The Lawson Clinic Pty Ltd v Ku-ring-gai Council

[2016] NSWLEC 36

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:	The Lawson Clinic Pty Ltd v Ku-ring-gai Council [2016] NSWLEC 36
Hearing dates:	16, 17, 18, 23 and 24 March 2016
Decision date:	08 April 2016
Jurisdiction:	Class 1
Before:	Moore J
Decision:	Matter adjourned for further hearing on 12 and 13 May 2016
Catchwords:	CATEGORISATION OF PROPOSED DEVELOPMENT – Contributions Plan – contribution to be levied dependent on categorisation of development – definition of “non-private dwelling” not satisfied – appropriate category is “commercial premises” NEXUS OF DEVELOPMENT TO WORKS IN CONTRIBUTIONS PLAN – does proposed development require or contribute to demand for the events providing bases for the contribution – sufficient bases found to exist – ability of applicant to challenge basis of calculation stood over PUBLIC BENEFIT – claim for relief from contribution on grounds of public benefit – claim under cl 1.26 of Contributions Plan – held cl 1.26 not available PUBLIC BENEFIT – claim on general reasonableness grounds – for-profit psychiatric hospital also proposed to be used for university teaching and research – extent of evidence on scope of public benefit – absence of evidence to permit quantification of public benefit – no commercial information of either historic operation of associated for-profit outpatient psychiatric clinic – no commercial information on projections for inpatient facility – not possible, on highest case for applicant, to quantify what discount (if any) might be appropriate – matter stood over to permit discussions between parties on the basis of those findings
Legislation Cited:	Environmental Planning and Assessment Act 1979 Ku-ring-gai Contributions Plan 2010 Land and Environment Court Act 1979
Cases Cited:	Rose Consulting Group v Baulkham Hills Shire Council [2003] NSWCA 266; 58 NSWLR 128 Hammersmith Management Pty Ltd v Lake Macquarie Council [2003] NSWLEC 20; 124 LGERA 63
Category:	Principal judgment
Parties:	The Lawson Clinic Pty Ltd (Applicant) Ku-ring-gai Council (Respondent)
Representation:	Counsel: Mr C Ireland, barrister (Applicant) Mr J Robson SC (Respondent)   Solicitors: CMI Law Firm (Applicant) Spark Helmore (Respondent)
File Number(s):	11061 of 2015
Publication restriction:	No

TABLE OF CONTENTS

Judgment

Introduction

The approved development

The proceedings

The Contributions Plan

How the burden falls in these proceedings

The development contribution condition

The categorisation contest

The relevant definitions

The plan’s discussion of “non-private dwelling”

“Non-private dwelling”, consideration of the definition

The nature of the contribution called up by the “commercial premises” categorisation

The extent of application of the Contributions Plan

The exemption clause in the Contributions Plan – cl 1.26

The claimed public benefit

First cl 1.26 basis

Second cl 1.26 basis

Public benefit – the general discretion to vary

Not-for-profit activities

Conclusion

Annexure A

Judgment

Introduction

1. HIS HONOUR: The Lawson Clinic Pty Ltd (the Clinic) operates, at present, as a psychiatric outpatients’ clinic. The Clinic is located on the Pacific Highway at Gordon, on the western side of the road, a little to the south of the Gordon shopping centre strip.

The approved development

2. The Clinic has applied for, and been granted, development consent to construct a 65-bed inpatient psychiatric hospital facility on a site that significantly expands the present landholding upon which the Clinic is located. The construction cost will be about $8.5 million and the land value about $5.0 million, giving a total project cost of about $13.5 million. The site will be accessed on a left turn-in-left-turn-out basis from the Pacific Highway.

3. The proposed development is to be constructed at 742, 746, 746A and 748 Pacific Highway, Gordon. It will consist of the construction of a 65-bed facility with a gross floor area of 2,704 square metres.

4. The proposed hospital was approved by the relevant Joint Regional Planning Panel (the Panel), subject to a number of conditions.

The proceedings

5. The Clinic seeks to modify the conditions that were attached to the development consent granted by the Panel in two respects.

6. First, the Clinic seeks the deletion of a condition that imposed a requirement for it to pay Ku-ring-gai Council (the Council) a non-refundable infrastructure restoration fee, estimated by Mr Levy (see later for his general evidence) to be ~$17,000 (e-mail dated 23 July 2015, Class 1 Application, 24 November 2015, Tab 4), based on rates listed on page 92 of the “Ku-ring-gai Adopted Fees and Charges”. The second is the condition that required the Clinic to pay the Council a development contribution calculated pursuant to the Ku-ring-gai Contributions Plan 2010 (the Contributions Plan) of $451,410.97, an amount which is to be adjusted further for inflation.

7. This decision deals with the second of these matters only

The Contributions Plan

8. The Contributions Plan is, in general terms, a conventional one developed and adopted by the Council through the prescribed processes under the Environmental Planning and Assessment Act 1979 (the EP&A Act).

9. The Contributions Plan sets out a number of categories of development with the categorisation of the approved development determining the category into which it falls and, thus, the basis upon which the development contribution for that proposal is to be calculated.

10. The plan is a modern one and went through the full statutory development and consultation process prior to adoption by the Council.

How the burden falls in these proceedings

11. Although there is no formal burden of proof in the sense of “the balance of probabilities” being engaged, the applicant in proceedings such as these is conventionally regarded as “bearing a persuasive burden”. I have always understood that expression to mean that the Clinic, in these proceedings, is required to show me sufficient good reason why I should adopt the position advocated by Mr Ireland, counsel for the Clinic.

The development contribution condition

12. The first step in determining how the proposed inpatient facility should be dealt with pursuant to the Contributions Plan is to determine how it is to be categorised. This is necessary as the categorisation determines what items identified by the Contributions Plan are to be supported by funding from the relevant category or categories of approved development.

13. Once the categorisation exercise had been undertaken and the calculation from the Contributions Plan’s formula for that category derives the resultant amount of that levy, that is not the automatic end of the story. There are then further issues capable of being triggered for consideration as to whether an individual development should remain liable for the contribution so calculated. In these proceedings, the Clinic first disputes the category assigned to the proposed inpatient facility, thus requiring me to undertake a categorisation assessment of the proposal.

14. However categorised, a contribution would be derived pursuant to the relevant post category determination formula applicable. Whatever the amount so derived, the Clinic then seeks to engage a number of further bases which, Mr Ireland submits, provide a proper foundation to set aside any requirement for the Clinic to pay a development contribution for this proposed facility. In summary, those bases are:

1. First, there is no nexus between the proposed development and the facilities for which a contribution would be levied (however the development is categorised) on the inpatient facility; or

2. Proper consideration of a discretionary provision (cl 1.26) contained in the Contributions Plan itself should give rise to a determination that the public benefit of the proposal is such that, on a proper exercise of the discretion, the fee should be waived in its entirety; or

3. I should exercise the discretion available to the Court (but not to the Council - see Rose Consulting Group v Baulkham Hills Shire Council [2003] NSWCA 266; 58 NSWLR 159) and, on a proper understanding of the public benefit of the proposal, waive, in its entirety, the proposed contribution.

15. As a fallback position, if there is not to be total relief from the category-derived fee, then the Clinic puts the proposition that a substantial (but not precisely quantified) discount should be applied in recognition of the public benefit the Clinic says should be ascribed to its proposed operations.

The categorisation contest

16. I have later set out the three relevant definitions engaged from the dictionary in the Contributions Plan. Those definitions are of “commercial floorspace”, “commercial premises” and “non-private dwelling”. It is the agreed position of the parties that one or other of the latter two definitions must apply to the Clinic’s proposed development, there being no other potentially relevant category of development into which it could fall.

17. As set out in more detail later, how the proposed development is categorised gives rise to different mathematical outcomes when calculating what is the development contribution (prior to consideration of any ameliorating or discounting factors), as different identified works are proposed to be funded by contributions from differing types of development. For this proposal, the Clinic proposes that it could be categorised as “non-private dwelling” (a term defined in the plan as set out later), whilst the Council contends that it should be categorised as “commercial premises” (also a defined term as set out below).

18. Without entering into matters of great mathematical precision, my determination of the outcome of this contest might, prima facie, lead to a perverse result from the Clinic's perspective. This arises because, if the full rate of contribution were to be required to be paid by the Clinic, the current, adjusted amount applicable as “commercial premises” is ~$550,000 (Notice of Determination of Development Application by the Sydney West JRPP, Exhibit D, Vol. 2, folio 470), whilst that derived from “non-private dwelling” is over $700,000 (Respondent’s Expert Planning Report, Exhibit 1, folio 11 at [2]). However, given my conclusion on the appropriate category, this does not require further consideration.

The relevant definitions

19. There are three terms that are defined in the dictionary of the Contributions Plan that are relevant in these proceedings. They are the definitions of “commercial floorspace”, “commercial premises” and “non-private dwelling”. Each of these is set out below:

“commercial floorspace” means any floorspace for the purposes of any for-profit activity including but not necessarily limited to commercial, retail, office, business, industrial, private education, private health, private childcare facilities or other commercial enterprise.

