McMahons Road Pty Ltd v Frankston City Council
[2005] VSC 522
•4 May 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 5606 of 2005
| McMAHONS ROAD PTY LTD | Plaintiff |
| v | |
| FRANKSTON CITY COUNCIL | Defendant |
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JUDGE: | DODDS-STREETON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 3 May 2005 | |
DATE OF JUDGMENT: | 4 May 2005 | |
CASE MAY BE CITED AS: | McMahons Road Pty Ltd v Frankston City Council | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 522 | |
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LOCAL GOVERNMENT- Validity of city council’s resolution to discontinue and sell roads – to discontinue and sell roads unreasonable, unlawful and beyond power, due to failure to take into account relevant issues, taking into account irrelevant issues and Wednesbury unreasonableness.
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APPEARANCES: | Counsel |
| For the Plaintiff | Mr C. Porter |
| For the Defendant | Mr D. Graham, QC with Mr Pizer |
HER HONOUR:
This is a matter of some urgency, which was referred to be heard in the Practice Court. Due to the urgency and the context, I give extemporary reasons which are less detailed than would otherwise have been the case.
The proceeding was commenced by originating motion filed 19 April 2005 on behalf of the plaintiff, McMahons Road Pty Ltd, which seeks relief in relation to a decision of the defendant, Frankston City Council, to discontinue and sell certain roads. There is also a summons filed 19 April 2005. The plaintiff relies on the affidavit of Colin Stubbs sworn 19 April 2005. The defendant relies on the affidavit of Steven Oleznicki sworn 29 April 2005.
The originating motion states that the plaintiff is the owner of land in the municipal district of the defendant. The plaintiff’s land is situated in an area known as the bulky goods precinct, which is bounded by certain roads. The plaintiff seeks relief against Frankston City Council in relation to its resolution made on 13 September 2004 to commence to discontinue and sell certain roads in the bulky goods precinct, in particular Bryan Street, which is on the eastern boundary of the plaintiff’s land. It also seeks relief in relation to the defendant’s further resolution made on 21 March 2005 to discontinue and sell the roads in circumstances where, both at a meeting on 24 January 2005 and by letter dated 18 February 2005, the plaintiff had made submissions opposing such a course, on grounds including the following, set out in the originating motion.
First, the plaintiff asserted that there was inadequate access and egress from its land, so that access and egress from Bryan Street was urgently required.
Secondly, having regard to the defendant’s bulky goods retailing policy, the plaintiff contended that it was imperative for the defendant to retain Bryan Street as a road in order to ensure that the plaintiff’s land would not be isolated from the other bulky goods retailing developments which might be attracted to the precinct, but rather, would be fully integrated with them.
Thirdly, the plaintiff submitted that unless and until the traffic and parking conditions in the bulky goods precinct, as developed, could be ascertained and properly provided for, there could be no basis on which the defendant could conclude that Bryan Street was not needed.
The plaintiff alleges that, by reason of its resolutions in those circumstances, the defendant has acted unlawfully and beyond power, because it failed to ascertain, or even to consider, whether Bryan Street was required for public use, and rather, resolved to sell it by private treaty.
By the originating motion, the plaintiff seeks, by way of relief, a declaration that the decision of the defendant was unlawful or beyond power, an injunction restraining the defendant from proceeding with the discontinuance or sale of Bryan Street until further order, and an order granting mandamus directing the defendant to reconsider and re-decide whether Bryan Street should be discontinued and the land sold by private treaty.
In fact, the relevant roads are the subject of a contract of sale entered into on 23 March 2005 with a purchasing consortium, but, as the requisite notice has not yet been published in the Government Gazette, the purchaser has not yet become registered as proprietor under the Transfer of Land Act.
The background facts and issues are amplified in the affidavit of Colin Stubbs sworn on 19 April 2005 and by other undisputed facts submitted in the course of the hearing. Mr Stubbs is the managing director of the plaintiff, which is a property investor and developer. He deposes that the plaintiff’s land was once zoned residential, but was acquired by the plaintiff and re-zoned to a Business 4 classification. The residential properties were demolished. The plaintiff’s land now contains six bulk goods outlets, such as JB Hi-Fi and others. The land was developed under a planning permit. Mr Stubbs deposes that it originally had limited access and egress, due to the inadequacy of McMahons Road and Gertrude Street.
