Maxwell v Hornsby Council

[2002] NSWLEC 92

Reported Decision: (2002) 120 LGERA 186

Land and Environment Court

of New South Wales

CITATION:	Maxwell & Anor v Hornsby Council [2002] NSWLEC 92
PARTIES:	APPLICANT Simon Maxwell and Pat Pedulla RESPONDENT Hornsby Council
FILE NUMBER(S):	10201 of 2002
CORAM:	Pain J
KEY ISSUES:	Designated Development :- whether designated development - test for designated development - changes to statutory scheme - whether purpose of development is relevant
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979 s 4, s 5, s 77A, s 78A, s 158 Environmental Planning and Assessment Regulation 1980 cl 70(1), Sch 3 Environmental Planning and Assessment Regulation 1994 cl 49(1), Sch 3 Environmental Planning and Assessment Regulation 2000 cl 4(1), Sch 3 State Environmental Planning Policy No. 5
CASES CITED:	Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404; Botany Bay Council v Remath Investments No 6 Pty Ltd (2000) 50 NSWLR 312; Canyonleigh Environment Protection Society Inc v Wingecarribee Shire Council (1997) 95 LGERA 294; Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157; Helman v Byron Shire Council (1995) 87 LGERA 349; Hollis v Shellharbour City Council [2002] NSWLEC 83; Lyne v Moree Plains Shire Council (1999) 110 LGERA 120 ; Malcolm on behalf of Merrylands Residents Group v Newcastle City Council (1991) 73 LGRA 356; Moore & Anor v Yarrowlumla Shire Council [2002] NSWLEC 62; Penrith City Council v Waste Management Authority (1990) 71 LGRA 376; Timbarra Protection Coalition v Ross Mining NL & Ors (1999) 102 LGERA 52
DATES OF HEARING:	27/05/2002
DATE OF JUDGMENT:	07/03/2002
LEGAL REPRESENTATIVES:	APPLICANT Mr C McEwen (Barrister) SOLICITORS Coudert Brothers RESPONDENT Mr B Preston SC SOLICITORS Pike Pike & Fenwick

JUDGMENT:

IN THE LAND AND Matter No: 10201 of 2002
ENVIRONMENT COURT Coram: Pain J
OF NEW SOUTH WALES Decision date: 3 July 2002.

SIMON MAXWELL and

PAT PEDULLA

Applicants

v

HORNSBY COUNCIL

Respondent

JUDGMENT

1. The Applicants commenced Class 1 proceedings against the refusal of a development application by Hornsby Council (the Council). The Council applied for the determination of a preliminary question of law as follows:

Whether the proposed sewage treatment plant, for which the applicant has sought development consent, is designated development pursuant to Schedule 3 of the Environmental Planning and Assessment Regulation 2000.

2. Designated development is defined in s 4(1) of the Environmental Planning and Assessment Act 1979 (the EP&A Act) as having the meaning given to it in s 77A of that Act. Section 77A provides:

Designated development is development that is declared to be designated development by an environmental planning instrument or the regulations.

3. Clause 4(1) of the Environmental Planning and Assessment Regulation 2000 (the 2000 Regulation) provides:

Development described in Part 1 of Schedule 3 is declared to be designated development for the purposes of the Act unless it is declared not to be designated development by a provision of Part 2 or 3 of that Schedule.

4. Part 1 of Sch 3 contains a list of categories of designated development.

5. It is agreed that the development application (DA 2206/01/U) in this case is for a retirement village; nursing home; community centre and facilities; strata subdivision; staged development; sewage treatment plant; associated works (including roads and drainage); car parking; and demolition of existing buildings. The land is zoned Rural BA under Hornsby Shire Local Environmental Plan 1994. The Agreed Statement of Facts states that:

The proposed development of the land for 120 residential units, nursing home, community centre and facilities, sewage treatment plant and strata subdivision is prohibited in the Rural BA Zone pursuant to [Hornsby Shire Local Environmental Plan 1994] but permissible pursuant to State Environmental Planning Policy No. 5 ("SEPP 5") as housing for older people or people with a disability. (at 2)