“commercial premises” means a building or place used for business or commercial or industrial purposes including but not limited to offices, shops, supermarkets, retail complexes, entertainment establishments, clubs, restaurants and cafes, factories, warehouses, transport terminals, for-profit activities and any other place which, in the opinion of Council, either generates a demand for facilities and services by means of the nature of the business and/or employs people who may generate a need for services and facilities which Council has a responsibility to provide. “Commercial premises” is a collective term used for all business activities for the purposes of this Contributions Plan.

“non-private dwelling” means places of residence that are not separate dwellings such as institutions, hostels, boarding houses, boarding school accommodation, seminaries, nurses accommodation and other staff accommodation but does not include short-term tourist accommodation or camping grounds (e.g. Girl Guides and Scouts).

The plan’s discussion of “non-private dwelling”

20. In the section of the Contributions Plan that discusses the demography of the Ku-ring-gai Local Government Area (2.14 “The Demography of Ku-ring-gai”, Exhibit D, folio 87), amongst the matters that are discussed is “non-private dwelling” (2.14.6 “Non-Private Dwellings”, folio 92). This portion of the Contribution Plan was the focus of a good deal of discussion in both the submissions made by Mr Ireland and Mr Robson SC, counsel for the Council, and also the town-planning evidence given by Mr Kerr for the Clinic and Mr Brindle for the Council. The town-planning evidence is discussed in more detail later. The discussion of “non-private dwelling” in the Contributions Plan is in the following terms:

2.14.6 Non-Private Dwellings

While there are relatively few residents of non-private dwellings in Ku-ring-gai, none-the-less these residents are also members of the community and need to be considered in the planning and provision of services and amenities.

Some non-private dwellings are provided as stand-alone accommodation like a boarding house or hostel. In Ku-ring-gai, a number of properties incorporate both private and non-private dwellings. For example retirement villages may contain self-contained dwellings for active over 55s as well as serviced accommodation like hostels as well as nursing home beds.

Other properties may include non-private dwellings with other uses such as nurses’ accommodation with a hospital complex; staff quarters within a business or institution; student accommodation within a school or tertiary establishment; and the like.

Figure 2.15: Ku-ring-gai Residents of Non-private Dwellings 2006 Census

Type of Non-Private Dwelling	Males	Females	Persons
Accommodation for the retired or aged (not self-contained)	105	532	637
Boarding house, private hotel	10	4	14
Boarding school	143	344	487
Childcare institution	4	3	7
Convent, monastery, etc	32	14	46
Corrective institution for children	0	0	0
Hostel for homeless, night shelter, refuge	5	6	11
Hostel for the disabled	0	0	0
Hotel, motel, bed and breakfast	22	11	33
Immigration detention centre	0	0	0
Nurses' quarters	38	124	162
Nursing home	127	460	587
Other and not classifiable	9	18	27
Other welfare institution	0	0	0
Prison, corrective institution for adults	0	0	0
Private hospital (not psychiatric)	214	277	491
Psychiatric hospital or institution	0	0	0
Public hospital (not psychiatric)	13	35	48
Residential college, hall of residence	0	0	0
Staff quarters	9	5	14
Not stated	0	0	0
Total	731	1,833	2,564

Many of these listed types of non-private dwellings provide accommodation for active people who are able to participate fully in community life and use the facilities which council provides for all its residents. Conversely it is acknowledged that not all residents of non-private dwellings will place a demand on Council’s services and facilities. By way of example, the public hospital listed in this table is a palliative care facility. In the case of levying and crediting these types of accommodation, the attention of applicants is drawn to section dealing with the limited opportunities for merit exemptions from this Contributions Plan.

21. There are two matters to be observed concerning this extract. The first is a general one relating to the approach to be taken to interpretation of the plan, whilst the second relates to the table reproduced in the above extract.

22. With respect to the approach to be taken to the interpretation of the document, it is long-settled that, despite there being a specific statutory basis for the preparation of such plans, they are not to be parsed and dissected as if they had been drafted with the care and diligence brought to drafting by Parliamentary Counsel in the preparation of legislation. This general proposition, however, is to be qualified where terms are defined in such a document, and more is thus required in one's analysis of such a definition.

23. The specific aspect of the above extract concerns Table 2.15, a table extracted from Australian Bureau of Statistics’ data for analysis of one aspect of data collected as part of the National Census process. There is, as has been explored in these proceedings, an element of tension between the list of premises encompassed in the Bureau's approach to what should be regarded as “non-private dwelling” and that which is to be drawn from a consideration of the definition of that term in the Contributions Plan. However, given my threshold decision, this extract requires no further consideration.

“Non-private dwelling”, consideration of the definition

24. It is convenient to set out, again, the terms of this definition prior to considering how it should be interpreted. The definition is in the following terms:

“non-private dwelling” means places of residence that are not separate dwellings such as institutions, hostels, boarding houses, boarding school accommodation, seminaries, nurses accommodation and other staff accommodation but does not include short-term tourist accommodation or camping grounds (e.g. Girl Guides and Scouts).

25. There are two elements within the definition that require detailed consideration. They are set out below, in reverse order (that being, in my view, the appropriate order for consideration):

1. Is the proposed development an institution?

2. If so, is that institution one that fits within the introductory words of the definition, particularly, “can the proposed development be regarded as a place of residence”?

26. Turning, first, to consideration of the concept of “institution”, I was taken to the definition of this expression in the Macquarie Dictionary, a definition that was tendered as part of Volume 2 of the Applicant’s bundle of documents (Exhibit D, folio 514). The definition is in the following terms:

Institution

noun 1. an organisation or establishment for the promotion of a particular object, usually one for some public, educational, charitable, or similar purpose.

2. a building used for such work, as a college, school, hospital, mental hospital, or the like.

3. a concern engaged in some activity, as an insurance company.

4. Sociology an organised pattern of group behaviour, well established and accepted as a fundamental part of a culture, such as slavery.

5. any established law, custom, etc.

6. any familiar practice or object.

7. the act of instituting or setting up; establishment: the institution of laws.

8. Ecclesiastical

a. the origination of the Eucharist, and enactment of its observance, by Christ.

b. the investment of a member of the clergy with a spiritual charge.

[Middle English institucion, from Old French, from Latin institutio arrangement]

27. I accept that, in terms, the Clinic’s proposed inpatient development falls within the scope of this definition and, therefore, on a “nature of physical development” basis, it passes the first necessary test arising from the definition of “non-private dwelling”.

28. I now turn to the question of whether this proposed development will constitute a “place of residence” or not. I do so in the context that Mr Brindle, in his oral evidence, explained that he did not accept the Clinic’s proposition, supported by Mr Kerr, that this was a place of residence.

29. The reason that Mr Brindle gave for this conclusion was, as I understood his evidence, what he regarded as the more transient nature of the occupation of beds in the proposed development that would be undertaken by inpatients of the facility. He did so on the basis that other evidence disclosed (Exhibit C, Affidavit of Dr Skarbek, 3 February 2016, folio 3 at [15]) that, as a general rule, the period of occupation by each patient was ordinarily likely to be a maximum of three weeks, although there would, from time to time, be patients who stayed for longer or shorter periods than this (Transcript 17 March 2016, folio 133, lines 21 to 24).

30. In support of his submissions that I should conclude that the proposed facility would in fact be a place of residence, Mr Ireland tendered (part of Exhibit L) a photocopy of a page from the Macquarie Dictionary. This page includes definitions, in the relevant order for consideration, of “residence” and “reside” (the latter being referred to in the definition of the former). The first of these definitions, that of “residence”, is in the following terms:

Residence

noun 1. the place, especially the house, in which one resides; dwelling place; dwelling.

2. a large house.

3. the act or fact of residing.

4. the time during which one resides in a place.

–phrase 5. in residence, living or staying in a place of official or other duty.

[Middle English, from Old French résidence]

31. This, necessarily, requires a return to consideration of the earlier word, “reside”. Relevantly, this word is defined in the following terms:

Reside

verb (i) (resided, residing)

1. to dwell permanently or for a considerable time; have one's abode for a time: he resided in Box Hill.

32. Although Mr Ireland did not take me to the definition of the word “abode”, for abundant caution in the context of the conclusion that I have reached on this point, it is appropriate for completeness to consider that additional definition, one in the following terms:

Abode

noun 1. a dwelling place; a habitation.

33. Following the chain of linkage between the first and second of these three definitions, it is self-evident to me that the occupation of this facility is certainly not permanent as far as the inpatients are concerned and, in the alternative, an ordinary period of occupation of three weeks or so could not reasonably be described as being for a considerable period of time. On this basis, I am satisfied that the effect of the totality of this material must lead to a conclusion that Mr Brindle’s position as to why the facility could not be categorised as a “non-private dwelling” is the correct one.

34. Before leaving this definition, for completeness, I should turn to a matter that I raised with Mr Ireland and Mr Robson during the course of the hearing: that being the limited exception given to two types of habitation by the tail-end of the definition, being the words “short-term tourist accommodation or camping grounds”.

35. I have considered whether the fact that these words should be regarded as, in some fashion, tempering what I have set out above as being what I consider to be the correct interpretation of the words “place of residence” and, particularly, whether any such tempering, if of a more general nature, should mean that “short-term accommodation” (which would, in my view, encompass the nature of the occupation envisaged for the Clinic’s proposed development) should be included on the basis that it had not been expressly excluded by the limited terms of these final words of the definition.

