Konann Pty Ltd v Casey City Council (in its capacity as collecting agency of the Cranbourne North Precinct Structure Plan - Development Contributions Plan)

[2020] HCATrans 84

[2020] HCATrans 084

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M9 of 2020

B e t w e e n -

KONANN PTY LTD

Applicant

and

CASEY CITY COUNCIL (IN ITS CAPACITY AS COLLECTING AGENCY OF THE CRANBOURNE NORTH PRECINCT STRUCTURE PLAN – DEVELOPMENT CONTRIBUTIONS PLAN)

Respondent

Application for special leave to appeal

NETTLE J
GORDON J

TRANSCRIPT OF PROCEEDINGS

FROM MELBOURNE BY VIDEO LINK TO SYDNEY

ON FRIDAY, 12 JUNE 2020, AT 10.59 AM

Copyright in the High Court of Australia

MR B.W. WALKER, SC:  May it please the Court, I appear with my learned friend, MR G.P. HARRIS, QC, for the applicant.  (instructed by Sinisgalli Foster Legal)

MR A.J. FINANZIO, SC:   May it please the Court, I appear with my learned friend, MS S. GORY, for the respondent.  (instructed by Maddocks)

NETTLE J:   Thank you.  Yes, Mr Walker.

MR WALKER:   Your Honours, a very important part of the planning regime in Victoria, reflected in other parts of Australia and particularly in relevant respects in similar provisions obtaining in New South Wales, is for a transparent allocation of future costs of necessary infrastructure to support private development in the social interest.

The device which is at the heart of the controversy between these parties concerns the operation of a so‑called development contributions plan, when the primary form of allocation of responsibility, sharing of costs, is expressed by the imposition of a financial levy.

The financial levy, as your Honours appreciate, comes about by a relatively complex set of formulae, the detail of which does not matter for the present controversy, by which an amount is allocated by reference to what I am going to call the proposed development by an aggregated division or proportion of the infrastructure that the development contribution plan in question governs.

By reason of that arithmetic, the levy imposed for the development approved in favour of our client was some $16.6 million.  The development for which the DCP had been promulgated included an intersection from and on public roads into what I might call the subdivision.

As your Honours may have gathered from the materials, the intersection, as it was envisaged or conceptualised for the purpose of preparing the DCP, was of course not necessarily that which would actually be constructed.  Actual construction is never proposed to be imminent in relation to a DCP set of infrastructure.

GORDON J:   The works in the permit were more extensive than the DCP.

MR WALKER:   Your Honour anticipates me, and what are called the permit works encompass – but, on the findings of the Court of Appeal, go beyond, probably physically, certainly in terms of engineering sophistication – that which was what I will call, for present purposes, the bare bones in the DCP.  The key, of course, functionally, is that by the permit works being constructed – that is, the works required to be constructed at the expense of the developer as a condition of development approval – there was removed the need to have what I am going to call the DCP intersection constructed.  The one subsumed the other.  The purpose ‑ ‑ ‑

GORDON J:   The DCP works were subsumed by the permit works but there was more to the permit works than was otherwise specified in the DCP.

MR WALKER:   Quite so.  That is, the DCP specifies matters, including money, at a time which could be far in advance of what actually occurs on the ground, not only, notoriously, even nowadays the value of money alters and the cost of the services alters but, of course, so do engineering specifications.

GORDON J:   To the extent to which there is that overlap, that is, that bit which is common to both the DCP and the permit, is that the bit which the Council says will be the subject of, in effect, deduction from the levy?

MR WALKER:   We think that that is the informing notion there.  Your Honours will have noted the way in which the Court of Appeal referred to that at book 116, paragraph 117, where, as I think Justice Gordon is raising with me, the proposition is expressed:

Insofar as the Permit intersection works overlap with RD 18-

which is the DCP project:

some credit must be given for those works –

It is the working out in legal terms, by reference to the legislative scheme, of that imperative which, in our submission, is at the heart of the difficulty in this case.  Their Honours do not explain how it is that any such imperative, which surely is legal rather than simply a matter of social justice – there is no explanation of how that imperative works.  Rather – and at odds with the idea of there being a legal imperative – there comes the description as involving a so‑called multifactorial discretion of the provisions of subsection 46P(2) of the Planning and Environment Act which you will see at application book 172.

