South of Perth Yacht Club (Inc) v Jacob MLA

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: SOUTH OF PERTH YACHT CLUB (INC) -v- JACOB MLA [2016] WASC 160

CORAM: CHANEY J

HEARD: 10 MARCH 2016

DELIVERED : 26 MAY 2016

FILE NO/S: CIV 2540 of 2015

BETWEEN: SOUTH OF PERTH YACHT CLUB (INC)
Applicant
AND
ALBERT PAUL JACOB MLA
Respondent

Catchwords:

Administrative law - Certiorari - Approval to develop area of riverbed lease - Condition requiring entry into new lease - Whether valid condition - Improper or extraneous purpose - Whether condition fairly relates to proposed development

Legislation:

Marine and Harbours Act 1981 (WA), s 12
Swan and Canning Rivers Management Act 2006 (WA), s 29, s 29(4), s 72, s 73, s 75, s 76, s 80, s 80 (1)(c), s 82

Result:

Decision to impose condition quashed

Category: B

Representation:

Counsel:

Applicant: Mr K M Pettit SC
Respondent: Mr T C Russell & Mr S J Willey

Solicitors:

Applicant: Integra Legal
Respondent: State Solicitor for Western Australia

Case(s) referred to in judgment(s):

Buzzacott v Minister for Sustainability, Environment, Water, Population and Communities [2013] FCAFC 111; (2013) 215 FCR 301
Kindimindi Investments Pty Ltd v Lane Cove Council [2006] NSWCA 23; (2006) 143 LGERA 277
Mison v Randwick Municipal Council (1991) 23 NSWLR 734
Newbury District Council v Secretary of State for the Environment [1981] AC 578
Scott v Wollongong City Council (1992) 75 LGRA 112
Thompson v Randwick Corporation (1950) 81 CLR 87
Transport Action Group against Motorways Inc v Roads and Traffic Authority (NSW) (1999) 46 NSWLR 598
Western Australian Planning Commission v Temwood Holdings Pty Ltd [2004] HCA 63; (2004) 221 CLR 30
Winn v Director General of National Parks and Wildlife [2001] NSWCA 17; (2001) 130 LGERA 508

CHANEY J: The applicant is the registered proprietor of two adjoining lots of land located at 2 Canning Beach Road, Applecross. The land is on the foreshore of the Swan River, and the applicant conducts operations as a yacht club from that site. The applicant is also the lessee of an area of the riverbed adjacent to its land pursuant to a lease dated 2 July 1986 (riverbed lease) between it and the Minister for Transport as lessor. Under the authority of a jetty and mooring licence issued to the applicant under the Jetties Act 1926 (WA), a number of jetties were constructed within the area of the riverbed lease which provide moorings for boats.
In August 2014, the applicant lodged an application for approval under the Swan and Canning Rivers Management Act 2006 (WA) (SCRM Act) to commence development within the area of the riverbed lease. The development proposed by the applicant included the replacement of two jetties, the replacement of boat maintenance and slipway facilities, the reclamation of approximately 1,100 sqm of riverbed and the construction of a seawall. On 30 March 2015, the respondent granted approval of the application subject to various conditions. Condition 2 of that approval provided that, prior to commencement of the works, the applicant was required to enter into a new lease of the riverbed with the Swan River Trust (SRT). Condition 2 refers to advice note 2, which reads:
This project includes 1100 m² of reclamation of the riverbed and the lease boundaries will need to be amended to reflect the proposed new shoreline. The club is currently on a 1985 lease under which current best practice protection of the environment is not adequately addressed.
By ground 1 of the application, the applicant contends that condition 2 was imposed primarily for the purpose of increasing rent, that that is an improper purpose, and that condition 2 is thereby invalid. It also contends that the condition is invalid because it sought to impose environmental conditions in a manner contrary to the SCRM Act, and because it required a boundary alteration of the lease at a time that was legally premature.
The requirement for approval arose under the SCRM Act. Pursuant to s 82 of that Act, an applicant is able to request the Minister to reconsider a condition of development approval. The applicant sought reconsideration by the Minister but the condition was maintained. By ground 2 of the application, the applicant seeks judicial review of that reconsideration.

