misconstrued the LEP.

80. It is to be noted that these possible qualifications have no application to the meaning of the development standard in the case of cluster housing development carried out in Zone No 2(e1) because the prescribed minimum lot size for dwelling house development is 557m2. If this requirement is applied to the prescribed minimum site area of 2,000m2 for cluster housing, the result will never be less than three dwellings, so that what has been described in the present proceedings as “incongruous results”, (in the case of cluster housing development in Zone No 2(e2)) has no possible application to cluster housing development in Zone 2(e1).

81. In the present case, neither qualification comes into play since the result of applying to the area of the development site (2,626m2) the density standard fixed by cl 22F(4) of the LEP (one dwelling per 873m2) yields three dwelling house allotments ( 3 x 873m2 = 2,619m2) so that a cluster housing development comprising three dwellings grouped together may be developed on the development site

82. However, both qualifications may apply in any given case to cluster housing development carried out in zone 2(e2), for example, in the case of a cluster housing development of four dwellings proposed on a site having the minimum prescribed area of 2,000m2.

83. In such a case, applying the density standard of one dwelling for each 873m2 would produce a result of two dwellings. This result thereupon becomes subject to the operation of the first mentioned qualification and the number of dwellings must be taken to be three. However, the qualification goes no further than allowing for three dwellings on a site comprising not less than the minimum prescribed area of 2,000m2. The qualification does not operate to increase dwelling density by allowing one dwelling for each 666m2 (eg by dividing 2,000m2 by 3). The development standard fixes the dwelling density at one dwelling per 873m2, subject only to the qualification that where the site area of the proposed cluster housing development is not sufficiently large (but no less than the minimum prescribed area) so as to yield three houses, nonetheless, the resultant number (presumably two) is to be taken as yielding three.

84. In so concluding, I have rejected the Appellant’s suggested interpretation (i) that the reference to “allotments” in the second sentence of the definition of “cluster housing” is a reference to any type of lot (and is not related to a lot created for a dwelling house development) and (ii) that the reference to “conventional subdivision” is a reference to any type of subdivision known to the law, including strata subdivision and community title subdivision.

85. In my opinion, the Appellant’s suggested interpretation entirely negates the clear purpose or object of the development standard to fix a dwelling density standard. It is also contrary to the “zone objective” and “zone description” for the Residential 2(e2) zone provided by cl 18 of the LEP.

86. It is to be noted that “subdivision” is a permissible form of development within the Residential 2(e1) and 2(e2) Zones but requires development consent. The meaning of “subdivision” for the purposes of the LEP is the definition contained in s 4(1) of the EP&A Act which is an extremely wide definition which includes a strata subdivision: vide the Interpretation Act 1987 s 11: see also EP&A Act s 4B.

87. Although the LEP does not contain express limitations on the form of permissible subdivision, cl 22E and cl 22F of the LEP, in prescribing minimum lot sizes for designated forms of permissible housing development (dwelling houses, dual occupancy development and cluster housing development) indirectly limits the form of permissible subdivision: cf Laidlaw Pty Ltd v Cleverley (1972) 25 LGRA 196; Smith v Wollondilly Council (1995) 86 LGERA 437, the latter holding that a prescribed minimum lot area requirement applies to a subdivision including a strata subdivision.

88. Finally, it is to be noted that the Commissioner appears to have understood the second sentence of the definition of “cluster housing” as requiring an actual subdivision exercise to be undertaken in respect of the development site in order to establish what would be the precise lot yield and the precise form of the subdivision. That this was his approach appears from the following passage at par 29:

In this case, I have had regard for the drawing showing the land divided into two lots as confirmed by Mr Crane in Exhibit O. This sketch made it clear that given the constraints on development of this land, the limited vehicular access frontage, the topography, the presence of the 30m FSBL, that number of allotments would be two. It is conceivable that on a site of the same plan area, not so severely constrained, the number of allotments in a conventional subdivision may be greater up to around 2.6 on the evidence of Mr Blyth.

89. In my respectful opinion, this approach was not required by the statutory language when it refers to “ the number of allotments that could be created through a conventional subdivision ” (emphasis added). This is another aspect of the Commissioner’s misconstruction of the development standard.

90. Again, applying a purposive approach, having established that the statutory purpose or object is to fix a dwelling density standard, all that is required by the statutory expression “could be created” is a hypothetical assessment of capacity or capability to yield a number of allotments based upon the prescribed density. In this context, it is the 873m2 per standard lot that should be regarded as the relevant dwelling density standard fixed by cl 22F(4) of the LEP (the larger minimum lot size prescribed for internal lots being less normative and hence not determinative of the density standard).