36. I do not consider that I should approach the matter in this fashion. I have reached this conclusion because the particular types of specifically excluded accommodation are ones that could not ordinarily fall within the general scope of the definition as I have construed it but, for tourist accommodation, properly fall within the “commercial premises” category and, for Girl Guides’ facilities, would appear not to have the potential to attract a development contribution if new development of this nature were to be proposed to the Council. With respect to the Girl Guides’ facilities, I am satisfied it is reasonable to assume that these are unlikely to be conducted on a for-profit basis but are not likely to fall, for reasons later explored in a different context, within the first of the bases for exemption from, or reduction of, development contributions contained in cl 1.26 of the Contributions Plan.

37. Although, perhaps, infelicitously drafted (a matter that need not detain me in these circumstances), there is, in my view, sufficient specific reason to confine the understanding of this phrase at the conclusion of the definition of “non-private dwelling” to set aside any possibility that the Clinic’s facility should, in some way, be shoehorned into the main body of the definition as a consequence of its non-exclusion by the concluding portion of the definition.

38. This reasoning, in itself, is sufficient to dispose of the proposition that the Clinic’s facility should be categorised as a “non-private dwelling”. On this basis, the proposed private psychiatric hospital must, by default, be categorised as “commercial premises”.

39. However, I consider that it is also appropriate to set out why I am satisfied, on a positive basis, that the Clinic’s proposed facility should be so categorised.

40. First, the definition of “commercial floorspace” clearly brings, within its express terms, the floorspace of this proposed development. It does so by the incorporation, in the definition, of the words “for-profit activity including but not necessarily limited to…private health… or other commercial enterprise”. Although not conclusive in the circumstances, this provides at least what should be regarded as a broad hint as to how one might regard a facility such as this; one that clearly squarely falls within the words “commercial enterprise”.

41. However, the next step, and the one in reaching a positive conclusion, comes from a proper examination of the definition of “commercial premises” in the Contributions Plan. Although earlier set out, it is appropriate, here, to repeat that definition. It is in the following terms:

“commercial premises” means a building or place used for business or commercial or industrial purposes including but not limited to offices, shops, supermarkets, retail complexes, entertainment establishments, clubs, restaurants and cafes, factories, warehouses, transport terminals, for-profit activities and any other place which, in the opinion of Council, either generates a demand for facilities and services by means of the nature of the business and/or employs people who may generate a need for services and facilities which Council has a responsibility to provide. “Commercial premises” is a collective term used for all business activities for the purposes of this Contributions Plan.

42. The inclusion of “for-profit activities”, as used in this definition, clearly encompasses this proposed development, showing it does fit within this definition.

The nature of the contribution called up by the “commercial premises” categorisation

43. The Contributions Plan sets out (at page 9 in Exhibit B, Vol. 1, folio 14) the range of projects in the applicable defined area within which the site of the proposed facility is located (see map on page 19 of the Contributions Plan – Exhibit B, Vol 1, folio 24). These are set out under the broad heading “Summary Schedules” and under four groupings, with the relevant subheadings being:

1. Local parks, Local sporting facilities;

2. Local recreational and cultural facilities, and Local social facilities;

3. Local roads; Local bus facilities and Local Drainage facilities (New Roads and Road Modifications);

4. Local roads; Local bus facilities and Local Drainage facilities (Townscape, Transport & Pedestrian Facilities).

44. Only the third of these subheadings, “Local roads; Local bus facilities and Local Drainage facilities (New Roads and Road Modifications)” is applicable to development categorised “business” The words under this heading comprise:

1. Traffic Signals and Intersections (eight items);

2. New Streets (three items);

3. Road Modifications (eight items).

45. The specific items are set out on page 212 of the Contributions Plan.

46. The remainder of the detail in those tables in the Contributions Plan set out a variety of detail, contribution-calculating and non-characteristic-describing information not presently relevant. However, pages 161 to 163 of the Contributions Plan set out a more descriptive list of the elements for which the “business” category is to be levied. This list is in the following terms:

Vehicle Access, Circulation and Parking: Objectives and Challenges

To reduce the dominance of car parking areas on the public areas of Gordon;

To reduce pedestrian and vehicle conflicts in the town centre streets;

To redesign traffic signal configuration along the Pacific Highway to improve local traffic conditions and reduce congestion at key intersections;

To facilitate widening of the Pacific Highway in key locations to three lanes in each direction;

To introduce new roads on the western side of Gordon town centre to improve vehicle access and circulation around the retail core;

To modify existing roads and lanes to accommodate changes in traffic management measures.

Vehicle Access, Circulation and Parking: Strategies

Provide new pedestrian activated traffic signals on Pacific Highway north of Moree Street, for a mid-block pedestrian crossing;

Modify signals at the intersection of St Johns Avenue and the Pacific Highway to accommodate one-way flow, and remove right-turn from Pacific Highway to St Johns Avenue;

Provide new traffic signals at Pacific Highway and Ravenswood Avenue to allow right turn from the Highway, to replace the right-turn removed at St Johns Avenue;

Remove the traffic signals at Park Avenue and Pacific Highway intersection, with Park Avenue to become one-way east bound to Wade Lane. Left turn only from Pacific Highway into Park Avenue;

Modify traffic flow on Wade Lane to be one way south bound (currently north bound);

Modify signals at Dumaresq Street and Pacific Highway intersection to accommodate a third north-bound lane and provide pedestrian crossings to all sides;

Acquire land for new roads between St Johns Avenue and Moree Street; Moree Street and Dumaresq Street; and Dumaresq Street and McIntyre Street;

New service lane to be provided at rear of Gordon Centre (as part of site redevelopment);

St John’s Avenue to become one way west bound between Wade Lane and new street on the western side of the highway. Traffic signals at St Johns and Pacific Highway intersection to be modified to remove right turn movements;

Fitzsimons Lane to be modified to provide a wider carriageway and a verge and footpath on both sides of the lane;

Plan for widening of the carriageway of the Pacific Highway around the Dumaresq Street intersection; and

Plan for widening of the carriageway on the western side of the Pacific Highway between Bushlands Avenue and Yarabah Avenue.

47. Mr Ireland, on the question of whether there was any nexus between the proposed facility and those items set out above (they being the relevant ones on the categorisation basis I have concluded is appropriate), focused on the three new roads, although not exclusively so. These three new mid-block roads breaking up the long, east-west-running blocks located to the north of St Johns Avenue are, by far and away, the most significant cost elements requiring accommodation in the derivation of the contribution required for business development in this defined Gordon town centre area (see fifth and thirteenth bullet points in the above list).

48. Although there was some attempt to obtain assistance from Mr Brindle and Mr Kerr, on town-planning grounds, on the extent to which the proposed facility might contribute to the demand for these roads, the position adopted in the second dot point under the third heading “The proposed psychiatric hospital will generate some traffic” of the joint report of the planning experts (Exhibit K), effectively amounted to a disavowal by Mr Brindle and Mr Kerr of the ability to make any meaningful comment on this specific aspect of the matters under the broad umbrella of this portion of the Contributions Plan.

49. However, it is appropriate to deal with two further matters in this regard. The first assists in an understanding of the conclusion that I draw from the second.

50. Therefore I turn, first, to note a concession made by Mr Kerr during the course of his oral evidence that it was reasonable to assume that some (unquantified but nonetheless existent) benefit would be derived from the traffic-light adjustments within the Gordon town centre, as contemplated by the plan, being effected with that unquantified benefit accruing to the proposed facility.

51. Although, as I noted his evidence on this point, the lack of quantification was put in a positive fashion. As I understood it, it should also be regarded as supporting the proposition that this proposed facility contributes only minimally, at most, to the demand for the implementation of those measures (to address the proposition in the appropriate constructional fashion).

52. The second matter to which it is necessary to turn is the section of the Contributions Plan that followed, immediately, from the more discursive list set out above. This section (Exhibit B, folios 167 to 168) is in the following terms:

Transport modelling for the Gordon town centre was undertaken by GTA consultants and updated to reflect the then draft revised Ku-ring-gai Local Environmental Plan (Town Centres) 2008 which was exhibited at the end of 2008 by the Ku-ring-gai Planning Panel, adopted for referral to the Minister for gazettal on 27 May 2009 and gazetted on 25 May 2010.

The analysis supported the need for the construction of several new roads to break up the long linear blocks on the western side of the Pacific Highway as follows:

A link road between Dumaresq Street and McIntyre Street

A link road between Dumaresq Street and Moree Street

A link road between Moree Street and St Johns Avenue

The Roads and Traffic Authority noted that the success of the proposed traffic management scheme depends on all new local roads being implemented.

The two remaining are regarded as critical to the functionality of the town centre into the future and, accordingly, the required land is zoned SP2 Infrastructure under the Ku-ring-gai Local Environmental Plan (Town Centres) 2010 which was gazetted on 25 May 2010.

An additional proposed new road link between St Johns Avenue and Moree Street is also supported by the Roads and Traffic Authority of NSW.