Grounds of application

The grounds for the application are these:
1.In granting approval to the applicant on 30 March 2015 for development of land leased to the applicant by the Swan River Trust under s 29 of the Swan and Canning Rivers Management Act 2006 (the Act), the Respondent erred in law and exceeded his jurisdiction under s 80(1)(c) of the Act by making his approval subject to the condition that 'Prior to commencement of works, the applicant shall enter a new riverbed lease with the Swan River Trust (see Advice Note 2)' (Condition 2), in that:
(a)Condition 2 was imposed for an extraneous and improper purpose, namely to force upon the applicant an increase in rent; and
(aa)Condition 2 was imposed with an intention to increase rent as a condition of approval for the development, which condition did not have a sufficient nexus with the proposed development and was not a proper planning consideration; and
(b)Condition 2 was imposed in order to add environmental conditions in a manner contrary to the Act; and
(c)By Condition 2, the Respondent unreasonably required a new lease to reflect new boundaries of the River Reserve (a defined term under the Act) before any alteration of the River Reserve boundaries occurred or could occur,
whereas the Respondent should have:
(d)imposed a lease condition in term similar to the following:
'2. At conclusion of the works, the applicant shall enter into a variation of its riverbed lease with the Swan River Trust solely in order to alter the boundary of the lease area to reflect the new shoreline',
and
(e)imposed any additional environmental conditions under and in the form contemplated by s 80(1)(c) of the Act.
2.In refusing on 17 June 2015 to reconsider Condition 2, the Respondent erred in law and exceeded his jurisdiction under s 82 of the Act by:
(a)failing to take account of, and failing to address, the applicant's statutory request to reconsider whether Condition 2:
(i)was for the improper purpose of forcing upon the applicant an increase in rent; and
(ii)was imposed in order to add environmental conditions in a manner contrary to the Act,
and
(b)giving weight to irrelevant considerations, namely whether;
(i)the river reserve is a vital community resource that needs to be protected and managed for the longer term;
(ii)the proposed development will allow the applicant's lease area to be used more intensively;
(iii)the proposed development has an overall cost of $4,500,000; and
(iv)Condition 2 will ensure that the applicant's lease arrangements are consistent with contemporary practice. (original emphasis)

The riverbed lease and jetty licence

The riverbed lease was granted pursuant to s 12 of the Marine and Harbours Act 1981 (WA). It was for a term of 21 years, with an initial annual rental of $4,240. Clause 3(b) of the riverbed lease required the lessor, at the written request of the lessee and subject to there being no outstanding breaches of the lease by the lessee, to grant a lease for a further term of 21 years from the expiration of the original term 'containing the same covenants, agreements, powers, reservations and conditions as' the riverbed lease (excluding the covenant for renewal).
Clause 4(b) of the riverbed lease provided that the lessor was at liberty to reappraise the annual rental every three years. The clause set out a process for determination of the reappraised rent. That procedure provided that if the lessee did not accept the reappraised rent stipulated by the lessor, the lessee could require the lessor to have the reappraised rent determined by a mutually acceptable valuer. The clause provided that the lessor was to be bound by the following considerations and stipulations:
1.The amount of the rental shall not in any event be less than the amount payable immediately preceding the commencement of the period in respect of which the rent is to be determined and shall be the ground rent hereinafter referred to.
2.The ground rent shall be the fair market rent of the demised premises.
3.The amount of the reappraised rental shall not exceed 102% of the rental payable hereunder immediately prior to the date of the reappraisal.
That third stipulation is of particular significance to the current dispute.
By a jetty and mooring licence dated 2 July 1986 (jetty licence), the then Minister responsible for administration of the Western AustralianMarine Act 1982 (WA) and the Jetties Act granted to the applicant a licence to exclusively use those waters of the Swan River within the area of the riverbed lease, and to maintain and use jetty structures within the riverbed lease area in accordance with the plan annexed to the jetty licence.
By a deed of variation dated 7 April 1998, the parties to the riverbed lease and the jetty licence agreed to vary the area to which the riverbed lease and the jetty licence applied and to alter the jetty structures permitted by the jetty licence. The effect of the deed of variation was to surrender a portion of riverbed at the southern end of the area covered by each of the riverbed lease and the jetty licence, and to extend the riverbed lease area at the northern end by a roughly equivalent sized area. The deed of variation further surrendered the lessee's rights in respect to the original jetty structures depicted in the jetty licence, and contained a grant of a right to construct the jetty structures depicted in the plan attached to the deed of variation. Save for those variations, both the riverbed lease and the jetty licence remained in full force and effect.
By a deed of partial surrender, renewal and variation of the riverbed lease (partial surrender) which was undated (but which provided for a renewed term commencing on 1 July 2006), the SRT as lessor and the applicant as lessee agreed to partially surrender, vary and renew the riverbed lease. The area surrendered was 7,662 sqm, which comprised an area which had been reclaimed and therefore no longer formed part of the riverbed. The effective date of the surrender was 1 March 2006. It was common ground that that surrender was necessary because the SRT, which had (in circumstances that were not revealed at the hearing but are not in issue) acceded to the position of lessor in place of the Minister for Transport, no longer had the capacity to lease that part of the area which no longer formed part of the riverbed. The variation provided for in the partial surrender was to add a new clause to the riverbed lease dealing with GST liability. The partial surrender also provided for a renewal of the riverbed lease, in accordance with the option under the riverbed lease, for a further period of 21 years commencing on 1 July 2006 and expiring on 30 June 2027.
By a further agreement dated 18 June 2010, between the Manager, Property Services, Coastal Facilities of the Department of Transport as licensor, and the applicant as licensee, the licensor agreed to accept a surrender of the jetty licence in respect of part of the mooring area, to grant to the applicant a licence to use and maintain additional jetty structures, and to grant an extension of the term of the jetty licence for 21 years from 1 July 2006 to 30 June 2027 (thus coinciding with the term of the renewed riverbed lease).
The reclaimed area which had been excised from the riverbed lease adjoined the land owned by the applicant, and also reserve 25599. On 20 April 2005, the Minister for Lands ordered that reserve 25599 be amended to increase the size of the reserve to 1.6028 ha, being the area that had been reclaimed and surrendered from the riverbed lease by the partial surrender. The Minister for Lands also ordered on that date that the purpose of reserve 25599 be changed to 'yacht club and public access', and ordered that the care, control and management of the reserve be placed with the applicant to be utilised for this designated purpose.