6. The relevant paragraph in Pt 1 of Sch 3 in this case is par 29 which concerns sewerage systems or works. Paragraph 29 relevantly provides as follows:

4. Sewerage system or works that release or reuse more than 20 persons equivalent capacity or 6 kilolitres per day of sewage, effluent or sludge and that are located:

a) in or within 100 metres of a natural waterbody, wetland, coastal dune field or environmentally sensitive area, or
b) in an area of high watertable, highly permeable soils or acid sulphate, sodic or saline soils, or
c) on land that slopes at more than 6 degrees to the horizontal, or
d) within a drinking water catchment, or
e) within a catchment of an estuary where the entrance to the sea is intermittently open, or
f) on a flood plain, or
g) within 500 metres of a residential zone or 250 metres of a dwelling not associated with the development

7. It is agreed between the Council and the Applicants that the proposed sewerage systems or works for the site fall within the statutory description of sewerage system or works in par 29 of Pt 1 of Sch 3 of the 2000 Regulation. The proposed sewerage system or works will release or reuse more than 20 person equivalent capacity or six kilolitres per day of sewage, effluent or sludge and will be located on land that slopes at more than six degrees to the horizontal (par 29(4)(c)) and will be located within 250 metres of a dwelling not associated with a development (par 29(4)(g)).

8. The EP&A Act has been altered over time in relation to designated development. Designated development was first defined in s 4 of the previous EP&A Act as:

any class or description of development that is declared pursuant to section 29 or 158 to be designated development for the purposes of this Act.

9. Section 158 of the previous EP&A Act stated:

The regulations may contain provisions declaring any class or description of development (whether by reference to the type, purpose or location of development or otherwise) to be designated development for the purposes of this Act.
Section 158 was repealed by the Environmental Planning and Assessment Amendment Act 1997.

10. In the Environmental Planning and Assessment Regulation 1980 (the 1980 Regulation) cl 70 stated that:

Development described in Schedule 3 is declared to be designated development for the purposes of the Act.
The Environmental Planning and Assessment Regulation 1994 (the 1994 Regulation) also contained the same wording in cl 49(1).

11. Importantly for this case, under the 1980 Regulation and the 1994 Regulation, Sch 3 contained a preamble to the effect that:

development for the undermentioned purposes or development of the undermentioned types is designated development .

This is the wording used in the 1994 Regulation, the 1980 Regulation was similarly worded. This preamble has been omitted in the 2000 Regulation, which took effect from 1 January 2001.

Council's submissions

12. The Council argued the correct approach to the identification of development as designated is that prescribed by the current EP&A Act and the 2000 Regulation. This process does not require consideration of the purpose for which development may be carried out. If the facts demonstrate that a development falls within the statutory definition in Sch 3 of the Regulation the development is designated. There is no need to determine what is the dominant use or purpose intended for a particular development in order to determine whether or not the development is designated.

13. The Council argued that the approach by the Court to date, which has led to lengthy examination of the characterisation of development to see whether its purpose leads to the conclusion it is designated, no longer applies because the legislation and regulations have changed. The Council argues that the word "purpose" was removed for a reason and the Court should not insert it back into the legislation.

14. The Council argued Sch 3 not only omits the previous preamble, it also shows a legislative intention to treat the purpose for which the development is to be carried out as irrelevant to the process of identifying whether development is designated. This is because development in Sch 3 is described by physical acts or the location of land upon which the particular work is to be carried out. There is no reference to purposes for which the development is to be carried out. In this regard, sewerage systems or works are described by reference to the physical processes or the acts that are to be done on the land and by reference to the location of those works in relation to physical features of the surrounding environment. Neither of these descriptions requires the consideration of the purpose for which the sewerage systems or works are intended to be used.

15. In addition, the Council argued that exclusion from designated development of pumping out of sewage from recreational vessels in par 29(5) which provides "This clause does not apply to development for the pumping out of sewage from recreational vessels" supports its submission that purpose is irrelevant to the statutory description. This is because, the Council submitted, the pumping out of sewage from such vessels is not a use of the land. Rather the physical act of pumping out sewage from a recreational vessel could potentially have fallen within the statutory description in par 29(1) - (4) and would therefore be designated development. Consequently it was necessary to exclude that physical act from the description in the schedule.

