Christopher Conolly

FAVOURITES 23 October 2009 – NSW’s Planning Department has been under the gun with decisions on rezonings declared illegal. In the following article, Maddocks partner, Christopher Conolly, explains what went wrong, with an analysis of the Gwandalan and Summerland Point  challenge in the NSW Land Environment Court –

In the recent decision of Gwandalan and Summerland Point Action Group Inc v Minister for Planning his honour Justice Lloyd of the NSW Land and Environment Court declared void approvals given by the then Minister for Planning, Frank Sartor, for a large residential development at Catherine Hill Bay and Gwandalan. His honour held that the Minister’s approvals were affected by a reasonable apprehension of bias.

On 4 November 2005 the Minister released a draft Lower Hunter Strategy that identified new areas for potential residential development, which did not include Gwandalan or Catherine Hill Bay. During the formulation of the strategy, an internal memo of the Department of Planning noted that the Minister was approached by “a number of major landholders [at Gwandalan and Catherine Hill Bay] who sought to increase the development potential of their lands in exchange for dedication of lands [to the NSW Government] with significant conservation values”. The memo also indicated that the Minister entered into negotiations with these landholders.

On 28 September 2006 the Department of Planning retained the Crown Solicitor’s Office to draft a Memorandum of Understanding  between the Minister and the major landholders (Rose Property Group Pty Ltd and Lakeside Living Pty Ltd) at Catherine Hill Bay and Gwandalan. The MOU provided that the Minister would use “reasonable endeavours” to allow the landholders to achieve the development potential of certain land by rezoning it so that it could be used for residential development (schedule 1 land). In exchange, the major landholders would transfer certain land to the NSW government (schedule 2 land). The MOU was entered into in October 2006 and was later formalised into a deed made on 1 September 2008.

On 2 September 2008, in accordance with the MOU and the deed, the Minister rezoned the schedule 1 land enabling it to be used for residential purposes. He also granted approval under Part 3A of the Environmental Planning and Assessment Act 1979 for a:
concept plan for development at Catherine Hill Bay and Gwandalan for 787 residential lots;   and project approval for the subdivision of land at Gwandalan into 187 residential lots.

Reasonable apprehension of bias
The Gwandalan Summerland Point Action Group Inc alleged that the Minister’s decision to grant project approval was affected by a reasonable apprehension of bias. The court had to determine whether a fair minded observer, who is properly informed might reasonably apprehend that the minister did not bring an impartial and unprejudiced mind to the consideration of the development application.

After examining correspondence between the Department of Planning and the Crown Solicitor’s Office and Department of Planning media releases, his honour found that the apprehended bias test had been satisfied. His honour found that the very existence of the MOU “by itself… [gave] rise to a reasonable apprehension of bias, even although it is expressed as not fettering the discretion of the minister under the Act.”

The apprehension of bias is enforced when the content and timing of the MOU is considered. The MOU obliged the Minister to use reasonable endeavours to carry out the rezoning in return for land. It was entered into before the development was declared subject to the assessment procedures under Part 3A of the Act (11 December 2006) or subjected to any assessment under that Part. His honour went so far as to characterise the MOU and Deed as giving effect to a “…land-bribe in exchange for rezoning and associated development”.

The minister had also “publicly committed himself to a particular outcome and indicated a disposition to achieving a particular type of result, namely the specified development potential”.

Before and during the assessment of the development application, the minister and his department had used words that demonstrated a level of finality and certainty in regards to the outcome of the application.

On 28 September, the Department of Planning asked the Crown Solicitor’s office to draft the MOU so that the minister would use his reasonable endeavours “to ensure” that the substance of the MOU was achieved. Similar words were used on 17 October 2006 in a media release for the Lower Hunter Regional Conservation Plan which noted that 12,000 hectares of privately owned land (the schedule 2 land) “will” be transferred to the NSW   government.

This case serves as a reminder that administrative decision makers must bring an unprejudiced mind to the determination of administrative decisions.

In particular that:

  • a government body should be cautious and take care in entering into any agreement that may pre-empt an administrative decision
  • this care should be extended to media releases, informal arrangements and correspondence
  • where a formal procedure exists this should be adopted, in this case his honour refers to the Voluntary Planning Agreement regime in the Act
  • the current case dealt with a development consent, but the principle applies generally to administrative decisions including dealing with Crown land, granting concessions for road or rail developments and awarding construction projects
  • the decision makers can be the minister, a department, a government authority, a local council or a state owned corpor
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