Your Honours are familiar with the old sore that sometimes “may” means “must”.  We draw to attention that the Court of Appeal’s use of the word “must”, nonetheless, is in the set of reasons which emphatically rejects the proposition that “may”, in circumstances such as obtained in this case, in subsection 46P(2), had to mean “must”. 

Now, we draw to attention that the language of subsection (2) refers to this notion of accepting the provision of works in part or full satisfaction of the amount of levy payable.  It is, of course, possible that different entities are responsible authority, collecting agency or developing agency.  But it is no anomaly or marginal case for them all to be the same council as occurred in this case.  Indeed, earlier versions of the legislative scheme rather show that that was once upon a time an historical expectation for obvious reasons. 

Here, as the authority with the power to impose conditions on the development permit, the Council required the provision of works, works of such a kind that they would, upon completion, result in title in the Council.  The combination of requiring work at the expense of the developer and stipulating for the transfer of title of the works once completed, in our submission, well and truly satisfy a purposive understanding of the word “accept”, namely accepting the provision of works. 

The devil, however, comes with the following phrase – was the imposition of the requirement for the work, including the transfer upon completion of title, such as to impose an obligation and not merely some uncontrolled discretion - an obligation that, having accepted the developed roadwork there had to be credit given that had to follow under 46P(2).

What is left dangling by paragraph 117 of their Honours’ reasons is by what means that is to occur bearing in mind that they have refuted the proposition that we advanced that it is subsection 46P(2) which, in such circumstances, necessarily involves that there has to be credit by way of part satisfaction of the amount of levy payable by reference to the value of what has been passed over.  That, of course, is the reasonable cost readily established of the works in question. 

That is why overlap or excess, if I can call it that, that which shows a difference in the actual physical development and its engineering sophistication between the DCP concept and the permit realisation of the infrastructure need, that is why that is of no moment.  What the Council stipulated for was something which reflected the specialist agencies, that is, the roads authority’s requirement for such an intersection at such a place and for such a demographic demand. 

That, in our submission, not merely subsumed what the levy by an aggregate process required this developer to contribute towards, it was, in effect, the up‑to‑date equivalent functionally of that which the Council was required to recognise. 

As your Honours appreciate, the carpentry of this legislative scheme is plainly directed to ensuring that there cannot be, as it were, overt double‑dipping, that there cannot be a requirement for more levy effectively to be paid than the DCP promulgated by a highly deliberate process stipulates.

May I by way of example take your Honours to page 182 of the application book.  There, provisions of section 62 include paragraph 62(5)(b), which makes a reference to an agreement under section 173.  An agreement under section 173 may be, perhaps oddly, a requirement of permit conditions.  When I say “perhaps oddly”, there is a requirement that there be an agreement, notwithstanding of course that in order to reach an agreement there has to be consensus obtained.  There was not consensus obtained in this case.

Under subsection (6), one sees however - perhaps in anticipation of just such a case where there is a requirement to reach 173 agreement, but it takes two to tango – that there is attention paid to the anterior step of imposing in the permit a condition for a person to provide works, which is what occurred in this case, and because of the evident potential for that to achieve the plainly anti-purportive and really unjust imposition on a person not only of a levy but also of an extra obligation to pay for works, doubling up, as it were, there are the safeguards that are set out in paragraphs (a), (b) and (c) of subsection (6) of section 62.

Relevantly, we draw to attention the safeguards in paragraph (a), constituted by subsection (5), to which I have already referred – the section 173 possibility – or subsection 46N(1).  If I could take you back in the book to page 169, your Honours will see that it is devised so as to operate alongside, together with, section 62 by its opening words and, again, your Honours see that in the case of levy there must be provision made for its payment. 

That is why the provisions of subsection 46P(2) are so central because, given the compulsion to pay and the evident denial of any possibility of double‑dipping or what might be called double burden arbitrarily attached by reference to the combination of levy contribution and permit conditions, 46P(2) therefore presents as a critical provision in order to avoid what has occurred in this case.