16. Sewerage systems or works are not described in Sch 3 as being associated with any particular industries. This can be contrasted, in the Council's submission, with "effluent" and "sludge" which are defined in Pt 4 of Sch 3 of the 2000 Regulation by reference to the industry which produces such matter. Sewerage systems or works are not defined in relation to any industry in which, or the purpose for which, the sewerage system or works is to be carried out.

17. The Council submitted that there are no decisions of this Court or the Court of Appeal which have addressed the new statutory scheme now in force. On this basis, the Council argued, there is no binding authority on the Court.

18. The Council referred to the decision of the Court of Appeal in Penrith City Council v Waste Management Authority (1990) 71 LGRA 376 in relation to whether, under the former Act and 1980 Regulation, designated development could be defined by the type of development as well as by reference to the purpose. The Court of Appeal reversed the decision of Stein J in this Court, who had held that the use of the land for the purpose of the winning of extractive material was subsumed into the dominant purpose of a waste disposal depot and consequently, that it was not designated development. The Court of Appeal held that based on the legislative scheme then in operation there were two limbs to the test - purpose and type. Although the principal purpose could not be described as an extractive industry (the first limb), as the activities of the Respondent depended for its operations on the winning of extractive material (the second limb) it was therefore classified as designated development. The proposed development was of the type described as extractive industries in Sch 3 to the 1980 Regulation. Accordingly, it should have been categorised as designated development. This approach was followed by Stein J in Malcolm on behalf of Merrylands Residents Group v Newcastle City Council (1991) 73 LGRA 356 at 360 - 361, the Council submitted. It was argued by the Council that the decision in Penrith was not inconsistent with its argument.

19. The decision of Bignold J in Canyonleigh Environment Protection Society Inc v Wingecarribee Shire Council (1997) 95 LGERA 294 was also referred to at length by the parties. Bignold J held that a proposed sewerage system which was to cater for stage 1 of a major tourist development was not designated development under the 1994 Regulation. Bignold J held that the proposed sewerage systems or works were for a purpose which was subordinate to the approved stage 1 tourist development and was not therefore designated development. The Council pointed out that his Honour did not consider whether the proposed sewerage system was of the type of sewerage system or works included in the definition of designated development in the 1994 Regulation. This, it was argued, should have been done if the Court of Appeal decision in Penrith was to be fully applied. The implication of the Council's argument was that a different result may have been arrived at if the Court's approach in Canyonleigh had also focussed on the "type" of development.

20. The decision of Pearlman J in Lyne v Moree Plains Shire Council (1999) 110 LGERA 120 was also distinguished from this case by the Council. In Lyne the applicant had lodged a development application for subdivision, which included designs for a common effluent collection and treatment system for the subdivision. The Council had refused the development application on the basis that it fell within the definition of sewerage systems or works in Pt 1 of Sch 3 of the 1994 Regulation and therefore constituted designated development. The development application was found by her Honour to be for a subdivision only, and not in respect of sewerage works. However, approaching the issue of characterisation, an alternative argument put by the applicant was that the purpose of the sewerage system was subservient to the purpose of subdivision. A determination of this alternative argument was not necessary given her Honour's earlier finding that the development application was not for the use of land. Her Honour held that as subdivision was not a use of land, the characterisation of purpose test did not arise. Furthermore, the Council submitted, Pearlman J also did not consider whether the sewerage system was of a type of development described in Sch 3 of the 1994 Regulation.

21. The Council submitted the decisions in Canyonleigh and Lyne are not contrary to its submission that the purpose for which the development might be carried out is irrelevant to the question of whether or not the development falls within the statutory description of designated development under the current legislative scheme.