53. Having determined that the appropriate categorisation of the Clinic’s proposed facility for the purposes of the Contributions Plan is “commercial premises”, it is only necessary to consider Mr Ireland’s submissions concerning whether or not a contribution is warranted at all in the context of the sole element for the Gordon town centre called up as a consequence.

54. Mr Ireland’s submission, in this regard, is based on the test described by Lloyd J in Hammersmith Management Pty Ltd v Lake Macquarie Council [2003] NSWLEC 20 where his Honour said, at [25]:

The conclusion confirming the validity of the contributions plan does not necessarily also determine the appeal against the imposition of the particular condition of consent in this case. Whilst the contributions plan may validly include contributions for the public amenity of a conservation corridor, the questions remain as to whether the particular development “will or is likely to require” the provision of such a corridor, or “increase the demand” for such a corridor, as required by s 94(1) of the EP&A Act.

55. It is Mr Ireland's submission that the test, as posed by his Honour, is not satisfied by this proposed development. I am unable to accept this submission for the reasons that follow.

56. It is clear from what is set out in the above extract from the Contributions Plan, particularly the element emphasised at [52], that the traffic management scheme for the Gordon town centre, of which the three proposed new roads are part, is a single integrated scheme - the implementation of the totality of which is essential in order to achieve the traffic management outcomes expected to be achieved.

57. As a consequence, although the increase in demand for facilities acknowledged by Mr Kerr might be confined to traffic-light enhancement or synchronisation improvements along the Pacific Highway, nonetheless this is an essential element of the total scheme.

58. However, as I noted, at the commencement of this decision, access to and egress from the proposed facility would be by left-turn-in and left-turn-out from the Pacific Highway, with all such vehicles travelling in a northerly direction. In this context, it is necessary to set out the state of the evidence concerning the potentiality for vehicle movements northwards after exiting the proposed facility and travelling into or through the area covered by the traffic management scheme to which the “business” category levy under the Contributions Plan is directed to funding.

59. The Statement of Environmental Effects set out (Exhibit D, Vol 2, folio 69) what was said to be the staffing levels for the proposed facility. The table showing this described the staffing as being on a two-shift basis. Mr Levy, during the course of his evidence, produced a revised table (Exhibit F) based on a three-shift arrangement. This table makes it clear that, for the envisaged staffing levels, vehicle movement assumptions able to be drawn by consideration of the table in the Statement of Environmental Effects would underestimate those numbers.

60. Mr Robson’s cross examination of Mr Levy was directed, in significant part, to seeking information as to what would be involved with the other necessary support services required to be provided to the proposed facility. These services comprised laundry services; waste disposal services; and meal deliveries. Each of these was unable to be quantified by Mr Levy.

61. For laundry services, the provision of hospital linen (such as sheets, towels and the like) is expected to be provided by an external contractor. Major linen washing and drying is not intended to take place on the premises. For waste disposal, a waste management plan was produced (Exhibit J). This waste management plan is one which sets out what is expected to be the general waste generation levels for the first stage of an inpatient facility on the Clinic site. It contains no information about what would be the anticipated general waste generation of the fully completed facility and it contains no information about the frequency of collection necessary to service even that which is within its scope. This document is of no assistance in understanding what might be the vehicle movements generated to service this aspect of the proposed facility’s waste generation.

62. The document is, in addition, entirely silent on volumes of, methods of disposal proposed for, and resulting trips generated with respect to hospital clinical waste generated by the proposed facility. Hospital clinical waste requires specialised disposal processes and this waste management plan is simply silent on that topic.

63. Finally, as to service vehicle trip generation, it is proposed that meals served at the proposed facility will be prepared off-site and brought, in bulk, to the site for heating and serving. No information was available as to the nature and frequency of meal deliveries.

64. Equally, for all categories of service vehicle, no information was available on the size of vehicle needing to be used for any of these services.

65. Finally, there is no material in evidence before me dealing with the question of trip generation for the delivery to or discharge of patients of the proposed facility. Even on the assumption of a 75% occupancy rate, and the further assumption that there would be little or no visitor traffic (as visits are not to be encouraged), there could still be more than 800 vehicle movements per annum for patient transport purposes. I do not put this number as, in itself, providing a basis for any specific conclusion, but I do so as part of noting:

1. First, the inadequacy of the information on traffic generation in a northward direction into the area encompassed by the proposed traffic management scheme; but

2. Also, second, to show that whatever might be demonstrated if sufficient information were, in fact, available, it could not be said that the proposed facility would not contribute to creating the demand for those traffic management facilities.

66. It therefore follows, from the very terms of the Contributions Plan itself in explaining the basis for these elements of the plan, that contributing to the need for some portion of the integrated whole scheme constitutes contributing to the need for the whole scheme as an integrated entity. Seen in this context, the disaggregation approach that was the foundation of Mr Ireland's submissions lacks validity and cannot succeed.

The extent of application of the Contributions Plan

67. The proposed facility has a floor area of ~2,700 square metres. For developments categorised as “commercial premises” and thus dealt with in the Contributions Plan as “business” (as I am satisfied this proposed development should be for the reasons earlier explained), the contribution charged for the Gordon town centre under the heading “Contribution Rates” is calculated at a rate per square metre. Application of the rate set out under this heading in the Contributions Plan, after applying the required indexation since the original rate was adopted, would result in the contribution to be paid for the proposed facility of ~$550,000.

68. The basis for determining the rate per square metre contained in the Contributions Plan is described in the plan as coming from the reasonably expected rate of generation of vehicle movements from such premises.

69. The Clinic seeks to dispute whether that rate of vehicle movement would be appropriate to be assumed for its proposed facility on a proper understanding of the way the facility is proposed to operate. The question of whether there should be some exercise to adjust the derived contribution on the basis of reasonableness was deferred by me, by agreement with the parties, to enable the parties to undertake negotiations within the framework that would arise from my findings on the issues of principle requiring determination. The consequence of this is that the proceedings are to be adjourned for a further hearing of two days if it is necessary for me to get into the merits of the rate because negotiations between the parties have failed.

70. Given the conclusion I later discuss with respect to the potentiality for a public benefit discount to any contribution and my inability, on the current state of the evidence, to venture how such a benefit might be quantified, means that this extra matter will remain needing to be discussed by the parties through that process.

The exemption clause in the Contributions Plan – cl 1.26

71. The Contributions Plan contains a provision, cl 1.26, that gives the Council a discretion, in the circumstances set out in the clause, to consider whether or not a complete or partial waiver should be made of some contribution that would otherwise fall due pursuant to the provisions of plan. The clause is in the following terms:

1.26 Merit Exemptions from the Contributions Plan

It is not always possible to identify in advance all developments which may be able to make a meritorious case for an exemption from the obligation to pay some or all of the applicable contributions. On the principle of ensuring public accountability, transparency and equity between all developers, this section specifies the limited opportunity for making a merit-based case for exemption. Council may formally consider, on the individual merits, a case for exempting the following types of development from the levying of contributions:

Developments which provide a distinct community benefit on a not-for-profit basis including but not necessarily limited to: fire stations, police stations or police shopfronts, ambulance stations, rescue services, State Emergency Service (SES) and Rural Fire Services (RFS) operational bases and the like;

Development by or for non-profit or cooperative organisations which provide a distinct community benefit including but not limited to: the provision of childcare services (especially for under-2s and/or special needs children) including kindergartens and pre-schools; outreach services, community services or the like, on a cooperative or not-for-profit basis;

Development which involves an application solely for the internal conversion of one existing single terrace style shop-top type dwelling (typically located in the town centres along the Pacific Highway) or a freestanding single dwelling which has recently been used for commercial purposes back to residential use. This potential exemption will not apply where that conversion occurs as part of a larger redevelopment which must be considered as a whole; and/or

Development where it can be demonstrated to the satisfaction of Council that in any particular category of contribution that the development, by the particular nature of its use, in the unique circumstances of the case, does not generate a demand for, or derive benefit from, some or any of the types of facilities and amenities to be provided. Note: Given that the grant of any such exemption, full or partial, may be considered to create a precedent or confer a pecuniary advantage on one developer over others, such an exemption is not likely to be granted unless there are absolute meritorious circumstances that would distinguish the case of the subject development from any other. All such arguments will be put before Council for formal determination and the full text of any such submission will be publicly available on Council’s website for public scrutiny.

Full details of any case for exemption must be included as part of the Development Application to enable the Council to make a merit-based assessment of the unique circumstances of the specific case in question concurrent with the consideration of the Development Application as a whole.

72. Mr Ireland submits that the first and fourth bullet points are potentially engaged for the Clinic's proposed facility. This is said to arise on the basis of the public benefit that the proposed facility will provide as a teaching and research facility in conjunction with the Black Dog Institute, a body forming part of the University of New South Wales (UNSW).

The claimed public benefit

73. Before turning to consider the terms of the clause, it is appropriate to set out what is to be derived from the evidence concerning the claimed public benefit of the activities proposed to be undertaken; the extent to which the teaching and research activities are to be undertaken; and the certainty that such activities will, in fact, materialise, thus giving rise to the anticipated benefit.