It is for those reasons, in our submission, your Honours, this does not merely present as a humdrum question of statutory interpretation.  Of course we do not offer this case for special leave on the basis that your Honours would be invited to take part in airing powers in relation to statutory interpretation.  Of course not.

We rather urge that this is a very socially important scheme of evident economic significance where the equitable allocation to developers in the social interest has been regulated by purposive provisions intended plainly to avoid arbitrary double burden or, from the point of view of an agency that may be collecting, developing and responsible agency authority, to avoid them double‑dipping.

Yet, the so‑called multifactorial discretion, which is really simply a discretion in which there is more than one consideration to be taken into account, has been reckoned by the reasoning of the Court of Appeal to be such that there is no way for the court by judicial review to avoid that which has occurred in this case.  The Council not agreeing – and that, surely, is a way we are entitled to see the failure to achieve a section 173 agreement – leaves us adrift, paying for the works which are now the Council’s and the Council also receiving the levied contribution.

In our submission, that presents a position which is so startling in the outcome that one looks for a solution in the statute.  The Court of Appeal, with respect, has not given the attention that the old and well‑established possibility presented, namely, that there are circumstances where the nature of the power in question in the scheme in which it appears renders the normally permissive or discretionary word “may” circumstantially a “must”. 

It is for those reasons, in our submission, including as I say the national implications of these now well‑established and very important schemes for the provision of public infrastructure, that the case is an apt one for the grant of special leave.  May it please the Court.

NETTLE J:   Mr Finanzio.

GORDON J:   We cannot hear you, Mr Finanzio, I think you are on mute.

MR FINANZIO:   Well, fortunately I did not say anything too important.  In our submission, the critical question, the threshold question that arose in this case and still arises, is the relationship between the permit works and those works which were to be funded by the DCP.  Are the RD 18 intersection works funded by the DCP the same as the permit intersection works?  In our submission, that turns on a question of construction, not of the Act, not even of the principle ordinance, but of a document incorporated into the planning scheme by reference.

Now, the product of that exercise in interpretation, in our respectful submission, will have no effect beyond the area to which DCP applies.  In all likelihood it will have no effect beyond the geographical area occupied by the signalised intersection, the subject of these proceedings itself.  It certainly, in our respectful submission, will not make a contribution to the body of jurisprudence at a national level.

…..in our respectful submission, but it is only - the issues that our learned friends seek to raise in this appeal only arise in circumstances where that construction offered by the Court of Appeal in emphatic terms is displaced.

GORDON J:   Does that mean - then you say they have to overturn the findings of fact about the - the areas to which they did not overlap?

MR FINANZIO:   Correct.  Both the findings of fact and the construction of a document which is not drafted by parliamentary draftsmen, but instead drafted by planners to serve the purpose of identifying the specified projects to which the scheme would apply, and the way in which those projects would be apportioned. 

The Court of Appeal’s reasoning and, indeed, the trial judge’s analysis of the documents, in our submission, are compelling and a central issue, if this matter proceeds to appeal, will be that construction, simply because in order to approach section 46P one has to understand the overlap and how it might apply.

In our submission, the text of 46P is critical and I would like to take your Honours to that matter now.  The starting point for section 46P is the use of “may” and the statutory effect of section 45 of the Interpretation and Legislation Act.  Our starting position is that a construction of this Act which facilitates its universal application is critically important. 

Now, there are some important observations to make about the way that section 45P(2) operates.  Firstly, it does not operate only where work services or facilities required to be constructed arise under a permit.  The circumstances in which work services and facilities can be accepted are broad.  There is no limitation in the work specified.  There is no limitation on when they might be accepted and there is no limitation – in effect, the timing is rendered open by the express terms of section 46P(3).

So, to proffer an example, the developer might offer works that are referable to a project in the DCP, but not yet required by permit - for example, to bring forward a reduction in a levy that might otherwise be applicable even when the project is not yet needed.  It might suit the developer to do so.  The developer might propose some over‑provision, for example, some gold‑plating of a piece of infrastructure that costs more than the DCP contemplated.  It might be in the interests of the developer to do so because it facilitates a greater attractiveness of the estate that the developer wants to advance.  In doing so, the developer may claim the credit.

