The reason for reasons – Al Maha v Huajun Investments

In 2018, the NSW Court of Appeal handed down a very important judgment which changed the approach to the publication of reasons by Commissioners in the Land and Environment Court.

Background

Proceedings which review the decision made by a Council to refuse a development application are commonly called a “Class 1 appeal”. When a Class 1 appeal is filed, it does not automatically go straight to a Court hearing. Usually the first step is that the parties participate in what is known as a “conciliation conference” in order to try to resolve the issues between them. The conciliation conference is presided by a Commissioner of the Land and Environment Court.

If the parties attend the conciliation conference and reach an agreement, the Commissioner can hand down a judgment which grants the development consent in accordance with the agreement reached by the parties.

Prior to 2018, it was common for such judgments to be brief and would usually:

  1. summarise what the development was;
  2. confirm that the parties had reached an agreement and the Commissioner was “satisfied that the decision was one that the Court could have made in the proper exercise of its functions”; and
  3. deliver orders which would give effect to the agreement reached between the parties.

What happened in Al Maha Pty Ltd v Huajun Investments Pty Ltd [2018] NSWCA 245

  1. An agreement was reached between Huajun Investments and the City of Canada Bay Council at a conciliation conference.
  2. The Court granted a development consent to a development following a conciliation conference
  3. However, works were required on Al Maha’s land, and owners consent to the development application had not been provided prior to the granting of the development consent by the Court.
  4. the owner’s consent of Al Maha was legally required in order for the Court to have power to make the decision.
  5. Al Maha commenced proceedings in the NSW Supreme Court of Appeal to challenge the decision of the Land and Environment Court.

Ultimately, Al Maha was successful and the consent granted to Huajun Investments was declared to be invalid and of no effect.

What the Court said

The NSW Supreme Court of Appeal confirmed that it was necessary for Commissioners to provide reasons to demonstrate that they were satisfied that the decision was one that could be made by the Court.

The Court relevantly stated the following:

The requirement that the decision be one that the Court could have made in the proper exercise of its functions demands that the Commissioner examine the functions that the Commissioner would be exercising in order to dispose of the proceedings in accordance with the parties’ decision…

The Commissioner would first need to check that the Court has jurisdiction to hear and dispose of the particular proceedings…

The Commissioner would next need to identify what functions would be exercised in disposing of the proceedings in accordance with the parties’ decision. In proceedings in Class 1, 2 or 3 of the Court’s jurisdiction, the Court exercises the functions of the person or body whose decision is the subject of the appeal (see s 39(2) of the Court Act). Those functions will be stated in the statute under which the appeal is brought. The statute will specify the function, the conditions, including any preconditions, governing the exercise of the function, and the permitted outcomes of the exercise of the function…

A “decision that the Court could have made in the proper exercise of its functions” … is one which the Court, exercising the functions of the consent authority, has jurisdiction to make… the consent authority can determine a development application by granting consent to the application, either unconditionally or subject to conditions, or refusing consent to the application. A development application can only be made for consent to carry out development that an environmental planning instrument provides may not be carried out except with development consent… A development application cannot be made for consent to carry out development that does not need consent… or that is prohibited…

The EPA Act and the Environmental Planning and Assessment Regulation 2000… regulate the procedures for making a development application, including prescribing the form and content of the development application. One of the content requirements is that the development application contain evidence that the owner of the land on which the development is to be carried out consents to the application…

An environmental planning instrument, such as the LEP in this case, may provide that development consent is not to be granted except if some condition is satisfied…

The requirement in the EPA Act and the EPA Regulation that a development application contain evidence of the owner’s consent to the application and the requirement in the applicable environmental planning instrument that development consent not be granted except if some condition is satisfied, are jurisdictional prerequisites that need to be satisfied in order for the consent authority (and the Court on appeal exercising the functions of the consent authority) to be able to exercise the function of determining a development application by granting consent to the development application. Under s 34(3) of the Court Act, if the jurisdictional prerequisites to the exercise of the function of determining a development application by granting consent to the development application are not satisfied, a decision to grant consent to the development application will not be “a decision that the Court could have made in the proper exercise of its functions.” The Court could not make that decision…

 

What it means in relation to development appeals

Decisions following an agreement at a conciliation conference now provide details of how the Commissioner was “satisfied that the decision is one that the Court could have made in the proper exercise of its functions”. This is also known as the “check on jurisdiction” or the “jurisdictional prerequisites to the granting of development consent”.

If you have an appeal which reaches an agreement at a conciliation conference, it will be necessary for the Court to satisfy itself that the jurisdictional prerequisites have been satisfied. In the event that the matter does not settle at a conciliation conference and proceeds to a hearing, it will also be necessary to consider whether these matters have been satisfied. Jurisdictional issues can be fatal to a development application and so it is critical to ensure that they have been addressed.

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Alyce is a civil engineer and a practicing lawyer, who has a desire to share her insights on the legal and practical realities of the development industry.

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