74. There are four sources of evidence as to what is said to be the public benefit to arise from the proposed facility’s activities. This is to be drawn from:

1. The written evidence of Dr Skarbek, a psychiatrist who will be the medical superintendent of the proposed facility;

2. The evidence, both written and oral, of Mr Levy, the guiding mind representing the interests proposing to construct and operate the business of the proposed facility;

3. A limited range of documents concerning the Black Dog Institute and the expected arrangement between the proposed facility and that Institute; and

4. The evidence of Mr Kerr about the engagement of the proposed facility of the first and fourth bullet points of cl 1.26 of the Contributions Plan.

75. Although, initially, this evidence is set out in the context of my assessment of the extent, if any, to which the proposed facility might appropriately benefit from some dispensation of being required to meet the full obligations that otherwise would be imposed on it by the Contributions Plan, it is equally applicable to my consideration of the public interest (public benefit) of providing the facility with an adjustment to the levy due, an issue that arises pursuant to s 94B(3) of the EP&A Act and the broad and unconstrained scope of the Court's power to consider the reasonableness of the proposed development contribution pursuant to the Contributions Plan and, if found to be unreasonable, to adjust it.

76. The relevant material contained in Dr Skarbek’s written evidence was in the following terms:

The Lawson Clinic was established in 2008 at 748 Pacific Highway Gordon as a highly specialised outpatient clinic focusing on the diagnoses and treatment of anxiety, depression and bipolar disorder in accordance with the Black Dog Institute's Clinical Model.

The Black Dog Institute based at Prince of Wales Hospital is internationally recognised as a pioneer in the identification, prevention and treatment of mental illness and the promotion of wellbeing.

I am familiar with the characteristics of the proposed hospital as I will be the clinical director and have had considerable input into the facility.

…

Patients are not granted leave during an admission although where it is medically indicated; some patients may be permitted leave over a weekend as a way of better acclimatizing the patient to their home environment in anticipation for discharge.

In accordance with the requirements imposed by the Ministry of Health (NSW Government), the hospital is a self-contained facility where patients are able to make use of numerous activities and facilities in a safe therapeutic environment under close medical supervision.

The compulsory programs extend to light exercise, relaxation through mindfulness and meditation and outdoor activities in the hospital's medically supervised recreational gardens.

The hospital dining room provides all meals for patients, staff and visitors.

Use of Council's facilities

In view of the circumstances explained above, patients of the hospital cannot make use of Council's facilities due to pronounced disability and the 24 hour medical care required to treat and protect patients against suicide.

I have been asked to further comment on any use by visitors or staff.

In relation to visitations, a helpful insight is provided by Professor Gordon Parker, Scientia Professor of Psychiatry, University of New South Wales, who has observed:

"[Patients] say if I was in the hospital with a broken leg I would've had many visitors and lots of flowers. When I was in the psychiatric unit, I had no flowers and no visitors. So it is a situation which can frequently be oppressive, it can often be a difficult environment to be in a psychiatric hospital, alone".

In the context of the hospital, visitations are to be discouraged and in many cases not permitted. This is due to the severity of patients treated and interference with the compulsory patient programs to which I have referred.

I understand that the doctors and some administrative staff who will provide services to the hospital are part of the existing outpatient clinic at 748 Pacific Highway Gordon. I have therefore been asked to comment on the use of Council's facilities by any additional staff attached to the hospital which consists primarily of nurses.

The use of Council's facilities by staff is in my opinion unlikely.

As referred to above, the hospital is a self-contained facility which provides all staff meals and in my experience as a consultant psychiatrist it is uncommon for allied staff to use local parks and sporting facilities or Council's local recreational, cultural and social facilities during working hours or at all.

77. Although she was cross-examined by Mr Robson, this cross-examination was essentially confined to exploring the extent to which she had any understanding of the non-medical, functional operations of the proposed facility or of its business arrangements. It is to be noted, without intending any criticism of her in doing so, that she has no detailed knowledge of these aspects of the proposed facility.

78. Before turning to the evidence of Mr Levy, it is appropriate to explain, briefly, the present activities of the Clinic and the proposed future structure.

79. The Clinic, as a corporate entity, currently operates the psychiatric outpatients’ facility located at Gordon on a parcel of land that adjoins the site of the proposed new inpatient facility. A panel of psychiatrists uses the facility on a sessional basis. They operate on a fee-for-service basis (some services may be bulk-billed). There is no evidence of the nature of the commercial relationship between these doctors and the Clinic.

80. After the establishment of the inpatient facility, it was Mr Levy’s evidence that a separate legal entity (although under the same broad ownership basis as the present outpatients’ clinic) would be established as a separate holding entity for the proposed inpatient facility. This new entity would be, as I understood it, both responsible for the operations of the inpatient facility and would hold all the assets, including the real property assets, associated with inpatients’ facility.

81. Although the two entities would sit, geographically, side-by-side and the psychiatrists who practised in the outpatient clinic would also practise with the patients in the inpatient facility, there would be complete separation between the two bodies.

82. I also observe that, although there is, if I understood the evidence of Dr Skarbek and Mr Levy correctly, present utilisation through the outpatients’ clinic of the treatment methodology (discussed further below) developed by Professor Gordon Parker, the Founding Director of the Black Dog Institute, there is no evidence of any formalised association between the present outpatients’ clinic and the Black Dog Institute or UNSW. I further observe that, although Mr Levy conceded that the present outpatients’ clinic was conducted on a for-profit basis by the Clinic as a corporate entity and that he derived personal financial benefits from this operation, there is no evidence, such as financial statements, for these present outpatient operations.

83. I now turn to consider Mr Levy's evidence. Mr Levy is, by profession, a lawyer and has no clinical qualifications relevant to the present outpatient facility or to the proposed inpatient facility. He does, however, derive income from the outpatients’ clinic and will have an interest in the inpatient one. To the extent that his affidavit traversed matters relevant to this present consideration of the public benefit said to be provided by the proposed facility, this is set out in detail below.

84. It is, however, appropriate to make some initial observations concerning the nature of this evidence. First, although his affidavit is extensively footnoted to a very wide range of what might be described, in broad, as “medical literature or commentary”, this medical literature or commentary listed in the footnotes was not in evidence.

85. A letter from Professor Parker, who is now retired but who was, as earlier observed, the Founding Director of the Black Dog Institute, was annexed to Mr Levy's affidavit. To the extent that this document is said to provide professional support for the application, my consideration of it must, in my view, be considerably tempered for a number of reasons.

86. Although, in proceedings of this broad nature, I am not bound by the strict rules of evidence (s 38(1) and (2) of the Land and Environment Court Act 1979), I must still have regard to broad concepts of fairness in my evaluation of such material.

87. In this instance, given the criticality of Professor Parker’s methodology to the Clinic's case and the nature and extent of both past and anticipated future arrangements between the Clinic (both outpatient and inpatient activities being encompassed in this) and the Black Dog Institute, the absence of formal evidence from Professor Parker remains (as I indicated to Mr Ireland during the course of his closing submissions) a matter of concern.

88. Indeed, Professor Parker’s letter is descriptive but not a document with any detail setting out the nature of the arrangements (present or anticipated) or any empirical information about teaching and research activities that might be anticipated to be provided from any future arrangement between the proposed facility and the Black Dog Institute (I also note, in passing, that no information of such an empirical nature has been provided by the present Director of the Black Dog Institute and Scientia Professor and Head of School of Psychiatry at the University of New South Wales, Professor Philip Mitchell).

89. As a consequence, the letter from Professor Parker is of little assistance to me in determining this question of public benefit. To enable a proper understanding of the approach that I have taken to this document, a copy of it is annexed to this decision.

90. I now turn, in more detail, to Mr Levy's evidence. The relevant portion of his affidavit is largely reproduced in the document Mr Ireland handed up titled “Aide Memoire on the Evidence as to the Social Benefit of the Proposed Hospital” and is set out in full at [111] of this judgment.

91. Mr Levy was cross-examined, at some length, by Mr Robson about non-clinical managerial operations anticipated for the proposed clinic. This cross-examination, particularly as to staffing levels, arose (as earlier discussed in more detail) in the context of what turned out to be a degree of imprecision in the Statement of Environmental Effects with Mr Levy producing, overnight, a revised staffing schedule (Exhibit F).

92. In this context, I observe that I rejected an attempt by Mr Ireland to tender what was said to be a more current version of a proposed operational plan for the hospital, a document said to have been prepared by Mr Levy immediately prior to or during the course of these proceedings. However, I do observe that the conditions of the development consent attaching to the approval incorporate, by express reference in condition 3, the requirement that the proposed facility is to be subject to a Draft Operation Management Plan dated August 2013 that had been provided as part of the development application material assessed by the Joint Regional Planning Panel. This document is not in evidence before me.

93. It is unnecessary to traverse Mr Levy's oral evidence at length but I should set out the general tenor that I took from it. It can be encapsulated in a number of short points:

1. First, although there is no formal arrangement with the Black Dog Institute or UNSW, it is Mr Levy's expectation that there will be such an agreement;

2. Second, the proposed inpatient facility is currently intended to remain in the same ownership as that which will continue for the existing outpatient facility but that there is not to be any legal obligation created to this effect;

3. Although he does not expect the proposed facility to be profitable in the short term, he does expect that it will become profitable. In this context, the proposed facility is to be established as a business with the expectation that it will make a profit; the proposed facility will be financed, in part, by capital contributed by those standing behind the enterprise but will also be funded to a significant extent by borrowings; and

4. Although not able to be quantified, the public benefit aspect of the proposed facility is considered by him to be socially significant, with that view being formed because of his own personal past experience with persons who have suffered mental illness.