The developer may offer land which needs to be acquired but is not yet included in any DCP.  All of those things are permissible as forms of acceptance to reduce the levy under 46P(2).  One thing is for sure, the developer will always have its own reasons for trying to bring forward a credit or reduce the amount of the levy payable in cash required under 46N.

In our submission, while 46P permits a collecting agency to exercise its discretion to accept in those scenarios, in exercising that discretion in those scenarios, there must be at play a myriad of factors…..enable him to take into account, including the effect of reducing the amount of the levy payable, the timing of the provision of the thing offered by the developer, the overall benefit to the community of foregoing the funds to be…..at that point in time as compared with receiving the money that the developer is required to pay under 46N.

In all of these circumstances, the “may” in section 46P really means may.  The description in at least these scenarios of the discretion as involving multifactorial governmental decision‑making is completely apposite. 

Now, if the Court of Appeal is correct on the scope question, on the question of overlap, then properly characterised the costs associated with the east, west and southern approaches to the intersection were non‑DCP works in respect of which there is clearly a discretion.  So, it is for those reasons that we say that the findings of the court below in relation to the meaning of this document incorporated by reference are critical to whether or not there is this issue emerging before this Court. 

We would say because the word “may” must mean may in at least the scenarios that I have already…..the construction contended for by the applicants is to the effect that only in some circumstances the “may” is converted to a “must”.  In our submission, there is nothing in the legislation which expressly supports this contention. 

That fact stands in stark contrast to the tax‑related authorities relied upon in support of the contention by our learned friend.  In those cases, the features of the statutes under consideration expressly prescribe the preconditions necessary for the removal of the discretion notwithstanding the presence of the word “may”.  There are no words prescribing the circumstances or prerequisites in the Planning and Environment Act.  The “may” stands in isolation to be applied as a discretion in at least the scenarios that I have described. 

We say that there is no textual reason for displacing the statutory presumption created by section 45 of the Interpretation of Legislation Act.  Giving full effect to section 46P in the different scenarios to which it applies, there needs to be discretion and there is good reason for retaining the discretion in all contexts including circumstances in which double‑dipping may arise. 

In other words, we would say that whilst, as the Court of Appeal properly recognised, the avoidance of double‑dipping in a scenario like the one that arises here is very, very important but it is not possible to say that you can – that one can exclude the possibility that there will be compelling reasons, having regard to the statutory framework and its social purposes, that double‑dipping is the only relevant consideration or the determinative relevant consideration.

The collecting agency is collecting and distributing funds for a large number of different projects within the DCP area.  Those projects are intended to be provided in a timely way to meet the needs of a rapidly growing community.  Timeliness of delivery of infrastructure in emerging areas is critical. 

The applicant’s contention assumes that control over timing of infrastructure delivery and the management of funds in the DCP is subject to the developer’s timetable and not to the agency’s timetable.  This must be viewed in the broader context. 

Permits are permissive.  They are granted after an application.  The choice of timing of application is the developer’s.  Once the permit is granted, the choice of timing of construction of the development is the developer’s.  The permits allow but cannot compel the developer.  The developer could go slowly, they can go fast, they can respond to the markets and the material here reflects that the speed of development here was responsive to the market.

Either way, according to the applicant, the Council’s obligation arises when it decides to grant the permit, not knowing if, or even if so when, the development will proceed.  Here, the DCP did not contemplate the intersection to be constructed until some time after 2020 and yet this intersection was constructed four years ahead of schedule because there was a pressing market demand. 

By having no choice but to accept the works in satisfaction of the levy at a point in time over which the collecting agency has no control, the timely delivery of other necessary projects may be delayed, including projects which are intended for the benefit of the future residents of the developer’s own project. 

So, for example, a community centre might be dependent upon funds from the DCP, but if the DCP’s funds are not obtained at that time, that facility might not be able to be built.  The system does not exist to fund simply infrastructure items as and when they fall due at the developer’s timetable. 

If it is the case that the decision to grant the permit has the effect of effectively bringing forward infrastructure, it may be that councils acting as responsible authorities, that is, the authority issuing the permit under the Planning and Environment Act, would be forced to refuse or limit development in order to retain control over the funds in the DCP.  Instead, development is allowed and, if the developer chooses to go ahead with the market, that is for the developer.