Mr Graham, senior counsel for the defendant, pointed out in the course of the hearing that the planning permit issued to the plaintiff on 20 July 2000 contained conditions, including Clause 1(b), which provided for landscaping of the western side of Bryan Street and the reserve between the plaintiff’s land to the council’s satisfaction; Clause 1(t), which provided for the footpath along the west side of Bryan Street to be demolished and the area and existing nature strip to be fully landscaped to the council’s satisfaction; and Clause 1(v), which provided for a two‑metre fence alongside the entire east boundary of the development site. Those conditions, he submitted, indicate that it was not originally contemplated that Bryan Street would provide access to and from the plaintiff’s land.
Mr Stubbs, however, deposes that the existing arrangement is entirely inadequate for the plaintiff and was necessary only because some parts of the bulky goods precinct were still being used for residential purposes when the permit was granted. In Mr Stubbs’s opinion, there will now be more pressure on the egress and access arrangements, making it even more important for the plaintiff to use Bryan Street. He deposes to a perceived danger that the planning policy requiring integrated development will be ignored and the plaintiff’s business will thus have the disadvantage of heavy traffic on McMahons Road, not being able to turn inwards to face Bryan Street and the other developing bulky goods structures - presumably, that is, when they are constructed in future.
Mr Stubbs deposes that owners of the opposite land have applied to use Bryan Street when it has been closed as a bland façade. Further, there is a re-zoning application which is inimical to the policy of integrating bulky goods. He also deposes that he attended a meeting of the Frankston City Council on 24 January 2005 with Mr Porter of counsel, who put the plaintiff’s submission to the council. He also sent a letter dated 18 February 2005 to the council. Mr Stubbs claims that the time allowed for speaking or making submissions at the council meeting was short and that the mayor conducted the hearing in a perfunctory manner. He refers to the reasons given for the council’s resolution on 21 March 2005, which the plaintiff seeks to impugn in this proceeding. He complains that the council’s decision was arbitrary, ignored the policy, did not consider the plaintiff’s need to use Bryan Street (even if it already had access via another road) and that the council arbitrarily concluded that the closure of Bryan Street was “not premature”.
The affidavit of Steven Oleznicki sworn 29 April 2005 deposes that he is the finance administrator and manager of the defendant council. In 2000, a consortium approached the defendant council. It had acquired land in the bulky goods precinct and wished to purchase the six roads in the precinct, including Brian and Gertrude Streets. Negotiations occurred. The consortium indicated that it would pay approximately $3,524,000 for the roads. The defendant convened a meeting on 13 September 2004 to consider commencing the process of discontinuing and selling the roads. The consortium was advised of the defendant’s decision to do so on 17 September 2004. On 5 October 2004, Messrs Cornwall Stodart advised that some of the members of the consortium for which it acted were interested in making the purchase.
On 12 October 2004, the defendant published a notice inviting submissions. The plaintiff and several other persons made submissions objecting to the discontinuance of Gertrude Street between its intersection with McMahons Road and the intersection with Bryan Street. The interested parties did not object to this being excised and the price was relevantly adjusted.
A further meeting occurred on 24 January 2005, attended by six of the defendant’s seven councillors. There was another meeting on 14 February 2005, attended by the same councillors. The plaintiff’s letter dated 18 February 2005 was received. On 21 March 2005, the defendant council met and considered a report on the sale of the roads with the excised area excluded. It resolved to proceed. On 23 March 2005, the defendant executed a contract with certain purchasers conveniently identified as “the consortium”. Mr Oleznicki states that the defendant has not yet considered Amendment C32, which is concerned with the planning framework for redevelopment of the bulky goods precinct.
Mr Oleznicki further deposes that there is no application by the plaintiff to amend the planning permit to allow ingress and egress from its property to Bryan Street or any proposal to dismantle the fence, which presently prevents such ingress and egress.