94. The written evidence given by Mr Kerr on this public benefit aspect of the proposed facility (Affidavit of Stephen Kerr, 4 February 2016, folios 6 to 7, beginning at [38]) was in the following terms:

Section 1.26 of the Contributions Plan - is an exemption justified on the merits?

…

The framework for considering merit exemptions from the Contributions Plan set out in Section 1.26 also includes consideration of uses that provide a 'distinct community benefit on a not-for-profit basis'. These are described in points 1 and 2 with specific examples including, 'but not limited to' emergency services facilities and child care and community services.

Section 1.26 of the Contributions Plan recognises that: "It is not always possible to identify in advance all developments which may be able to make a meritorious case for an exemption from the obligation to pay some or all of the applicable contributions."

The Lawson Clinic will provide a high level of community benefit by addressing an unmet community need in the area of mental health treatment as explained in the Affidavits of Dr Skarbek and Mr Levy.

The Lawson Clinic hospital will also be a teaching and research facility for the University of New South Wales (a not-for-profit entity) as further addressed in the Affidavit of Mr Levy. I understand that the Council has asked for further particulars of the relationship with the University of New South Wales, and that these particulars were provided on 3 February 2016. I attach as Annexure "C" a copy of the letter providing those particulars.

Some part of the Lawson Clinic hospital, therefore, will provide a 'distinct community benefit on a not for profit basis' and in this respect the proposal as a whole, in my opinion, also qualifies for consideration under points 1 and 2 of Section 1.26.

In my opinion, this is for the following main reasons as explained in Mr Levy's Affidavit:

Depression is a major public health concern with 3.2 million Australians being affected each year.

The total annual cost of mental health problems in Australia is $20 billion.

There is a lack of appropriate infrastructure to address mental health problems in our community which has been recognised by Australian Governments as giving rise to an unmet need.

In 2002 the Black Dog Institute (BDI) was established at Prince of Wales Hospital through funding provided by the NSW Government. It is based on a Clinical Model developed by the University of New South Wales which was the culmination of over 25 years research. The application of the Clinical Model results in more specifically targeted treatments being selected for each individual patient and improved clinical outcomes. Outpatient services based on the Clinical Model have been provided by the BDI to the entire state of New South Wales since about 2002.

In 2008 the Applicant established the Lawson Clinic at Gordon because of the lengthy waiting lists at the BDI, lack of government funds to address this predicament and to further establish the efficacy of the Model.

The proposal will, for the first time in Australia, extend the above Clinical Model to hospital care so that Australians who are acutely unwell and require hospitalisation can benefit.

It is believed that the research data which will be collected over time to further validate the Clinical Model, will result in significant improvements in the diagnosis and treatment of depression and related disorders for those Australians who are suffering.

The Applicant will have an integral role in the research due to the expertise of the psychiatrists in the Clinical Model.

The for-profit activities of the hospital will enable the Applicant to make its psychiatrists and hospital available to facilitate the research.

Without the expertise of the Applicant's psychiatrists and the availability of the hospital, the research could not be conducted,

Government funds are not available to establish such a hospital in NSW to facilitate such research.

The proposal provides a significant contribution to mental health in NSW and will ensure that Australia is at the forefront of this worldwide epidemic.

95. Although the primary aspect of his oral evidence (given concurrently with Mr Brindle) concerned the categorisation issue earlier discussed, Mr Robson did direct a number of questions to Mr Kerr focusing on the extent to which he might have reservations about granting a dispensation of any substantial nature to compliance with the Contributions Plan in circumstances where:

1. There was no agreement with the Black Dog Institute and/or UNSW for teaching and research commitments on an ongoing basis;

2. There were no enduring conditions of consent that imposed any such general teaching and/or research obligation on an ongoing basis; and

3. The proposed facility was to be established as a separate entity capable of being sold on a separate enterprise basis from the entity that would continue to operate the outpatient facility.

96. Although Mr Kerr suggested that it might be possible to craft a condition that might be imposed as part of the outcome of these proceedings where that condition might impose some ongoing obligation or set some claw-back arrangement of an unspecified nature if there were not to be the creation of some ongoing teaching and/or research obligation, Mr Kerr acknowledged that, under those circumstances, he would have reservations about the appropriateness of granting any substantial concession to the otherwise calculated contribution that would be derived from application of the Contributions Plan (noting, however, that he did not, in fact, concede that it was appropriate for any such obligation to arise for the reasons he had earlier given in his written and oral evidence about categorisation and nexus issues).

97. I observe, at this point, that no condition of the type postulated by Mr Kerr as potentially being appropriate has been offered by the Clinic in these proceedings.

First cl 1.26 basis

98. I turn, now, to the first of the bullet points contained in cl 1.26 of the Contributions Plan. It is convenient to repeat it, it being in the following terms:

Developments which provide a distinct community benefit on a not-for-profit basis including but not necessarily limited to: fire stations, police stations or police shopfronts, ambulance stations, rescue services, State Emergency Service (SES) and Rural Fire Services (RFS) operational bases and the like;

99. Before turning to discuss what I consider to be the essential and relevant approach to be taken to this provision, I observe that there is a footnote in the Contributions Plan (at page 52) that is in the following terms:

This provision is not intended to include corporate headquarters of any type.

100. For the reasons set out in the discussion that follows, I do not consider that this footnote acts in any way as a significant qualification to, or broadening of, the general conclusion that I have reached about this provision. I explain my reasons for that position as part of the following analysis.

101. The developments that are proposed would not attract a development contribution by falling under the umbrella of the first bullet point to cl 1.26 have, it seems to me, three fundamental attributes in common, attributes that are not shared by the proposed facility. First, self-evident I would have thought, those facilities are likely to be provided exclusively by the state rather than by a private sector operator. Second, each of the nominated types of facility is one that is provided as an entirely not-for-profit public service. Whilst there may be fees recovered for some aspects of police, fire brigade or ambulance services, such revenue can only amount to partial cost recovery and certainly does not, in any fashion, evidence a profit motive for their conduct. Third, the corporate headquarters point, the exemption is confined to operational facilities, not administrative ones.

102. The necessary conclusion to be drawn from this is that the proposed facility cannot fall within this element of cl 1.26. I put this proposition to Mr Ireland during the course of his closing submissions and his response was to the effect that he agreed that such a conclusion was available to me and that the Clinic relied primarily on the fourth bullet point.

103. The broad conclusion that I believe follows, inevitably, from the terms of this portion of the clause is that it does not apply to this proposed development.

Second cl 1.26 basis

104. The fourth dot point of cl 1.26 is, in a proper understanding of it, in two separate parts. The first sets out the test by which an application is to be assessed by the Council as to whether the threshold has been crossed for there to be a potential for granting a general discretionary discount to the otherwise payable levy calculated according to the Contributions Plan. The second element of the bullet point (after the word “Note”) only comes into play if the first is satisfied. This second step in the clause then informs the Council as to how the Council is to go about considering whether or not a discounted levy should be granted.

105. In this context, it seems to me that the emphasis placed by Mr Kerr (as I understood the totality of his oral evidence on this point), on what he regarded as the “absolute unique circumstances” of the proposed facility being satisfied by the public benefit said to be provided by it, fundamentally misunderstands what is required, in the first instance, to bring an application within the scope of potential for the exercise of discretion given by this bullet point.

106. The critical words in the prerequisite for this provision are that the particular development proposal “does not generate a demand for, or derive benefit from, some or any of the types of facilities and amenities to be provided” for which it would otherwise be levied.

107. In the circumstances of this case, given the categorisation of the proposed facility as “business” and the earlier discussed matters with respect to the Gordon town centre Traffic Facilities Scheme, there is no basis to conclude that this proposed development would not create any demand for, nor derive any benefit from, the facilities toward the cost of which contribution would be levied on this development.

108. It therefore follows that, whatever might be said to be taken into account for the second, process-oriented portion of this bullet point, this proposal does not pass through the gate that engages such a process. The matters that are said to be engaged in such a process do, however, arise for consideration in the broader discretionary process available to the Court but not available to the Council.

Public benefit – the general discretion to vary

109. I have earlier observed that the Clinic bears what is conventionally described as a persuasive burden in establishing that there is some appropriate basis upon which:

1. I could conclude that there was a sufficient public benefit to warrant some discounting (whether complete or partial not presently being relevant on this point) to depart from the obligation that would arise from the ordinary application of the Contributions Plan to this proposed development in the category and pursuant to the identified nexus as earlier set out; and

2. A proper basis upon which, if I were to be satisfied that such a public benefit existed, I could set out some rational basis upon which such a discount could be quantified.