The proposed new lease

On 29 December 2006, the then Minister for Planning and Infrastructure wrote to the applicant in relation to the renewal of the riverbed lease for a second term of 21 years that had been effected by the partial surrender six months earlier. She expressed concern about 'the inappropriate level' of rent being charged and the 'need to investigate how such a set of circumstances occurred'. She referred to a letter 'initially sent to the various clubs regarding the method of charging' of rent for riverbed leases. She continued:
The letter that was sent to your Club by the then acting General Manager of the Department of Marine and Harbours gave a clear intention of the government of the day that the percentage of rent charged at the outset be 10% of the value determined by the Valuer General and the rent was to be reviewed on a 3 yearly basis. The intention was there be a 3 yearly market revaluation but that any increase in the percentage of the valuation to be paid would be a maximum of 2% per rent review, that is, a maximum of 2% increase of the percentage of the valuation to be paid, not a maximum of 2% increase in the rent.
The intention was that the first review would see a maximum of 12% of the Valuer General's assessment, the second review 14%, the third review 16%. At the end a valuation of 22% of the annual market based rental would be payable.
Regrettably the drafting of the document did not reflect this and simply provided for only a maximum of 2% increase in the rent payable every 3 years which of course completely makes the whole principle of a market valuation pointless. Indeed the rents being paid are now less than 10% of market valuation which was to be the base case. Even more concerning, the rental payments have not kept pace with CPI.
As a consequence, if the document had been drafted as had been agreed by the Government of the day then you would be paying 22% of the current market valuation which is $38,500.00 as opposed to your current payment of $4,774.41.
The arrangement as approved by the Government was, in my view, a very generous arrangement that allowed you to build up to 36% market rent over a period of 42 years.
I think it is quite inequitable that the terms of the current document continue and I would propose that the renewal rent be at the 22% of the current market value and that for the next 21 years we adopt the process that was originally intended, that is that the market rent be reviewed every 3 years and the percentage of market rent that is paid increases by 2% every 3 years. That means that at the end of the second 21 year period you will still only be paying 36% of the market rental.
In my view the arrangement I propose still represents a very generous concessions [sic] to your members for the exclusive use of a public asset. Anything less would be unfair.
I look forward to your response so we can have this matter resolved.
The applicant declined to surrender the renewed riverbed lease and enter a new lease as requested by the Minister.
In August 2008, the applicant received a tax invoice from McGees Property for an amount of $83,234.49 being for 'seabed rent shortfall 06/07, 07/08, Jul ‑ Sep 08 1/07/2006 - 30/09/2008'. Mr David Charles Bray Harries, the general manager of the applicant, took that to be an invoice for additional rent that the applicant would have been responsible for had the proposed new lease been accepted. He telephoned Mr Duffield at McGees Property and was told that the invoice was issued in error and should be disregarded. The applicant did not pay the invoice.
In an undated letter apparently sent in early October 2009 by the applicant to the general manager for coastal infrastructure at the Department of Planning and Infrastructure, Mr Harries referred to his earlier discussions with representatives of the SRT and McGees Property in relation to the possible realignment of the boundaries of the riverbed lease area. Mr Harries asked that the letter be considered a formal application to embark on the process of realigning the riverbed lease boundaries and enquired as to the documents which would be necessary to enable the matter to be dealt with. The proposal was to surrender approximately 45,000 sqm of the southern end of the riverbed lease area, and to add an area slightly in excess of 18,000 sqm to the north of the riverbed lease area.
On 19 October 2009, Mr Duffield wrote to the applicant. He referred to the letter concerning realignment of the riverbed lease boundary, and continued:
The Swan River Trust (SRT) has advised Transport and this office no Lease or Licence variation for any new development will be considered for those Lease and Licences not renewed in accordance with the new documentation currently utilised by the Lessor.
McGees Property act for Transport and SRT with respect to all Lease and Licence areas in the Swan and Canning Rivers and accordingly, would like to meet with you to discuss progressing the new Lease and the proposal put forward in your correspondence.
Accordingly, please contact this office to arrange a mutually convenient time to meet.
On 28 October 2009, the applicant wrote to Mr Duffield seeking advice as to the reason for the direction of the SRT referred to in his letter of 19 October 2009. On 23 November 2009, the SRT responded by saying:
To clarify the Trust's position on the matter relating to lease variation, the Trust will not approve lease variations unless it is submitted concurrently with a Part 5 Swan and Canning Rivers Management Act 2006 development application that reflects the proposed change of use of the subject area. In this instance the development application would be for the proposed extension to the jetties.
It is also the Trust's position that applications received from those clubs which have elected to exercise the extension option under leases developed in 1986 will be conditioned on signing a new lease.
The Trust has advised the Department of Transport of this position and instructed the Department to continue lease negotiations in good faith until such time as the relevant development application is received by the Trust.
On 23 December 2009, the SRT again wrote to the applicant in relation to lease negotiations. The letter said:
The Trust's position, which has been advised to the Department of Transport, is to ensure equity among all the river reserve leases and to provide a long term secure future for leasees. Seven out of the ten clubs on the Swan River are now on a new lease and these clubs have recently undergone a rent review based on either Consumer Price Index or market valuation provided by Landgate as per the new leases. I believe you have requested a copy of the report from Landgate which documents the methodology of the valuations, I have instructed the Department of Transport to forward a copy of this report to you as soon as practical.
On 8 February 2010, the applicant wrote to the SRT referring to a meeting with Mr Jim Freemantle, the chairman of the SRT, and various other representatives of the SRT, Department of Transport and McGees Property on 1 February 2010. The letter said:
We were pleased to hear the clarification of the statement about development applications in your correspondence dated 23^rd November (Ref DEC 7836) by Trust Chairman, Jim Freemantle, and yourself that 'development applications will be taken on their merit and not conditioned on signing a new lease'. We look forward to your confirmation of that assurance. (original emphasis)
The requested confirmation was contained in a letter dated 26 February 2010 from the general manager of the SRT to the applicant. He said:
You have asked for confirmation of the Trust's position in relation to development approvals for new proposals by the club and the possible imposition of a condition requiring a new lease. Generally the tests for validity of a condition are that it is reasonable, that there is a nexus between the condition and the proposal and that it has a planning purpose. The Trust is mindful of those tests in considering applications and providing advice to the Minister for Environment. All applications are considered on their merits but generally it would seem unreasonable to impose a condition requiring the Club to enter into a new lease where an application relates to development on the Club's land holding, and similarly for development within the existing water bed lease area.
As stated above any development proposed outside the existing waterbed lease area is likely to be subject to a condition requiring a new lease. In fact such an application would be considered invalid without the Trust first consenting to the application and signing the application form.
There may be instances whereby the imposition of a condition requiring a new lease would be considered justifiable in relation to an approval for development within the existing waterbed lease area. For example a major redevelopment of the marina significantly increasing the number of boats may result in increased impacts that would bring about the need for the more detailed day to day environmental management required under the new lease model.