The bulky goods retailing policy of the Frankston Planning Scheme, Amendment C32 and other legislative or regulatory provisions are relevant to the dispute. I discuss them briefly.
The bulky goods retailing policy and Amendment 32
Clause 22.02 of the Frankston Planning Scheme sets out the bulky goods retailing policy, which is stated to give direction to the appropriate location of bulky goods retailing within the council’s municipality. The policy identifies five locations which are considered to satisfy the objectives and policy of the Policy. One of those locations is an area which includes the plaintiff’s land and a Bunnings site, which are currently zoned Business 4. The other land in this area, which would be included in the bulky goods precinct contemplated by the Policy, is still zoned residential, but there is a proposed amendment C32 which will, if made, result in a re-zoning of that additional land (which is now vacant and includes the relevant roads) to a Business 4 classification, in keeping with the existing zoning of the plaintiff’s land and that of the Bunnings site. Clause 22.02-3 provides, inter alia, that it is policy wherever possible that bulky goods retailing be grouped together and integrated with other commercial uses to maximise economies of scale and use of infrastructure.
Rights in relation to roads
As counsel for the plaintiff pointed out, the owner of freehold land has both a public right of passage upon an adjoining public highway and a private right to access from his land to the highway, which is enjoyed as a landowner, as recognised by Sholl, J. in Walsh v Irwin.[1] Those common law rights are both recognised and qualified by the Road Management Act which, in ss.8 and 9, acknowledges the right of passage and the right of access. Each section provides that the rights conferred by the section or at common law are subject to any restrictions, limitations or conditions which may be specified by or under the Act or any other Act or law.
[1][1952] VLR 361.
Schedule 10 of the Local Government Act 1989
Schedule 10 of the Local Government Act 1959 confers, by clause 3, a power upon councils to discontinue roads including (in addition to any power under ss.43 and 44 of the Planning and Environment Act 1987) a power to: (a) discontinue a road or part of a road by notice published in the Government Gazette and (b) sell the land from that road, if it is not Crown land, transfer the land to the Crown or itself, or retain the land.
In contrast to the situation which obtained under previous legislation (which laid down specific guidelines for the exercise of a power to discontinue and sell roads) no criteria or guidelines are prescribed in relation to the power conferred by clause 3 of Schedule 10.
Basic legal principles applicable to the determination of the dispute
The fundamental principles relevant to the exercise of a power, such as the power to discontinue and sell roads, are not a matter of dispute between the parties. In The Shire President, Councillors and Ratepayers of the Shire of Swan Hill v Bradbury (“Swan Hill”),[2] a municipal by-law which prohibited the erection of any building within the municipality was found to be outside the power conferred by the relevant legislation, and thus invalid. Dixon, J. recognised that the ambit of the discretionary powers conferred on a public authority were frequently not subject to exhaustive or precise guidelines, definite rules or stated objectives. It was, however, he stated,
“incumbent upon the public authority in whom the discretion is vested not only to enter upon the consideration of applications for its exercise, but to decide them bona fide and not with a view of achieving ends or objects outside the purpose for which the discretion is conferred”.[3]
[2](1937) 56 CLR 746.
[3]At 757.
That is fundamentally the same constraint which governs the exercise of powers and discretions conferred upon fiduciaries, such as directors and trustees. His Honour acknowledged that in identifying what were or were not extraneous objects for the exercise of a discretion which was, in terms, unlimited, recourse must be had to the scope and object of the instrument conferring the power. Consistently with that statement of Dixon, J., Mason, J. subsequently, in Minister for Aboriginal Affairs v Peko‑Wallsend,[4] stated:[5]
“The failure of a decision-maker to take into account a relevant consideration in the making of an administrative decision is one instance of an abuse of discretion entitling a party with sufficient standing to seek judicial review of ultra vires administrative action.”
[4](1985) 162 CLR 24.
[5]At 39.
He also stated:
“The ground of failure to take into account a relevant consideration can only be made out if a decision-maker fails to take into account a consideration which he is bound to take into account in making that decision.”