110. During the course of his closing submissions, Mr Ireland handed up a document entitled “Aide Memoire on the Evidence as to the Social Benefit of the Proposed Hospital”. The document comprises an extraction on behalf of the Clinic of what was submitted amounted to a comprehensive listing of the matters put as supporting the public benefit to be derived from the proposed facility. A close reading of the document, and my examination of the written material and my notes of the oral evidence, leads me to the conclusion that this document represents what might be described as the various propositions able to be put, from the evidence, reflecting the highest point in the Clinic's case on this topic. This commentary is not to be taken as being critical of this material; I have found it a particularly useful summary document of the evidentiary underpinnings of the case for the Clinic on the basis that Mr Ireland has advanced it.

111. It is, in my assessment, although a somewhat lengthy document for incorporation in a judgment, instructive of a proper understanding of Mr Ireland’s foundational submissions about the public benefit said to be derived from the proposal. I therefore set this document out in full immediately below:

A.   Evidence as to the unmet need for mental health services to be addressed by the proposed hospital

1.   One in five Australians experience a mental health problem each year which is equivalent to 3.2 million Australians (Levy: para 24).

2.   The estimated total annual cost of mental health problems in Australia is $20 billion (Levy: para 24; Exhibit G (Business Case): pages 4-5). The Business Case submitted to the Ministry of Health, NSW Government would be accorded significant weight as it is dated 22 July 2013, prepared well before this dispute about s94 contributions.

3.   The World Health Organisation estimates that depression will be the number one health problem in both the developed and developing nations by 2030 ( Levy: para 25).

4.   Mental health receives about 5% of all health funding even though it accounts for almost three times that share of the burden of disease (Levy: para 27).

5.   Approximately 65% of people with mental health problems in Australia do not access any treatment. The proportion of people with mental health problems accessing treatment is half that of people with physical disorders (Levy: para 31; Exhibit G: pages 4-5).

6.   The problem is pronounced among young people in Australia with 70% of young women and 80% of young men who experience a mental health problem receiving no help at all (Levy: para 32).

7.   Young people in Australia often need to inflict serious physical harm to gain access to support and “even then, sometimes that care and support is not made available” (Levy: para 51).

8.   It is estimated that there are seven deaths by suicide in Australia each day and approximately 200 attempts. That is more than 1 new attempt in Australia every 10 minutes (Levy: para 34).

9.   While Australia’s road toll has more than halved in the last 40 years, the suicide rate has remained almost the same (Levy: para 89).

B.   Evidence that the hospital will meet this community need

1.   The development will result in the installation of essential mental health infrastructure in the Hornsby Ku-ring-gai catchment area and more broadly in the State of New South Wales (Levy: para 39-57).

2.   The NSW Ministry of Health has determined that the hospital will address an “unmet need” and has granted approval following a rigorous assessment and consultation process (Levy: para 40).

3.   The treatment offered by the hospital will be based on a Clinical Model which was the culmination of over 25 years research by the University of New South Wales (UNSW) and its extension to hospital care (as distinct from outpatient) will be an Australian first (Levy: paras 13, 61, 92; Annexure E; Skarbek: 11, 17; Exhibit G: page 2).

4.   The hospital will address current gaps in NSW public / private mental health infrastructure and service provision (Levy: para 41; Exhibit G: pages 1, 5-8).

5.   There are no dedicated mother and baby units in the NSW public hospital system (Levy: para 44; Exhibit G: page 5, 7(v)) notwithstanding that approximately 15-20 per cent of women in Australia are affected by postnatal depression (Levy: para 43).

6.   This means that mothers requiring mental health admission to a NSW public hospital in the postnatal period are separated from their babies during crucial early periods of development (Levy: para 44; Exhibit G: pages 5, 7(v)).

7.   The hospital will provide a dedicated mother and baby unit to address this gap (Levy: para 41, 46; Exhibit G: pages 5, 7(v), 8).

8.   A dedicated young adult unit (16 – 26 years) will be the second of its kind in Australia and will facilitate the Australian Government’s policy of early intervention intended to overcome the statistic that suicide is the leading cause of death for young Australians (Levy: para 47-52; Exhibit G: pages, 5, 8).

9.   The hospital will provide highly specialised psychiatric care for Hornsby Ku-ring-gai’s ageing population with easier access to treatment. There is currently no private mental health beds and insufficient public mental health infrastructure in the catchment area (Levy: paras 54, 54; Exhibit G: page 5, 7 (vi)).

10.   The hospital will facilitate additional service provision to regional and rural areas where people are dying every day due to a lack of services and a lack of action (Levy: paras 20-23, 55-56; Annexure E; Exhibit G, pages 5, 7-8).

11.   The unremitting workload of Hornsby & Royal North Shore Hospitals created by limited beds and overwhelming demand will be shouldered by the hospital (Levy: para 57; Annexure F, page 30).

C.   Evidence as to the hospital’s research & teaching programme

1.   The Applicant has undertaken not-for-profit clinical research in collaboration with UNSW / Black Dog Institute since its inception in 2008 (Levy: para 59).

2.   The development is to be a UNSW affiliated hospital (Bundle, Vol 3, page 47; Exhibit G, page 2).

3.   The Applicant will carry out advanced medical research and tertiary education for the university as conveyed by UNSW (Professor Gordon Parker) at the public meeting of the JRPP held on 11 September 2014 (Exhibit E, Class 1 Application, Kerr Report, Appendix 2, para 5).

4.   With depression identified as a leading cause of disability worldwide and a major contributor to the global burden of disease, there is an essential community benefit in facilitating ground breaking medical research, to understand what causes mental health problems and to find better ways to diagnose and treat them (Levy: paras 58, 65).

5.   The hospital will provide a unique opportunity to facilitate tertiary research in the areas of postnatal mental health and young adults as there are no postnatal mental health hospital units in the NSW public sector and the hospital’s young adult unit will be the second of its kind in Australia (Levy: 44, 88; Exhibit E, Kerr Report, Class 1 Application, Appendix 2, para 11).

6.   In addition, the hospital will provide an opportunity to undertake research to validate the above Clinical Model in its application to inpatient treatment which may lead to significant advances in the diagnoses and treatment of depression and related disorders (Levy: para 61-64).

7.   The hospital will provide highly specialised training for psychiatry trainees attached to Hornsby and Royal North Shore Hospitals which cannot be taught in the public sector. The NSW public mental health sector will benefit from the improved training opportunities which in turn will also benefit the local community (Levy: 66-68; Annexure E, page 29; Exhibit G: 8-9; Kerr Report, Class 1 Application, Appendix 2, para 18-20).

8.   A major public health issue recognised by all Australian Government is that the “workforce shortages in psychiatry hinders the ability of government and non-government providers to meet the increasing demand for services” (Levy: para 72).

9.   To address this chronic workforce shortage, the hospital will introduce an Australian first initiative to train and mentor UNSW medical students with a view to transitioning those students into the NSW psychiatry training program and ultimately local public mental health facilities (Levy: 69-77; Exhibit G, page 9; Kerr Report, Class 1 Application, Appendix 2, para 21-29).

10.   It is anticipated that this will better equip local public mental health facilities to meet the increasing demand placed on its services, in circumstances where they are either struggling or failing to do so currently (Levy: para 77).

11.   It is the perspective of the NSW Ministry of Health and NSW Chief Psychiatrist that the above strategy has the potential to improve workforce outcomes in psychiatry across Australia (Exhibit G, page 9).

D.   Evidence of the recognition of the hospital’s social benefit at a State and Federal Parliamentary level

Annexures D, E and F to the Levy affidavit.

112. Even assuming I were to consider, for the purposes of this section of my analysis, that there is sufficient scope of and certainty for the accrual and realisation of that public benefit, there is nothing in the evidence from either past experience with respect to the operation of the outpatient clinic or any material concerning the proposed facility other than that which is contained in the “business plan” for the proposed private hospital licence (Exhibit G) that purports to deal with relevant managerial or financial matters.

113. It is to be noted that there are number of references throughout Mr Ireland’s document to what is contained in Exhibit G. Exhibit G is a document submitted to the health regulatory authorities, noted as being “commercial in confidence”, entitled “Application for a Licence for a Private Health Facility Business Case”. In addition to noting the references to this document in the summary handed up by Mr Ireland, I have carefully analysed the totality of the document as it is the only document suggested to me as comprising a business case for the proposed facility. At the commencement of the resumed closing submissions by Mr Ireland on 23 March 2016, I asked whether there were any other documents, other than Exhibit G, in the tendered material that constituted any form of business analysis for the proposed facility as, on the state of my examination of the documents at that time, I had not observed any. Mr Ireland confirmed that there were no other such documents.

112. A reading of Exhibit G makes it clear that the document addresses, precisely, what might be described as the clinical and social justification for the establishment of the proposed facility. In making this observation, I intend no disrespect to the authors, nor any dismissal of the significance of the matters concerning mental illness and its treatment, in both the more localised context and a broader geographic area. Nor am I to be regarded as criticising any aspect of the analysis contained in Exhibit G of the various needs for appropriate psychiatric intervention or various elements in a social profile such as young people or post-natal mothers. Indeed, in many respects, the document is quite compelling in revealing unmet clinical demand and the desirability of facilities to address it. It also provides a deal of what could be characterised as qualitative analysis of that which has been achieved, over the past eight years, from the operation of the outpatients’ facility run by the Clinic.

113. It is certainly, I accept, a powerful document prepared for the purpose to which it was addressed, namely, obtaining of the necessary regulatory approval for the establishment of the proposed inpatient facility.