The development application

In August 2014, the applicant lodged an application pursuant to s 72 of the SCRM Act for approval of development together with various attachments. As previously noted, the development proposed by the applicant included the replacement of two jetties, the replacement of boats maintenance and slipway facilities, the reclamation of approximately 1,100 sqm of riverbed and the construction of a seawall.
The application for development approval was referred to various authorities in accordance with s 73 of the SCRM Act. A report on the application was prepared in accordance with s 75 and s 76 of the SCRM Act (s 76 Report). The s 76 Report recounted the outcomes of the various consultations which had occurred, and contained the observation that:
2.20The Club is currently on a 1985 lease, and although effort has been made to negotiate with the club onto a new lease this has been unsuccessful to date. To ensure consistency throughout the yacht clubs and marinas on the river, it is recommended that a new riverbed lease with the club be pursued. The lease boundaries may also need to be amended to reflect the proposed new shoreline.
In relation to submissions that had been received on a draft report, the s 76 Report said:
3.6In regard to Condition 2 for a new riverbed lease, and related Advice Note 2, the Club expressed a preference to enter into a Deed of Variation on its current lease rather than signing a new lease. The Club suggested that the variation address the need to implement best practice environmental standards and update the lease boundary to reflect the 1100m² section of reclaimed riverbed. The Club also amended the plans for Jetty 4 & 5 so that the new finger jetties and pens are now contained entirely within the existing Riverbed Lease area.
3.7As outlined by the Club, the Trust previously advised that generally a new lease would not be required if the proposed works are contained entirely with the Club's land holding or waterbed lease area. However, the Trust also noted that there may be instances whereby the imposition of a condition requiring a new lease would be considered justifiable in relation to an approval for development within the existing waterbed lease area. For example, a change of use or major redevelopment, including an increase in the number of pens within the marina area, which may result in increased impacts on the immediate area.
3.8This application proposes 44 new pens within the Club - an expansion of 12 per cent ‑ as well as significant reclamation of the riverbed (approximately 1100m²) that will result in the replacement of beach areas with hard engineered seawall structures. These are considered to be substantial enough changes to the river and foreshore to warrant a new Riverbed Lease. The Club's lease is otherwise up for renewal on 30 June 2027.
Under the heading 'Discussion', the s 76 Report said:
6.3As mentioned above, the Club is currently on a 1985 lease which has out‑dated lease provisions under which the protection of the environment was not extensively addressed. When the government signalled its intent to sign the yacht clubs and marinas around the river onto modern leases in 2006, the majority of clubs immediately agreed to the new terms, with the remaining clubs progressively entering into new leases when major redevelopment or expansion has justified such a requirement. To ensure consistency, and in line with the Trust's previous advice, a new riverbed lease with the Club should be pursued. The lease boundaries will also need to be amended to reflect the proposed new shoreline. This can be addressed through a condition of approval.
In relation to the proposed reclamation of 1100 m, the s 76 Report stated that the SRT would generally not support reclamation, but 'given that the reclamation will allow the upgrade of the boat wash down/maintenance facility and slipway, resulting in significant environmental benefits, and the disturbance of contaminated sediment is prevented the Trust in this instance is willing to support the reclamation'.
The SRT resolved to recommend to the Minister approval on the conditions proposed including condition 2. Its report was then provided to the Minister. Prior to the Minister's final determination of the application, the applicant requested a meeting with him, which was arranged for 26 March 2015. The Minister was provided with a briefing note dated 23 March 2015 (Ministerial briefing note). Under the heading 'Discussion', the following is contained in the Ministerial briefing note (with portions redacted on the basis of legal professional privilege):
Riverbed leases were first administered by the then Department of Marine and Harbours on 1 July 1985 for a 21 year lease period with a 21 year lease extension option. [Portion redacted] The intention was that a rent of 10% of the market value would be paid in 1985 and every subsequent three years the rent would increase by 2% of the valuation to be paid, to a maximum of 22% of the market rate. That is, at the first review the rent would increase to 12% of the market value, and at the second review 14% of the market value. This was in strong contrast to the 2% increase in rent on the rental value initially set in 1985 which was actually charged every 3 years on the riverbed leases. In effect the yacht clubs had enjoyed lease rates well below current commercial rates for 21 years.
As a result, Government signalled its intent to sign the yacht clubs and marinas around the river onto modern leases. The majority of clubs immediately agreed to the new terms, generally accepting that the lease rates situation was unfair and that a discounted market rate was a reasonable approach for determining a rental value for the yacht club's marina areas. Seven of the ten clubs have now signed under the new lease arrangements for the next 21 years and beyond, some progressively entering into new leases when major redevelopment or expansion has justified such a requirement. The attached letter was sent from the then Minister for Planning and Infrastructure to the SoPYC explaining Government's rational for requesting that all yacht clubs enter into new leases with updated rents. Currently, the only yacht clubs to not be on the modern lease, after electing to exercise renewal options under the original leases for a further 21 years, are Royal Freshwater Bay Yacht Club, Claremont Yacht Club and the SoPYC.