He further observed:
“What factors a decision-maker is bound to consider in making the decision is determined by construction of the statute conferring the discretion. If the statute expressly states the considerations to be taken into account, it will often be necessary for the court to decide whether those enumerated factors are exhaustive or merely inclusive. If the relevant factors, and in this context I use this expression to refer to the factors which the decision-maker is bound to consider, are not expressly stated, they must be determined by implication from the subject matter, scope and purpose of the Act.”
His Honour also stated:
“The limited role of the court reviewing the exercise of an administrative discretion must be borne constantly in mind. It is not the function of the court to substitute its own decision for that of the administrator by exercising a discretion which the legislature has vested in the administrator. Its role is to set limits on the exercise of that discretion and a decision made within those boundaries cannot be impugned.
It follows that, in the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision-maker and not the court to determine the appropriate weight to be given to matters which are required to be taken into account in exercising the statutory power.”
Gillard J in Murdesk Investments Pty Ltd v Roads Corporation[6] applied the principles articulated in the above authoritative decisions and considered the limited nature of the court’s supervision of a statutory body’s exercise of its powers and duties. His Honour emphasised that the invocation of such curial supervisory jurisdiction was not an appeal, and was not, in general, directed to an assessment of the merits of the challenged decision or whether it was in some way adverse to the interests of an affected party. His Honour referred to and relied upon the decisions in Swan Hill and in Westminster Corporation v London and North Western Railway Co (“Westminster”).[7] He confirmed that where an authority exercises a discretionary power, the obligation to act in good faith would entail some consideration of the interests of those affected by the exercise of the power, but the circumstances of each individual case would determine what was required. Further, his Honour relied upon the statement of Gibbs J in Buck v Bavone,[8] where his Honour said:
“Moreover, a person affected will obtain relief from the courts if he can show that the authority has misdirected itself in law or that it has failed to consider matters that it was required to consider, or has taken irrelevant matters into account. Even if none of these things can be established the courts will interfere if the decision reached by the authority appears so unreasonable that no reasonable authority could properly have arrived at it. However, where the matter of which the authority is required to be satisfied is a matter of policy or opinion or taste, it may be very difficult to show that it has erred in one of these ways or that its decision could not reasonably have been reached. In such cases the authority will be left with a very wide discretion which cannot be effectively reviewed by the courts.
[6][2005] VSC 39.
[7][1905] AC 426.
[8](1975) 135 CLR 110 at 118.
In the present case, the plaintiff contends that the decision or resolution of the council was unlawful and hence invalid on the bases that, first, the council failed to take into account relevant issues. Most importantly, it failed to take into account the public and private need for the road. In relation to the private need for the road, the council failed to take into account the asserted inadequacy of the plaintiff’s existing access and egress and the plaintiff’s need to turn its development around to face Bryan Street, rather than the heavy traffic-bearing McMahons Road. It also overlooked, the plaintiff contends, the need to integrate the plaintiff’s site with other anticipated bulky goods developments.
Secondly, the plaintiff contends that the council took into account irrelevant considerations. In particular Mr Porter, counsel for the plaintiff, indicated that the decision was influenced by the opportunity to sell to the consortium at the price offered.
Alternatively, the plaintiff asserts that if the council took into account relevant considerations at all, that process was so slight and defective that the decision essentially fell into the category of Wednesbury unreasonableness[9]. Mr Porter submitted that failure to take into account relevant matters was evident from a perusal of Exhibit SYO.10 to Mr Oleznicki’s affidavit, being the report dated 21 March 2005 to which the council referred when it made the impugned resolution, and which reflected the matters considered in that process. In his submission, the report revealed that the council did not take into account future contingencies, namely, Amendment C32 coming into effect, with all land being zoned Business 4 and then being developed as a bulky goods precinct. He contended that although the report indicates that the relevant council officer responded to the plaintiff’s submissions, it did not refer to the bulky goods policy in Clause 22 already discussed, its effect upon the plaintiff’s land and the effect of granting a permit for any other land. The decision to discontinue Bryan Street thus took no proper account of the possible future contingencies for the land. Mr Porter contended that this constituted either failure to take into account the impact of relevant future plans or, alternatively, was unreasonable. Further, the report, in his submission, addressed only the public right aspect of the road and ignored the private right aspect.
[9]Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223.