91. For all the foregoing reasons, I have concluded that the Commissioner misconstrued the development standard and that in consequence of such misconstruction, his judgment is legally flawed and must be set aside and the case remitted for further decision in accordance with the interpretation of the development standard that I have determined.

92. In view of this conclusion, I shall deal only briefly with the other grounds of appeal raised by the Appellant.

C. DID THE COMMISSIONER MISDIRECT HIMSELF AS TO HIS TASK OF DETERMINING THE SEPP No 1 OBJECTION?

93. Having misconstrued the meaning of the development standard, it was an inevitable consequence that the Commissioner, in applying the erroneous interpretation, misdirected himself concerning his task of evaluating the SEPP No 1 objection, with the ultimate consequence that his conclusions (i) that the SEPP No 1 objection was not well founded (at par 38) and (ii) that the development standard was not unnecessary or unreasonable (at par 40), were legally flawed.

94. The cause and source of such consequential legal error is revealed in the following passage at par 37 of the Commissioner’s judgment:

It is against this datum of a conventional subdivision and the two allotment standard, with its underlying purpose to preserve [the] environmentally sensitive area of the site , that the proposed development should be assessed.

95. This passage reveals a further error on the Commissioner’s part, namely that a “ conventional subdivision ” of two allotments provides (or contributes to) the “ datum ” or reference point against which the SEPP No 1 objection must be evaluated. This conclusion entirely misunderstands the purpose of the reference in the statutory development standard to the expression “ conventional subdivision ”. The purpose of the reference is simply to derive a dwelling density for the cluster housing development. Once that density is derived, the reference to “ conventional subdivision ” is entirely spent and serves no continuing purpose. Yet at par 32 to par 36 (inclusive), the Commissioner proceeds to give detailed consideration to “ a conventional subdivision ” of the development site, yielding two allotments. Regrettably, the whole of this exercise misconceives (and misapplies) the development standard.

96. In passing, I would observe that the Commissioner, at par 31 of his judgment, had expressed the conclusion that the underlying purpose of the development standard was:

to enable development which preserves environmentally sensitive areas of the site [generally steeper and more densely vegetated sections] by grouping of dwellings, services and access within the most suitable areas of the site.

97. This conclusion replicates the express purpose of the DCP: vide cl 3 . It is to be noted that that express purpose is only marginally different from the definition of “ cluster housing ”.

98. Given the very close alignment of the definition of cluster housing and the express purpose of the DCP, I do not think, with respect, that the Commissioner’s conclusion as to the underlying purpose of the development standard was correct. Rather, the clear purpose of the development standard is to fix a dwelling density for cluster housing development commensurate with the dwelling house density fixed by either cl 22E or cl 22F of the LEP, as the case may be. In this respect, it may be noted that the DCP in cl 8 expresses particular objectives relating to “density”, namely
a. Development which has regard to topography;
b. Individual allotments with sufficient area for a dwelling and ancillary facilities;
c. A satisfactory balance of buildings and open spaces;
d. A diversity of housing types throughout the Shire.

99. For all the foregoing reasons, I would uphold this ground of appeal by concluding that the Commissioner misdirected himself as to the nature of his task of evaluating the SEPP No 1 objection.

D. DID THE COMMISSIONER DENY THE APPELLANT PROCEDURAL FAIRNESS?

100. In his reasons for judgment, the Commissioner refers to, and annexes to his judgment, two sketch plans marked “A” and “B” respectively.

101. It is common ground that neither of these sketch plans was in evidence but are documents prepared by the Commissioner for the purposes of his judgment, and that neither party was given any opportunity to deal with the plans, either by way of adducing evidence or making submissions. In fairness to the Commissioner, it should be noted that the two sketch plans that he prepared were derived from a number of documentary exhibits, but nonetheless, they involve original creative working on the Commissioner’s part.

102. The first occasion that either party became aware of the sketch plans was when the Commissioner published his reasons for judgment.

103. The circumstances in which the sketch plans came into existence and the significance of them in the Commissioner’s judgment are explained in the Commissioner’s reasons for judgment.

104. Sketch plan marked “A” is referred to at par 32 as follows:

To better understand the purpose of the standard, it is advantageous to consider the attributes of a two dwelling development of the land. By overlaying the dwelling Units No 3 and 4 in the development23 with the hypothetical subdivision of Mr Crane24 much of the land may be retained for open space25.