22. The Council further argued that there was no rationale for a distinction between cases where a sewage treatment plant was to be constructed by itself and where the same sewage treatment plant was constructed as part of a development. In the former case an EIS would be required as it would clearly be designated development, in the latter (on the Applicants' argument) it would not require an EIS as it would not be designated development. The Council argued that an EIS should not be able to be avoided simply because the sewage treatment plant can be said to be subordinate to another purpose.

Applicants' submissions

23. The Council's argument was opposed by the Applicants. The Applicants submitted that the proposed development is properly characterised as a SEPP 5 development (i.e. a retirement village, nursing home and associated facilities) and is not in respect of designated development.

24. The Applicants relied on the long standing approach of this Court and the Court of Appeal to argue that the relevant test is still one of characterisation of the development to ascertain the dominant purpose. That is, the sewage treatment plant is a purpose subordinate to the dominate purpose of the use of the land as a SEPP 5 development (i.e. retirement village, nursing home and associated facilities). Therefore, the Applicants argue, the development is not designated development.

25. The Applicants argued that the removal of references to "purpose" and "type" in relation to designated development in the EP&A Act (now s 77A) and the removal of the preamble in Sch 3 does not indicate that one only has regard to type, and no longer has regard to purpose. It could just as equally be argued that the removal of those words meant that regard should only be had to purpose. The basis for this submission was not entirely clear to me.

26. Alternatively the Applicants argued, once it is clear that a development may fit within the definition in Sch 3 it is then necessary to return to the EP&A Act to characterise the development because of s 78A. Section 78A(2) provides that:

A single application may be made in respect of one or more of the types of development referred to in paragraphs (a) - (f) of the definition of development in section 4(1) of the EP&A Act .

27. The Applicants argued that it is still necessary to characterise the development to see if the development is designated because s 78A requires characterisation of the development because it refers to "types" of developments and requires consideration of the definition of development in the dictionary of the EP&A Act. This approach is confirmed by and applies the reasoning of the Court of Appeal in Penrith relating to the two "limbs", the purpose and type of the development, outlined in par 18.

28. The Applicants further argued that although each case must be decided on its own facts, where there is a set of circumstances which are not relevantly distinguishable from this case, as in Canyonleigh, the finding in that case must be very persuasive. In Canyonleigh the sewerage system comprised three separate plants and a spray irrigation component and together catered for a volume of 96 kilolitres.

29. In this case the sewerage system is to service a proposed nursing home and residential development. The agreed facts show that there is intended to be a total volume of 38.4 kilolitres of sewage per day generated from the development. Sewage from the nursing home will be treated off site (9.4 kilolitres). Sewage from the residential units will be treated and reused on site (29.0 kilolitres). The sewage treatment plant will treat average flows of up to 29.0 kilolitres of sewage per day in dry weather and up to 116.0 kilolitres per day in peak wet weather flow for the residential unit component of the development.

30. The Applicants argued that both on the facts and the approach taken in Canyonleigh this case should be dealt with similarly, notwithstanding that Canyonleigh was based on the 1994 Regulation. I have set out above at par 19 the basis on which the Council distinguished Canyonleigh. I note this approach of looking at facts in other cases was not favoured by the Court of Appeal in Penrith because questions of fact and degree must arise uniquely in each case (see Penrith at 384).

31. In relation to the Council's argument that there is no rationale for distinguishing between a sewage treatment plant as an independent development and one which forms part of a development, the Applicants recognised the apparent problem. However, the Applicants argued that the problem has always existed in determining the relevant use of land in other areas of planning law. It was further submitted that if the Council's approach is accepted then problems may arise in those other areas. For example, the same issue of characterisation can arise in relation to prohibited development. Where there is more than one use for a site, one of which is prohibited, if the dominant use is not prohibited it will overcome the subordinate prohibited use, on the current characterisation approach taken by the Court. As I understand this submission, it means that the Council's proposed approach in relation to designated development will adversely impact on those other areas of planning law.

32. The Applicants maintain the test is still one of characterisation. The changes to the statutory scheme do not have any relevant impact on the Penrith decision or other decisions of this Court and the Court of Appeal. The removal of the words "type" and "purpose" with the repeal of s 158 and the removal of the preamble to Sch 3 should not lead to the conclusion that the approach taken under the previous legislation no longer applies. This case should be seen as equivalent to Canyonleigh and accordingly, is not designated development.