Mr Porter urged that I should conclude that the council failed to take into account at all the relevant issues of the plaintiff’s need for further access to Bryan Street, rather than merely “getting it wrong”.
Although the report acknowledged that the council was bound by the principles of the Westminster case, the plaintiff submitted that it nevertheless failed to adhere to them. Significantly, Mr Porter also contended that where the council did not know what would happen with the proposed development, it would always be premature to act at once. Where various contingencies remained unsettled, the council could not identify the relevant considerations and thus, necessarily, could not take them into account.
At the kernel of the plaintiff’s submission was the contention that the defendant council could not properly or credibly determine to discontinue and sell the roads, including Bryan Street, by reference to relevant considerations at a stage when various long-term certainties had not yet been established, such as whether the Amendment C32 would be completed and the re-zoning would occur. The final form of the Planning Scheme could thus not be known. In the plaintiff’s submission, until it was, the integration of the plaintiff’s premises with other bulky goods developments could not be provided for. The discontinuance of Bryan Street left no scope for future integration.
In my opinion, the plaintiff’s submission, if taken to its logical conclusion, would effectively hamstring the council and preclude it from taking any immediate step in this matter or in similar matters on the basis of its assessment of various future contingencies. It would be paralysed or deadlocked and unable legitimately to advance any decision, on the ground that the relevant considerations for that decision could not be identified until all future developments which might have an impact were not “locked in”. Such an approach appears unrealistic and potentially stultifying.
Mr Graham, senior counsel for the defendant, argued that the decision should be viewed in context. He pointed out that the bulky goods retailing policy was already in force and governed the objectives for development. The plaintiff’s land, and that of Bunnings, were already developed. To the east of the land the previously residential land had been cleared, but was still subject to a residential zoning. It consisted of many small parcels of land and the roads, which currently could not be developed by any party. The roads were all covered by the residential zoning. Until they were incorporated into the entirety of the site, no development could advance. Mr Graham identified a “chicken and egg” dilemma at the heart of the differences between the plaintiff and the defendant. The council, he said, had concluded that it was futile or ill advised to re-zone the land as Business 4 until the roads were closed, because development would otherwise be unduly fettered. On this view, the bulky goods retail policy was the first step. The next logical steps were to close the roads, re-zone the land and consider the planning permit.
Mr Graham contended, and it was not, I think disputed, that the report dated 21 March 2005 was central to the determination of the case. Both parties proceeded on the basis that the report reflected or informed the considerations of the defendant in making the challenged resolution to close and sell the roads, including Bryan Street.
The report dated 21 March 2005 is entitled “The Proposed Discontinuance and Sale of Roads in Stage 2 of the Bulky Goods Precinct”. It relevantly notes the following. First, the re-zoning of the bulky goods under stage 3 amendment 32 is a separate process from the discontinuance and sale of the roads. Secondly, the report summarises the submissions of the plaintiff made in opposition to such a course, which foreshadowed many of the criticisms which, in amplified form, were levelled at the decision in the course of the hearing. Thirdly, a lengthy “officer response” sets out detailed responses to each of the complaints or objections made on behalf of the plaintiff and the other objecting parties.
To summarise, the report states that the current development is operating effectively without any pedestrian and vehicular access from Bryan Street. The main public access is off McMahons Road. There is currently a substantial fence on the plaintiff’s land, with no access point whatever to any section of Bryan Street. Further, it notes that the public need for Bryan Street has ceased to exist following the removal of adjoining dwellings, and, in any event, alternatives exist via McMahons Road, which do not impose any significant inconvenience on the public. In the Recommendations Section B, the report repeats the above points.
In my opinion, that indicates that the council, in receiving and acting upon the report, “turned its mind” to both the existing public need for the road and the existing private need, including the plaintiff’s particular need for the road. It took into account the following conclusions: that the public did not have an existing need for the road and that the plaintiff, as landowner, did not have an existing need for it; that the plaintiff’s development was operating effectively without access to and from Bryan Street; and that the plaintiff had current frontage of 157 metres to McMahons Road and 83 metres to Gertrude Street, which the report noted to be more than adequate, although recognising that it was understandable that the plaintiff would want to hold all the road access it could, in order to maximise its development opportunities.