23 Exhibit 2 Figure 2 — Development overlay at 1:500 scale showing the proposal of four dwellings
24 Exhibit O — Two lot subdivision showing Lots A and B
25 See Composite Sketch A attached.

105. Sketch plan marked “ B ” is referred to at par 41 as follows:

I am of the opinion that a conventional subdivision of three allotments could only be approved by the responsible authority if an SEPP1 objection were successful. This is because there is insufficient site area available for the production of an internal allotment and two standard allotments as is shown in the attached sketch26.


26 Composite Sketch B attached

106. It may be the case that the Commissioner’s creation of, and reliance upon, these two sketch plans, was intended as some illustrative device either to supplement or to substitute for, verbal elaboration of his reasons for judgment.

107. In the result, the sketch plans appear to be some form of illustrative adjunct to the Commissioner’s consideration of what he described as a conventional two lot subdivision of the development site and a conventional three lot subdivision of the development site, which considerations I have already concluded misconceived the Commissioner’s task of evaluating the SEPP No 1 objection.

108. That conclusion means that it is not strictly necessary to consider the Appellant’s attack on the Commissioner’s judgment, based upon the ground of denial of procedural fairness by virtue of the Commissioner bringing into existence and utilising in his judgment the sketch plans “A” and “B”, without notice to the parties.

109. However, I am constrained to say that it is generally unwise for any tribunal to create for its own use, if only serving illustrative purposes, documents including sketch plans, which are not revealed to the parties in order that they might fairly deal with them in the course of the hearing.

110. The decision of the High Court of Australia in Stead v State Government Insurance Commission (1986) 161 CLR 141 aptly illustrates the problem that a tribunal may create for itself by the manner in which it conducts the hearing, and it comes to decision. The relevant principles are stated at 145 of the Court’s joint judgment:

The general principle applicable in the present circumstances was well expressed by the English Court of Appeal (Denning, Romer and Parker L.J.J.) in Jones v. National Coal Board (11), in these terms:


There is one thing to which everyone in this country is entitled, and that is a fair trial at which he can put his case properly before the judge…. No cause is lost until the judge has found it so; and he cannot find it without a fair trial, nor can we affirm it.

That general principle is, however, subject to an important qualification which Bollen J. plainly had in mind in identifying the practical question as being: Would further information possibly have made any difference? That qualification is that an appellate court will not order a new trial if it would inevitably result in the making of the same order as that made by the primary judge at the first trial. An order for a new trial in such a case would be a futility.

For this reason not every departure from the rules of natural justice at a trial will entitle the aggrieved party to a new trial. By way of illustration, if all that happened at a trial was that a party was denied the opportunity of making submissions on a question of law, when, in the opinion of the appellate court, the question of law must clearly be answered unfavourably to the aggrieved party, it would be futile to order a new trial.

Where, however, the denial of natural justice affects the entitlement of a party to make submissions on an issue of fact, especially when the issue is whether the evidence of a particular witness should be accepted, it is more difficult for a court of appeal to conclude that compliance with the requirements of natural justice could have made no difference.

111. In my judgment, the Commissioner erred in the manner in which he made use of the two sketch plans, without giving the parties (and particularly the Appellant), the opportunity to deal with them at the hearing.

E. CONCLUSIONS AND ORDERS

112. For all the foregoing reasons, the appeal must be allowed and the Commissioner’s judgment must be set aside. The proceedings must be remitted to the Commissioner for reconsideration in the light of my reasons for judgment.

113. The Appellant asked that upon remitter, the proceedings be dealt with by another Commissioner. I do not propose to make such an order, being of the opinion that the circumstances of the present case do not justify such a course.

114. In passing, I should note that at the hearing of the appeal, it became apparent that the Commissioner, at par 17 incorrectly recited the reasons for the Council’s refusal of the development application. In fact, the Commissioner was unwittingly quoting the Council’s earlier decision on an earlier development application for a three lot subdivision of the development site. The Appellant sought and obtained leave to rely upon this mistake by the Commissioner as an additional ground of appeal.

115. It is common ground that the Commissioner mistakenly referred to an earlier Council determination in respect of an earlier development proposal by the Appellant. However, in view of the fact that the appeal to the Court involves a hearing de novo, (the Court Act s 39(2)) I do not think that the mistake was other than one of fact.

116. Accordingly, I make the following orders:
1. Appeal allowed.
2. Judgment of Commissioner Watts set aside.
3. Remit the proceedings for reconsideration in accordance with reasons for judgment in this appeal.
4. Question of costs be reserved.