Council in reply

33. The Council further submitted in reply that if s 78A of the EP&A Act is considered in the context of the definition of "development" in s 4 it is clear that the purpose of development is not relevant either. Development is broadly defined and can include erection of buildings or demolition. Under s 78A it is possible to have a development application for a use and not need consent for the purpose of the development.

34. The Council argued that the irrelevancy of purpose is also underlined by the changes in the definition and application of "development" when the EP&A Act was introduced. Originally under the Local Government Act 1919 development was defined as a change in use and it was therefore necessary to look at the purpose of the development. This reference to change in use was deleted in the EP&A Act, but continued in many environmental planning instruments, which referred to the purposes of development in the zoning table. This is reflected in earlier cases such as Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157 and Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404. O'Donnell dealt with the determination of existing uses, Foodbarn considered older planning schemes which referred to the purpose of development, as it existed under Pt 12A of the Local Government Act. The Council argued that care must therefore be taken in applying cases such as O'Donnell and Foodbarn as they reflect the previous statutory regime and relate to different circumstances such as existing use determinations and prohibited uses.

35. Further, if the characterisation argument of the Applicants was to be adopted, it is difficult to conceive of a private sewerage system that would ever be sufficiently independent so as to be designated development, as no such system is likely to be built in isolation from a development. Even if a public authority was building a sewerage system cl 32 of the Model Provisions, which is generally adopted in environmental planning instruments, provides that these do not require consent under Pt 4 of the EP&A Act. Accordingly Pt 5 would apply with the result that Sch 3 would not be relevant. This would seem an unlikely result intended by the Parliament.

Finding

36. After this case was heard I handed down my decision in Hollis v Shellharbour City Council [2002] NSWLEC 83. One issue in that case was whether the development application was designated development. I applied the test of characterisation of purpose. That case related to the 1994 Regulations and no argument was put to the Court that the test of characterisation was not the correct one to apply. There have also been other cases in recent years, such as Moore & Anor v Yarrowlumla Shire Council [2002] NSWLEC 62, which have also applied the test of characterisation of purpose to determine whether a development was designated. These cases were also under the old regulations. No case has been decided by this Court, as fas as I am aware, under the new regulations.

37. The change in the wording in relation to designated development in the EP&A Act and the removal of the preamble to Sch 3 is significant. I accept the Council's argument that the consequence must be that the fact that a development falls within Sch 3 of the EP&A Regulation is now conclusive of whether a development is designated. I do not consider the case law which refers to the need to characterise the purpose or type of a development is binding as it relates to a legislative context that no longer exists. Accordingly, decisions such as Penrith, Canyonleigh, Lyne, Hollis and Moore can all be distinguished as they are decisions based on previous legislative schemes.

38. While Penrith deals with the 1980 Regulation and the EP&A Act as it then applied, the Court of Appeal's comments in relation to the nature of designated development are pertinent. The Court of Appeal noted at 381 - 2:

the common element which runs through [designated developments] is their potential risk to the environment and the cause of concern to residents of land near the development. That concern might arise from smells….noise…dust…fumes, vapour… and other environmentally risky activities.

39. Further in the judgment the need to apply the definition of designated development in Sch 3 of the Regulation is acknowledged, with a clear duty of the Court to give "effect to the purpose of Parliament as expressed in the words chosen" (at 383). The Court noted:

it is important to be alert, when embarking upon the task of statutory construction, to the context in which that task is enlivened and, here, the purpose for which various kinds of "development" are collected in a schedule of "designated development".

40. The scheme of the Act at the time of the Penrith case required that in each case the application as lodged had to be measured against the various classes of development specified in Sch 3. The Court of Appeal's comments set out above emphasise the potential for environmental impact from designated development in making that assessment.