In relation to the future, the report acknowledged that Amendment C32 was not yet approved nor guaranteed, although some such development was likely. It adopted the position that discontinuance and sale of the roads would not inhibit integration of the bulky goods precinct. Not only was the retention of Bryan Street unnecessary to such integration, its discontinuance was more likely to assist integration. Further, the integration required under the bulky goods retail policy was a planning issue which ultimately depended upon design and co-operation. The report noted that it was preferable for the process of discontinuance and sale of the roads to proceed as a precursor to the re-zoning process, which could then proceed unfettered in the planning process. The purchasing consortium was prepared to buy the roads, it stated, without having any guarantee as to their development. Further, the report noted that although the plaintiff had expressed a proposal to turn its existing developments to face Bryan Street, the implementation of any such proposal was not as of right, but required planning approval, and would involve the resolution of significant issues. The council, it observed, was obliged to ensure the integration and the report adopted the view that the sale of Bryan Street would in fact assist that process from the pedestrian’s point of view.
The Recommendations Section of the report reiterated much of the above. In particular, it stated that the plaintiff had a substantial road frontage which was unaffected by the proposed discontinuance and which adequately provided for the existing and likely future use. It stated that the concerns in relation to Amendment C32 and the integration of the bulky goods site could be more appropriately dealt with in the planning process. Specifically, the report stated that it did not consider the discontinuance to be premature.
Clearly, the plaintiff adopted, and maintains, a fundamentally different assessment from that of the defendant council of all of the above issues discussed in the report. In my opinion however, all of the matters identified as relevant to the exercise of the council’s power under Clause 3 of Schedule 10 of the Local Government Act were considered, taken into account and evaluated by the defendant, both individually and as part of a coherent overview.
The defendant’s report indicates a reasoned rejection of the plaintiff’s objections and arguments, rather than a failure to take them into account. Similarly, while the report referred to the consortium’s offer to purchase the roads, that was in the wider context of its conclusion that the preferable starting point was to discontinue the roads, thus permitting unfettered determination of the planning and re-zoning process.
The Recommendations Section, in paragraph 6, states that the authors of the report considered that the terms and purchase price proposed for the land to be sold were satisfactory. That consideration can hardly be said to be irrelevant to the exercise of the power of sale, and it is but one of a number of considerations.
It is no part of the court’s legitimate function to evaluate the merits or accuracy of the defendant’s conclusions, to substitute its own views or to form an opinion on whether the competing analysis of the plaintiff is more persuasive. Further, the court should not embark upon a course of determining the weight to be attributed to the various competing considerations. In the absence of statutory indication to the contrary, that is a matter for the decision maker. Should the court engage in that process, it would trespass upon the decision maker’s function. While the court may, it is true, validly evaluate the decision from the broad perspective of Wednesbury unreasonableness, that standard requires the Court to conclude that the impugned decision was “so unreasonable that no reasonable authority could ever have come to it”[10]. As such, the test operates to sieve out only such manifestly unreasonable decisions or conclusions that it is very rarely satisfied.
[10]Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 230.
In the present case, I am satisfied that the defendant, in exercising its power, took into account all the relevant considerations identified by the plaintiff. There is, in my view, nothing to establish that the defendant took into account any irrelevant consideration. There is no basis on which to conclude that the decision was so unreasonable that no reasonable council could have arrived at it. Further, it is not contended that the defendant failed to follow all the required procedures in relation to convening meetings, inviting submissions, responding to the same and publishing relevant notices, which are designed to ensure fairness and due process. The defendant responded fully to the submissions and objections and provided detailed reasons for its decision. There is no basis on which to conclude that it made its resolutions arbitrarily or capriciously.
It follows that, in my opinion, the plaintiff has not established any basis on which the defendant council’s decision, or the conduct founded upon it, may validly be impugned. The plaintiff has not established its entitlement to the relief sought in the originating motion, and in my view, the proceeding should be dismissed.
The order is:
1.That the proceeding be dismissed.
2.The plaintiff pay the defendant’s costs of the proceeding.
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