As mentioned above, the SoPYC does not oppose the need to implement best practice environmental standards for its day‑to‑day activities. It can therefore be surmised that the SoPYC is only resistant to entering into a new lease due to the additional rent that will be payable. [Portion redacted]
Under the SoPYC's current lease, which is based on the original 1985 model, its annual rent is presently $5066.65 for exclusive use of 144,376m² of river reserve. If the SoPYC were to enter into a new riverbed lease arrangement, consistent with the majority of other yacht clubs around the river, its annual rent would be approximately $57,200. This value is based on 26% of a market rent of $220,000, as advised in 2012 by the Valuer General's Office as being applicable to the SoPYC. The Valuer General's Office assesses market rents based on comparisons with full commercial premises. For yacht club's [sic], the market rent is discounted to 26% of the full commercial value. Lease rates are influenced by things such as lease area, pen numbers, slipping facilities and location. Rent reviews are annual and based on either CPI or current market rent. [Portion redacted]
[Portion redacted]
In early 2014, the Claremont Yacht Club received ministerial approval for significant expansion of its jetty structures, resulting in 59 new pens. Despite the new jetty being contained entirely within the Claremont Yacht Club's existing riverbed lease area, it agreed to modernise its lease, which will include an increase in rent, and has entered into negotiations in good faith.
On 1 April 2015, the SRT wrote to the applicant enclosing the Minister's approval, under s 80 of the SCRM Act, of the application with conditions, including condition 2 and advice note 2 (which are set out above).
On 28 April 2015, the applicant sought reconsideration of condition 2 pursuant to s 82 of the SCRM Act. The request for reconsideration referred to the requirements for valid conditions, including that a condition of development approval must be for a planning purpose and not any ulterior purpose, must fairly and reasonably relate to the proposed development, must not be so unreasonable that no reasonable planning authority could have imposed it and must comply with the SCRM Act.
The application for reconsideration then referred to the background to the application, and asserted that it was the SRT's strategy to utilise the development application process in order to require a new lease. Support for that proposition was drawn from the correspondence referred to above, and in particular the letters of 19 October 2009, 23 December 2009 and 26 February 2010. The letter summarised the club's objections as:
(1)The current best practice as to environmental protection could have been imposed as a condition of development approval, without a new lease or variation for that purpose. Environmental conditions have in fact been included in the Minister's conditions. The proper and only place for new environmental conditions is within the present development approval, not in a new lease.
(2)Even if a new lease became the mechanism for revised environmental protection, there is no proper need to also extend the new lease to different terms as to rent etc.
(3)There is no reason why Condition 2 requires a 'new' lease, as opposed to a varied lease.
(4)There is no need for any lease variation or new lease.
The letter asserted that condition 2 was designed to further the SRT's ulterior purpose, which is not a planning purpose and which was not related to the proposed development. Rather, it was suggested, condition 2 was designed to implement the SRT's strategy for forcing the applicant into more onerous rent obligations. The application for reconsideration then elaborated on each of those four objections. The application concluded by suggesting that if a new lease was required in order to accommodate a boundary adjustment related to the proposed development, or to include best practice environmental provisions, condition 2 of the approval could be amended to require the applicant to enter into a varied riverbed lease to reflect the altered boundary of the lease area and revised environmental conditions in respect of the area for reclamation.
On 17 June 2015, the Minister wrote to the applicant advising that he had determined that the decision to impose condition 2 was reasonable and appropriate. In doing so, he acknowledged that the relevant test as to validity of conditions was that outlined by the applicant in its application for reconsideration. After referring to relevant policies which had been considered, and to the applicant's detailed submissions against the imposition of condition 2, the Minister said:
The proposed development seeks to modernise the Club's facilities and will increase the number of pens available to be used. Whilst the Club's lease area is not being extended, the development will enable the existing lease area to be used more intensively than is presently the case. Portions of the riverbed will also be reclaimed and a seawall is required to be constructed. It is a significant development with an overall cost of $4,500,000,
Against that backdrop I consider that the decision to impose condition 2 is reasonable and appropriate in the circumstances and is consistent with the objectives of the Act.
Importantly, condition 2 will ensure that the Club's lease arrangements are consistent with contemporary practice in terms of the management and protection of the Riverpark.
It is my view that condition 2:
(a)is for a purpose that is authorised by the Act because it accords with the objectives of the Act which include protecting and managing the Riverpark;
(b)reasonably relates to what is a substantial development that will facilitate an intensification of the Club's use of its lease area; and
(c)is not manifestly unreasonable.

