Byron Council wins landmark court case against developer

Hans Lovejoy

Should councils be responsible for a developer’s loss of expected earnings if their development application (DA) is rejected?

In what appears to be a precedent for the nation, leave to appeal to the High Court has been refused, upholding the right of councils to reject such claims.

According to Findlaw’s legal service report, it’s good news for councils around the country, ‘because it confirms that when councils are exercising statutory functions, such powers are unaffected by a duty owed to private interests, including those of developers.’

Staff advise appeal avenues exhausted

A recent memo to councillors from senior staff reads, ‘The claim against Council by Dansar Pty Ltd (Mr and Mrs Vaughan) is now over as all avenues for appeal have been exhausted. The claimant will be liable to pay the council’s (Council’s insurer’s) costs of the High Court as well as all prior proceedings.’

Mr and Mrs Vaughan are two of a handful of Belongil residents who Cr Sol Ibrahim says will help fund rock wall structures to protect their homes.

The Echo understands that a previous council erected rock walls in front of Vaughan’s property, which created a legal liability requiring them to be maintained.

However, the unrelated negligence claim by the Vaughans against the council goes back to the period of the sewer moratorium from 1997 to 2006.

At the time, development required ‘prior adequate arrangement’ owing to a lack of council facilities to cope with human waste.

The applicant’s claim arose from the council’s failure to properly manage the council’s development application process due to the council’s sewerage system nearing capacity, which resulted in the development application initially being rejected.

According to special counsel Karen Browne and law graduate Andrew Clements, ‘In 1997, council resolved to limit the number of new developments approved in the area due to the limited capacity of its two sewerage treatment plants.’

‘The council’s planning controls prevented it from approving development applications unless the council was satisfied that prior adequate arrangements had been made for the provision of sewerage services to the land proposed to be developed.

‘In 2001, Dansar Pty Ltd (the developer) applied to the council for development approval to carry out a residential development. At the time of application, there was sufficient capacity in the sewerage system for the development. However, the council failed to correctly calculate the capacity of the sewerage system, which resulted in the developer’s application initially being rejected.

‘The developer re-submitted its application, which was approved by the council in 2005. The developer claimed that but for the council’s error, development approval would have been granted in a timely manner.’

Developer’s claim

‘The developer commenced proceedings in 2007 claiming damages from the council for a breach of a common law duty of care allegedly owed to them.

‘The developer claimed that the delay in approval was largely caused by the council failing to exercise reasonable care in carrying out the task of allocating the spare capacity, which it had determined should be allocated to new developments.

‘The developer alleged that the council owed a duty of care to the developer to ensure that it did not suffer economic loss resulting from the council’s refusal or delay in implementing its decision.’

First Sun Park approved

John Vaughan told The Echo, ‘Dansar believed the minority position in relation to the specific issue “duty of care” in relation to the allocation of a scarce resource being allocated by a monopoly authority “the council” was correct. Dansar’s application was the only application refused a sewage allocation of about 35-odd applications, pre and post March 2001.

On February 13, 2002 Council staff, without the delegated authority to do so, invoked Clause 45 of the Byron LEP.

‘In March 2002, Council staff defended the appeal on that basis, ie there was no spare capacity or a least not enough for Dansar’s application. Mr Warner, on behalf of council in the Land and Environment Court, gave evidence that has proved [incorrect], saying the STP was overloaded, in that case one example below.

‘It is worth noting that council approved the expansion of the First Sun Tourist Park including building backpacker accommodation and further tent sites on newly leased State Rail land in April 2002, without any concerns about an overloaded West Byron STP.

‘Before the recent Supreme Court appeal in 2013, counsel for Byron Shire Council belatedly admitted that at all relevant times, sewage capacity was available for Dansar’s application!

‘Council had resolved to allocate 89 Kl in September 2000, and did not alter or amend that resolution.

‘At no time did the actual “council” resolve to impose Clause 45, a fatal clause of the Byron LEP on Dansar’s DA.

‘In fact they had deliberately removed Clause 45 from staff’s recommended reasons on December 18, 2001.

‘In the execution of that resolution, council staff made numerous undefended errors and only allocated in total about 60 Kl of the resolved 89 Kl, including an allocation to Dansar’s via second application, approved some three years or so after the original application could have been approved on February 22, 2002, but for sewage allocation. Dansar will not have the opportunity to ventilate the clearly inequitable and ultra vires council staff’s decision before the high court.

‘If a council has no “duty of care” in the allocation of a scarce resource what might flow from that decision?

‘It surely leaves open the possibility of discrimination in an allocation process.

‘In Dansar’s case, it did not get an allocation on February 2002 and council itself approved the expansion of the First Sun Park in April 2002 and added to the flow to the STP. Go figure.’

Council staff were asked for comment but none was recieved by the time of going to press.

Refutes friendship claim

Mr Vaughan also says that regarding a recent Echo story where Donald Maughan claimed to have seen him man Cr Ibrahim’s election polling booth, he says he is ‘not a friend of Cr Ibrahim’.

‘I have only emailed him on issues of concern as one of the councillors when communicating with council.

‘It is my usual practice to cc councillors when writing to the general manager.

‘As to the assertions by Mr Maughan, he is clearly confused – I was handing out election material for the Woods team, which is my democratic right to do.’