114. Mr Ireland also handed up an aide-memoire summarising what are said to be the not-for-profit activities. This document is in the following terms:

Not-for-profit activities

Evidence as to the not for profit activities that arise synergistically out of the for profit activities

1.   Levy affidavit – [20] – Approximately 50% of the Applicant’s specialist mental health services are provided to some of the most socially and economically disadvantaged Australians including Indigenous and Torres Strait Islander peoples from regional and rural areas who would not otherwise have access to specialist mental health care.

2.   Levy affidavit – [59]- The Applicant has undertaken not for profit clinical research in collaboration with UNSW/BDI since its inception in 2008 and the hospital will be a NSW teaching hospital.

3.   Levy affidavit – [63] – Due to the expertise of the Applicant’s psychiatrists in the Clinical Model, the Applicant’s psychiatrists will have an integral role in the research. The for profit activities of the hospital will enable the Applicant to make its psychiatrists available to facilitate the research. Without the expertise of the Applicant’s psychiatrists and the availability of the hospital, the research could not be conducted.

4.   Levy affidavit – [65] – The research activities of the hospital may generate several identified community benefits listed in this paragraph at (a) – (g).

5.   Levy affidavit – [67] – The hospital will on a not for profit basis train psychiatry trainees in the Clinical Model. The Clinical Model is a medical model involving treatment tailored to the needs of each patient: Levy at [13], Dr Skarbek at [17] – [27]. Professor Parker’s letter at Annexure “A” in the Levy affidavit provides more detail.

6.   [75] – The hospital will address the shortage in psychiatrists by a mentorship programme in conjunction with UNSW.

7.   Levy – [77] – The tertiary teaching above is to be conducted on a not for profit basis and is of distinct community benefit. It will better equip local public health facilities to meet the increasing demand placed on its services in circumstances where they are either struggling to do so or failing severely.

117. However, and it is a substantial however, neither Exhibit G nor the material in Mr Levy’s affidavit, nor the above summary, provides any assistance at all, by any economic analysis, that would help me in understanding any empirical basis for assigning a value to the public benefit said to arise from the proposed facility. As has earlier been observed, this facility will have a project construction cost of approximately $8.5 million to which, to derive the invested capital value of the project, must be added the cost of acquiring the various allotments proposed to be consolidated into the single site upon which the proposed inpatient facility is to be located. This land capital cost is approximately $5 million. The total project capital cost is, therefore, of the order of $13.5 million. As earlier noted, Mr Levy holds the view that, although in the initial years, the proposed facility will not be profitable, this position is expected to change and that, on an ongoing basis after the early years, the facility will be a profitable enterprise.

118. Ordinarily, a conventional business case (and in using that expression I am not to be taken to be critical of Exhibit G, a “business case” prepared in quite a different context and for a quite specific purpose) would include a significant economic analysis giving much more specific anticipated timeframes within which the achievement of profitability might be expected; an analysis of expected income, expenditure and holding costs; anticipated taxation treatments; return on capital invested over time and, in the present context, such a document as this might well be expected to endeavour to quantify (and explain the basis for such quantification) what costs being met by the proposed facility would be attributable to (whether directly or indirectly) the provision of the teaching and research facilities said to be derived as the public benefit element.

119. Without any understanding of whether or not there is a cost impact of providing the public benefit by a for-profit enterprise anticipated to become profitable within a comparatively short element of what might be expected to be the useful working life of the proposed facility, there is no basis upon which I can conclude that, in effect, the remainder of the Ku-ring-gai community who are contributing to those matters set out in the Contributions Plan for the Gordon town centre “business” category contributing works should have a greater burden imposed on them as a consequence of a discount to be given to the Clinic.

120. There is no basis, on a Rose Consulting discretionary consideration, that I could conclude whether there is any appropriate basis to quantify the public benefit and, if there was, what would be the amount so derived. Finally, how such an amount should be viewed in light of the anticipated future profitability of the proposed facility is simply unknown and unknowable on the evidentiary basis presently available in these proceedings.

121. In light of this conclusion and what I accept might well be the possibility that those business planning matters, properly considered, might potentially provide a better evidentiary basis for contemplating such a public benefit discount, I have considered how the matter should proceed further.

122. I have done so against the backdrop that, as a consequence of my conclusion that the appropriate categorisation for the purposes of the Contributions Plan has the proposed facility to be regarded as a business with the result, as earlier set out, being that the only contribution available to be levied is that for the “Local Roads; Local bus facilities & Local drainage facilities (New Roads and Road Modifications)” pressed on behalf of the Council, the agreed position is that the parties are to explore whether there is any basis upon which a recalculated contribution might be agreed on a proper understanding of the traffic generation outcomes for the proposed facility when compared to the specified traffic generation-derived rate per square metre applied to the “business” category for the Gordon town centre.

123. As earlier observed, the parties have also agreed that, if, in light of the conclusion to which I have, in fact, come, they were unable to reach some negotiated outcome able to be embodied in consent orders of the Court, further hearing days have been allocated, on a contingent basis, in mid-May 2016. Given that I am not to be taken to be concluding that there is no public benefit to be derived from this for-profit enterprise but merely no evidence that would permit me to assess whether a discount was appropriate and, if so, how much it should be, I have weighed whether the failure to discharge the evidentiary burden should cause me to dismiss, effectively, the public benefit element of the Clinic's case or whether I should permit the negotiation and (at least contingent) further hearing to encompass an opportunity for the Clinic to provide, at least initially to the Council, what it says might be a proper economic evidentiary basis in support of a proposed discount.

124. I have concluded that, despite the present fundamental inadequacy of that which has been put on behalf of the Clinic (and I am not to be taken to be critical of Mr Ireland in this regard, he has cogently and competently mounted a case based on the material provided to him; it is the inadequacy of that material rather than its presentation in which I find fault), I should permit this element to go forward in tandem with the traffic generation matter for discussions between the parties and, if necessary, further evidence at a resumed hearing.

125. Having taken that position, I would indicate that, if the contingent hearing days need to be utilised for the purposes of me determining issues that may remain in contention between the parties, it is my strong expectation that the totality of the resumed hearing will be confined to those two days only (albeit with the potentiality for modest extensions to sitting hours on each day to accommodate this additional aspect).

Conclusion

126. For the reasons earlier set out, I have reached the following conclusions on the material so far in evidence in these proceedings:

1. First, the appropriate categorisation of the Clinic’s proposed inpatient facility for the purposes of the Contributions Plan is as a business – that is, as “commercial premises”;

2. Second, on that basis, it is not possible to conclude that the proposed Clinic will not contribute to an increase in the demand for the facilities for the Gordon town centre attributable to businesses as set out on page 212 of the Contributions Plan;

3. Third, on a proper consideration of cl 1.26 of the Contributions Plan, there is no basis founded on the first dot point of the clause for any reduction to be applied to the contribution that applies to the proposed facility as a consequence of its categorisation as “business” for the purposes of the Contributions Plan levy calculation in Gordon;

4. Fourth, consideration of the terms of the final bullet point of cl 1.26 of the Contributions Plan means it is not applicable to this proposal;

5. Fifth, for the broad general discretion given to the Court to consider the reasonableness of the derived contribution for the proposed facility in the context of what is said by the Clinic to be the public benefit of the proposed inpatient facility, there is no evidence that provides any rational basis to quantify such benefit (particularly in the context of the proposed facility being a for-profit enterprise expected to be profitable within several years of its commencement of operations); and

6. Finally, for this phase of the proceedings, given the nature of the material in evidence concerning the potentiality for a public benefit being able to be demonstrated on a properly articulated evidentiary basis to warrant some quantifiable discount from the contribution that would otherwise be imposed as a result of the strict imposition of the terms of the Contributions Plan, it is appropriate to defer finalisation of this aspect of the proceedings to enable the parties to consider the matters discussed in these reasons during the course of the discussions made necessary by these conclusions.

127. Two days have been set down for a resumed hearing to permit the parties to argue traffic generation issues if there is no agreement reached by negotiation between the parties. In those negotiations between the parties to be undertaken in light of these reasons, it is also appropriate that the Clinic have the opportunity, through that discursive process, of putting further material to the Council (should the Clinic wish to do so) to address the inadequacies I have described in the Clinic’s public benefit discount case. If those discussions result in an overall agreed outcome, consent orders can be made in chambers and the hearing dates vacated.

128. However, if those discussions are unable to resolve either or both of the matters now remaining for consideration, it will be necessary for the parties to file such expert material as might be appropriate to be dealt with at that further hearing.

129. As I am mindful of the potential cost of formalising such expert material and of the joint expert conferencing and reporting process, I do not propose to set a staged timetable for the filing and serving of such material. I expect that the discussion process will enable each party to become familiar with the other’s expert case during its course. It is, therefore, sufficient to direct that any further individual expert reports and joint expert reports be filed and served by the close of business on Tuesday 10 May 2016

130. The matter is therefore adjourned for further hearing on 12 and 13 May 2016 unless earlier finalised.

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Annexure A - Prof Parker letter 20 Jan 16 (70.6 KB, pdf)

Amendments

11 May 2016 - At [56], [51] should read [52].

Decision last updated: 11 May 2016