41. The Council argued that there was no rationale for distinguishing between, for example, sewage treatment plants that were an independent development and were therefore designated development and sewage treatment plants that fell within Sch 3, but would not require an environmental impact statement because they could be characterised as being for a subservient purpose to another development. I accept this submission. As was highlighted by the Court of Appeal in Penrith, activities are listed as designated development because they are activities which are considered to pose a greater threat to the environment; they are inherently risky activities. The EP&A Act imposes greater requirements on activities that constitute designated development in terms of the investigation and consideration of the consequences that the development will have on the environment, by requiring the Applicant to carry out and publicly exhibit an environmental impact statement. The importance of public participation in relation to designated development is emphasised in the procedures set out in Pt 4 of the EP&A Act.

42. It is important also to have regard to the objects of the EP&A Act. Section 5 of the EP&A Act relevantly provides:

The objects of this Act are:
(a) to encourage:
(i) the proper management, development and conservation of natural and artificial resources … for the purpose of promoting the social and economic welfare of the community and a better environment …

(c) to provide increased opportunity for public involvement and participation in environmental planning and assessment.

43. The EP&A Act’s objectives emphasise the need for environmental protection, proper environmental management and development and increased opportunity for public involvement. When taking these matters into consideration along with the current wording of the EP&A Act and the 2000 Regulation, it would seem to be contrary to the intent of the legislation now in force to hold that an activity that the Parliament considered to have potential for environmental harm (i.e. the activities in Sch 3), should necessarily lose that character because it forms part of a greater development or is not the main purpose of the development in question. The whole basis behind designated development is to ensure that activities that will potentially have greater environmental impact are properly considered through a process of environmental impact assessment.

44. I also note the Council’s argument that cases regarding designated development should not be treated in the same manner as cases regarding existing uses, such that the test of characterisation of purpose should not be applied to determine whether a development is designated. In my opinion there are important differences between existing use cases and cases regarding designated development. Firstly, the statutory context is quite different, which is a significant matter. Secondly, existing use cases are essentially concerned with determining the extent of a person’s legal rights to use their land for a particular purpose. Thus, the need for the characterisation test arises in order to determine the existence or non-existence of a person’s right to use certain land for a particular purpose. In contrast, designated development is not, per se, concerned with the extent of a person’s legal right to use land for a particular purpose. It is concerned with the extent of environmental impact assessment that needs to be undertaken and that is what the statutory scheme is directed at.

45. A consequence of adopting the Council's submission is that for every development that falls entirely or partly within Sch 3, the obligation will arise to conduct an environmental impact statement for the development, as required by the EP&A Act. Other consequences also flow from a development being designated in relation to public exhibition requirements and appeal rights, amongst other matters. A potentially greater number of developments will now be classified as designated and, usefully, there is greater certainty in deciding whether a development is designated.

46. The parties have agreed that the sewerage works fall within par 29 of Sch 3. As I have found that the test for designated development is whether a development falls entirely or partly within Sch 3, the development in question is therefore designated development. It is well established that where a development is designated development it is an essential precondition to a development application being effectively made that an environmental impact statement be submitted with the development: see Botany Bay Council v Remath Investments No 6 Pty Ltd (2000) 50 NSWLR 312; Timbarra Protection Coalition v Ross Mining NL & Ors (1999) 102 LGERA 52; Helman v Byron Shire Council (1995) 87 LGERA 349 and Hollis.

47. The Council argued that if I did not uphold the Council's argument on the construction of the current EP&A Act and Regulation in relation to designated development, it was necessary to characterise the use of the development in question to determine whether the purpose of this development is in respect of designated development. In this respect, the Council argued that the sewage treatment plant should properly be characterised as an independent purpose, which does not lose that purpose because it is part of the SEPP 5 development. The character, extent and features of the sewage treatment plant render it development in its own right. As I have found in the Council's favour on the first point I do not need to decide this issue.

Conclusion

48. I answer the preliminary question of law in the affirmative, i.e. the proposed sewage treatment plant for which development consent is sought is designated.

49. I note this matter has been set down for hearing on 2 - 13 September 2002. The future disposition of the appeal is a matter for the parties to consider in the light of this judgment. I grant leave for the parties to approach the Registrar regarding the hearing dates currently set down.