The test for legality of a condition

It was not in issue between the parties that the appropriate test as to whether a condition imposed on a planning consent is valid is that articulated by the House of Lords in Newbury District Council v Secretary of State for the Environment [1981] AC 578, namely that the condition must be for a planning purpose and not for any ulterior purpose, the condition must reasonably and fairly relate to the proposed development and the condition must not be so unreasonable that no reasonable planning authority could have imposed it: see Western Australian Planning Commission v Temwood Holdings Pty Ltd [2004] HCA 63; (2004) 221 CLR 30 [57] (McHugh J), [155] (Callinan J).
The respondent submitted, and I accept, that in the context of the proposed development the reference to a planning purpose in the first limb of the Newbury test should be read as a proper planning purpose consistent with the scheme of the SCRM Act.

The purpose of condition 2

Ground 1(a) turns on the proposition that condition 2 was imposed for the purpose of increasing the rent paid by the applicant for the occupation of the riverbed lease area. The respondent contends that there is no basis in the evidence for concluding that the Minister had such a purpose.
The respondent accepts, correctly, that it is not necessary, in order that the condition be rendered invalid, that the ulterior purpose be the sole purpose of imposing the condition. It is sufficient if the ulterior purpose is a substantial purpose: Thompson v Randwick Corporation (1950) 81 CLR 87, 106.
The respondent observes that there is no reference to existing rent arrangements or increases in rent in the s 76 Report, the Minister's approval dated 30 March 2015 or the Minister's letter dated 17 June 2015 sent in response to the applicant's request for reconsideration.
The respondent submits that those documents make it clear that the justification for the imposition of condition 2 was to ensure that a contemporary lease is in place to provide for the environmental management of the riverbed lease area, and not to obtain an increase in rent. In oral submissions, counsel for the respondent maintained that, whilst it was not the purpose of the imposition of the condition, there was no fetter on the respondent demanding an increase in rent under a new lease. He submitted that the rent payable under a new lease would be a matter for negotiation. While that is no doubt correct, the desire for consistency among yacht clubs on the Swan River strongly suggests that the SRT's expectation is that the rent would significantly increase in the manner explained in the Ministerial briefing note.
I do not accept the respondent's contention. There are a number of reasons why, on any objective view, the inference should be drawn that a substantial purpose for which condition 2 was imposed was to bring the rent paid by the respondent in line with what was said in 2006 to have been the original intention of the lessor and with rents being paid by other yacht clubs on the Swan River which had agreed to new leases.
Firstly, the s 76 Report, where it referred to the 1985 lease, referred to unsuccessful negotiations with the applicant in relation to a new lease and the obtaining of consistency of leases of yacht clubs on the river. There is a clear inference that the recommendation that a new riverbed lease 'be pursued' is founded on that background. The letter which commenced those negotiations, being the then Minister's letter of 29 December 2006, expressed the purpose of the requirement for a new lease entirely as the desire to increase the rent substantially. The consistency being referred to was, against the background of the negotiations, clearly a consistency in relation to the payment of rent. Quantification of the rental was not based on questions of intensity of use.
Secondly, at [3.6] of the s 76 Report, reference was made to the preference of the applicant to enter into a deed of variation of the lease which could implement best practice environmental standards. To the extent that the purpose of condition 2 was to achieve improved environmental standards imposed through a lease mechanism, there is no reason why that could not have been achieved in the way suggested by the applicant. In [3.8] of the s 76 Report, it was said that the increase in the number of pens, as well as 'significant reclamation of the riverbed', were considered to be 'substantial enough changes to the river and foreshore to warrant a new riverbed lease'. Beyond potential environmental consequences, which could have been dealt with by a variation to the existing lease, I am unable to see why the increased number of pens, or excision of the reclaimed area from the lease, would warrant a new riverbed lease. Even if the additional pens might, as they probably would, produce increased income for the applicant, that does not provide any basis to alter the terms of the applicant's leasehold interest. The respondent did not argue the case on the basis that an increased income for the applicant from the riverbed lease area justified an increase in rent.
Thirdly, in [6.3] of the s 76 Report, reference back to 2006 when 'the government signalled its intent to sign the yacht clubs … onto modern leases', and that 'the majority of clubs immediately agreed to the new terms', reinforces the conclusion that the 'consistency' being sought is a consistency in relation to calculation of rent. That is reinforced by the Ministerial briefing note.
Fourthly, in the Ministerial briefing note, which was in the possession of the Minister before he met with the applicant and made his decision, there is lengthy discussion of the rental position and reference to the fact that the applicant 'is only resistant to entering into a new lease due to the additional rent that will be payable'. The consequences on rent of the proposal for a new lease were expressly explained and quantified. There can be no doubt that the meeting between the applicant and the Minister on 26 March 2015 was focused upon the proposal to require increased rent. There is no doubt that the Minister was fully apprised of the background to the desire for a new lease because the Ministerial briefing note appended a copy of the previous Minister's letter of 29 December 2006 to the applicant.
Fifthly, the applicant's request for reconsideration expressly objected on the basis that the requirement for a new lease was designed to take advantage of an opportunity to demand greater rent. Although the Minister acknowledged, by reference, the objection that condition 2 had been imposed for an improper purpose, he did not specifically address the issue of increased rent. He did not refute the contention that the requirement was designed to achieve greater rent.
In the context of the history of attempts by the relevant authority to obtain a new lease with a requirement for increased rent, which background was well known both to the SRT and to the Minister when he made his decision, the conclusion is inescapable that a substantial purpose of the requirement to enter a new lease, as distinct from requiring uncontentious variations to the existing lease in relation to environmental and boundary matters, was to require the applicant to pay rent in accordance with the formula originally proposed in December 2006. That was not a proper purpose having regard to the scope and purpose of the power under s 80 of the SCRM Act. I uphold ground 1(a).