In those circumstances, the question of timing and the amelioration of the effect of double‑dipping have to be able to be balanced against other exigencies or the risk that the whole purpose of these funding arrangements collapses.

If a developer constructs a piece of infrastructure which is funded by the DCP, then the developer should…..to it very deliberately, the developer should get the benefit of 46P, because it is correct that the avoidance of double‑dipping in that scenario is a significant relevant consideration.  That said, in our submission, it can never be the only consideration, or the determinative consideration in all cases regardless of other considerations.  If that were so, in our submission, there would be a significant risk, but the scheme of providing timely and important infrastructure could be easily defeated.

First, developers claiming significant reductions for early projects, meaning that there are no funds for projects, it might be that the discretion is exercised solely as to timing.  On the facts of this case, though, and it is important to come back to the facts of this case, the collecting agency was prepared to accept works to the value of the RD 18 project as depicted in the DCP and as found by the Court of Appeal.  So if the scope issue had been resolved at the very outset, then there would be no issue of double‑dipping at all. 

If the Court of Appeal is right about scope and, as I have said, that involves the interpretation of this provision - of this sub‑ordinance, the issues sought to be ventilated by the applicant here would never have arisen and even if the Court of Appeal’s decision on the scope was overturned, the proper construction, in our submission, of 46P demands the existence of discretion, perhaps even more so. 

Of course it is the case, my learned junior reminds me, that when these conditions were imposed on the permit in the first place, they were reviewable on the merits and any decision of the collecting agency, including conditions concerning 173 agreement, they were reviewable before the State’s administrative law merits review…..and of course, the decision of the collecting agency is amenable to review, judicial review, on relevant administrative law grounds.  In our respectful submission, special leave should be declined.

NETTLE J:   Thank you, Mr Finanzio.  Mr Walker, any reply?

MR WALKER:   Yes, your Honours.  As to that last point, your Honours should resist the blandishment offered by a public authority that perhaps their original decisions were flawed and that was the proper route.  There is no serious case to that effect at all.

In relation to what I think my friend went so far as to describe as possible gold plating, could I bring that back to the facts of this case.  There are no factual disputes.  There is no factual challenge to the fact that the bare‑bones DCP project was superseded by not a gold‑plated but presumably a perfectly adequate engineered solution to the intersection question.

As you will see at application book 116, paragraph 116, that emanated, not from any luxury on the part of a private developer but that emanated by a combination of decisions by the Council and VicRoads.  No gold plating.  In other words, the same body that now says, “We should give you credit only for the bare bones”, is one of the bodies that, through the incorporation of the publicly important and appropriate stipulation of VicRoads to say what should be built and how it should be built and therefore how much it will cost – that very same body is relying upon the bare bones that it did not content itself with when it imposed a condition for the construction of works which it would then accept as a matter of ordinary and legal language by obtaining title upon satisfactory completion of that stipulated project.  That is the first point.

The second point is that 173, to which my learned friend refers, cannot possibly be construed bearing in mind that the word is “agreement” – that cannot possibly be construed as leading us over a barrel, as it were, having to accept anything that is proposed by the Council.  So, 173 is one of the possibilities but, in our submission, turning “may” into “must” in circumstances where work has been stipulated, accepted and taken into ownership by the same body responsible for giving credits, is a different issue.

The timing question is neither here nor there.  The whole of our regime in every jurisdiction in this country for the control of development contemplates that nearly all of it – not all of it but nearly all of it – will be funded by private investment.  The nature of our society is that that will not be centrally controlled, let alone by government. 

In other words, timing does depend, as my learned friend, with respect, recognises by what is called market – that myriad of interacting social and personal decisions, not all of them governmental.  It is for those reasons that timing has nothing whatever to do with some countervailing advantage which our client should be, as it were, left to accept as an adequate compensation under this so‑called multifactorial discretion.  May it please your Honours.

NETTLE J:   Thank you, Mr Walker.  The Court is not persuaded that an appeal to this Court would enjoy sufficient prospects of success to warrant the grant of special leave.  The application is dismissed with costs.

MR WALKER:   If it please the Court.

NETTLE J:   Thank you, gentlemen.

AT 11.35 AM THE MATTER WAS CONCLUDED