Nexus

The power to grant leases of the river reserve is found in s 29 of the SCRM Act. A lease may be granted on terms and conditions that the CEO considers appropriate. Section 29(4) provides that if a development to which a proposed lease relates requires approval under s 70, a lease must not be granted on any term or condition that is contrary to or inconsistent with that approval. Although s 29(4) has no application to the present case, where a lease is already granted, it would be consistent with the scheme of the SCRM Act to impose conditions requiring a specific variation to an existing lease if approval of a new development within the existing lease area would otherwise be inconsistent with the terms of the existing lease. In this case, however, it cannot be said that the proposed development is inconsistent with or contrary to the rent provisions in the existing riverbed lease. Section 29(4) does not provide a basis to impose conditions under s 80 relating to the terms of a lease that are not reasonably related to the proposed development.
I did not understand the respondent to contend that a development approval condition that simply imposed an increase of rent could be said to fairly relate to the proposed development. It could not. The clear effect of condition 2 is that the condition enables the lessor to insist on a very significantly increased rent. In that respect, condition 2 does not fairly relate to the proposed development.
It is no answer that the condition also enables the imposition of environmental management requirements and boundary alterations. It is not open to the Minister to impose requirements that have no proper nexus to a proposed development by tying those requirements into a mechanism that is also directed to requirements that do have the required nexus. The latter could, in this case, be easily achieved by appropriate variations to the riverbed leases.
Ground 1(aa) is made out.

Validity of mechanism to impose environmental conditions

Ground 1(b) asserts that condition 2 was imposed in order to add environmental conditions in a manner contrary to the SCRM Act. The applicant's contention is that condition 2 lacks sufficient specificity to fall within the power to impose conditions found in s 80(1)(c) of the SCRM Act. It is submitted that it is not possible to identify what the required environmental conditions are from the terms of the approval. No draft lease was attached to the approval which would have identified the proposed environmental management requirements. The applicant contends that if the condition is designed to impose environmental management requirements, then those requirements should be stipulated as conditions of the approval. The applicant accepts that, for reasons of effective enforcement, a condition of approval might reasonably require that the environmental management requirements be incorporated within the terms of the applicant's lease. It contends, however, that if that is to be the requirement, then the proposed terms of the variation should be clearly revealed as a condition of the approval. The failure to spell out the required terms on the basis that they will eventually be revealed in the terms of the new lease which is required to be signed renders nugatory the applicant's right to reconsideration in relation to those terms pursuant to s 82 of the SCRM Act. That is because a request for reconsideration must be made within 28 days of receipt of notice of the Minister's decision. If the terms of the lease are not disclosed within that period, but are thought to be unsatisfactory by the applicant, no request for reconsideration would be available.
Ambulatory conditions to planning approvals are not uncommon. The approval in question in these proceedings contains conditions which require a demolition and construction environmental management plan, final design plans for the works, a stormwater drainage management plan, a lighting plan, a public access plan and a landscaping plan, all to be prepared 'to the satisfaction of the [SRT]' (conditions 4, 5, 6, 7, 8 and 9). In Winn v Director General of National Parks and Wildlife [2001] NSWCA 17; (2001) 130 LGERA 508, Spigelman CJ, referring to Transport Action Group against Motorways Inc v Roads and Traffic Authority (NSW) (1999) 46 NSWLR 598 [117], rejected the proposition that any retention of flexibility or any delegation to a third party of the function of supervising a stage of the development is prohibited [17]. The Chief Justice, then referring to Scott v Wollongong City Council (1992) 75 LGRA 112, 118, concluded that provisions of that nature are inevitable since it cannot be supposed that a development application can contain every ultimate detail or that a consent can finally resolve all aspects of a proposal with absolute precision. That proposition was cited with approval in Buzzacott v Minister for Sustainability, Environment, Water, Population and Communities [2013] FCAFC 111; (2013) 215 FCR 301 [168], [169] and [179]. A condition will, however, be invalid where it has the effect of significantly altering the development or leaving open the possibility that a development carried out in accordance with the condition will be significantly different from that applied for, so that there is not in reality a consent to the ultimate development: see Mison v Randwick Municipal Council (1991) 23 NSWLR 734, 737 (Priestley JA), 739 - 740 (Clarke JA); Kindimindi Investments Pty Ltd v Lane Cove Council [2006] NSWCA 23; (2006) 143 LGERA 277 [28] (Basten JA).
Condition 2 requiring entry into a new lease was not capable of enabling a significantly different development. If it were the case that the requirement for a new lease was reasonably related to the proposed development, the ambulatory nature of the condition does not lead to its invalidity. The respondent did not err in law in the manner asserted in ground 1(b).

Premature requirement of a new lease to reflect new boundaries

The current boundaries of the riverbed lease area include the 1,100 sqm of land which is proposed to be reclaimed as part of the proposed development. When the reclamation is completed, it will alter the location of the high watermark, which presently serves as the boundary on the western side of the riverbed lease area. The river reserve, over which the SRT has jurisdiction and to which its power to lease is restricted, extends only to the high watermark.
Reserve 25599, which, as observed earlier, is under the care, control and management of the applicant by reason of a management order made on 20 April 2005, extends to the land side of the high watermark where the proposed development is to take place. The applicant submits that the result of the reclamation will be that the eastern boundary of reserve 25599 and the conterminous lease boundary will both move with the movement in the high watermark when the seawall is complete.
Because the power to lease is confined to the river reserve, and thus only the seaward side of the high watermark, the movement in the high watermark will require an alteration to the boundary of the lease area when the seawall is complete and the new high watermark is established.
The applicant contends that if the lease boundary is altered before the works commence by the entry into a new lease with altered boundaries, there will be a gap in the applicant's tenure between the lease and reserve 25599 with the result that construction will be taking place on land neither leased under the seabed lease nor the subject of the management order in relation to reserve 25599. It submits that the result would be that the applicant would not be in lawful occupation of the area and would have no lawful capacity to exclude others from the construction site. The applicant also submits that, because the precise location of the seawall as constructed may differ from the precise line on the approved plan, a better practical course would be to vary the lease boundary after its location is made certain by the construction of the seawall.
Accepting for present purposes, but without deciding, that the boundary of the river reserve will automatically change upon completion of the seawall, and before amendment is made to the deposited plans which are referred to in schedule 4 of the SCRM Act and which depict the boundaries of the river reserve, I do not consider that the issues of tenure identified by the applicant lead to a conclusion that condition 2 is invalid. Questions of timing as to the commencement date for a new lease, and as to any necessary extension of the boundaries of reserve 25599, are matters to be resolved regardless of whether a new lease is entered or a variation of the riverbed lease is undertaken to accommodate the altered boundaries.
I do not consider that the respondent exceeded its jurisdiction in imposing condition 2 for the reason asserted in ground 1(c).

Conclusion

For the foregoing reasons, I consider that the respondent erred in law and exceeded his jurisdiction by imposing condition 2 for an extraneous or improper purpose and that the requirement for a new lease, rather than a variation of lease to deal with environmental management matters and boundary changes, did not have sufficient nexus to the proposed development. The appeal should therefore be allowed on that basis. In those circumstances, as the applicant submitted, ground 2 need not be addressed.
The decision of the Minister to impose condition 2 to the approval should be quashed, and the matter should be referred back to the Minister to reconsider the application for development in accordance with these reasons.
I will hear the parties as to the precise form of orders to be made.

[2016] WASC 160

26 MAY 2016

Key Legal Topics

Areas of Law

Administrative Law

Legal Concepts

Certiorari

Improper or Extraneous Purpose

Natural Justice & Procedural Fairness

Legitimate Expectation