Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Huntlee Pty Ltd v Sweetwater Action Group Inc; Minister for Planning and Infrastructure v Sweetwater Action Group Inc [2011] NSWCA 378
• Hearing dates: 4 November 2011
• Decision date: 08 December 2011
• Before: Beazley JA at 1; Sackville AJA at 2; Tobias AJA at 145

Decision

1) Allow the appeals in each of CA 247958 of 2011 and CA 251741 of 2011.

2) Set aside Orders 1, 2 and 3 made by the primary Judge in Proceedings 40245 of 2011 in the Land and Environment Court (" Proceedings ").

3) In lieu thereof, make orders in the Proceedings dismissing the summons filed by Sweetwater Action Group Inc (" Sweetwater "), on 21 March 2011.

4) Sweetwater to pay the costs of the Minister for Planning and Infrastructure (" Minister ") and of Huntlee Pty Ltd ("Huntlee") of the Proceedings in the Land and Environment Court.

5) Sweetwater to pay the costs of the Minister of the appeal in CA 251741 of 2011.

6) Sweetwater to pay the costs of Huntlee of the appeal in CA 247958 of 2011.

7) Sweetwater have a certificate under the Suitors Fund Act 1951 with respect to the costs of the appeals referred to in orders 5 and 6, if otherwise qualified.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court146s computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: ENVIRONMENT AND PLANNING - Land and Environment Court upholds challenge to Minister's decision to recommend amendments to State Environmental Planning Policy ("SEPP") and to validity of SEPP - whether Minister's recommendation decision failed to comply with the requirements of an existing SEPP - whether the Minister took into account an irrelevant consideration, namely a voluntary planning agreement purportedly made in conformity with s 93F of the Environmental Planning and Assessment Act 1979 - whether voluntary agreement provided for suitable means of enforcement of a development contribution, as required by s 93F(3)(g) - whether a suitable means of enforcement is a jurisdictional fact - whether non-compliance with an existing SEPP would render the Minister's recommendation decision invalid - whether status of recommendation decision affects validity of the amending SEPP - whether a Ministerial recommendation is a precondition to the exercise of the statutory power to make a SEPP; WORDS AND PURPOSES - "suitable means of enforcement".
• Legislation Cited: Colonial Laws Validity Act 1865 (Imp); Environmental Planning and Assessment Act 1979; Environmental Planning and Assessment Amendment Act 2008; Environmental Planning and Assessment (Development Contributions) Act 2005; Interpretation Act 1987; Land and Environment Court Act 1979 Sydney Water Catchment Management Act 1988; State Environmental Planning Policy (Major Development) 2005; State Environmental Planning Policy (Major Development) Amendment (Huntlee New Town Site) 2010; State Environmental Planning Policy No 55 - Remediation of Land; State Environmental Planning Policy (Major Projects) 2005 (Amendment No 35)
• Cases Cited: Attorney-General for New South Wales v Trethowan [1931] HCA 3; 44 CLR 394; Cody v J H Nelson Pty Ltd [1947] HCA 17; 74 CLR 629; Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5; 199 CLR 135; Deputy Commissioner of Taxation v Clark [2003] NSWCA 91; 57 NSWLR 113; Forster v Jododex Australia Pty Ltd [1972] HCA 61; 127 CLR 421; Gwandalan Summerland Point Action Group Inc v Minister for Planning [2009] NSWLEC 140; 75 NSWLR 269; Johnco Nominees Pty Ltd v Albury-Wodonga (New South Wales Corporation) [1977] 1 NSWLR 43; Rivers v Bondi Junction - Waverley RSL Sub-Branch Ltd (1986) 5 NSWLR 362; The Dairy Farmers Co-operative Milk Co Ltd v Commonwealth [1947] HCA 49; 73 CLR 381; The King v Regos and Morgan [1947] HCA 19; 74 CLR 613; Timbarra Protection Coalition Inc v Ross Mining NL [1999] NSWCA 8; 46 NSWLR 55; Woolworths Ltd v Pallas Newco Pty Ltd [2004] NSWCA 422; 61 NSWLR 707
• Texts Cited: Bennion on Statutory Interpretation (5th ed 2008); Butterworths Australian Legal Dictionary (1997); J Phillips and J O'Donovan, The Modern Contract of Guarantee (Looseleaf ed.); New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 8 December 2004
• Category: Principal judgment
• Parties: In appeal 247958/2011: Huntlee Pty Ltd (Appellant); Sweetwater Action Group Inc (First Respondent); Minister for Planning (Second Respondent); In appeal 251741/2011: Minister for Planning and Infrastructure (Appellant); Sweetwater Action Group Inc (First Respondent); Huntlee Pty Ltd (Second Respondent)
• Representation: In appeal 247958/2011: Dr J Griffiths SC with S Pritchard (Appellant); R Beech-Jones SC with J Hutton (First Respondent); N Williams SC with S Free (Second Respondent); In appeal 251741/2011: N Williams SC with S Free (Appellant); R Beech-Jones SC with J Hutton (First Respondent); Dr J Griffiths SC with S Pritchard (Second Respondent); In appeal 247958/2011: Corrs Chambers Westgarth (Appellant); Environmental Defender's Office (First Respondent); Marcus Ray, Department of Planning and Infrastructure (Second Respondent); In appeal 251741/2011: Marcus Ray, Department of Planning and Infrastructure (Appellant); Environmental Defender's Office (First Respondent); Corrs Chambers Westgarth (Second Respondent)
• File Number(s): 2011/247958; 2011/251741
• Publication restriction: No

Decision under appeal

• Citation: Sweetwater Action Group Inc v Minister for Planning [2011] NSWLEC 106
• Date of Decision: 2011-07-07 00:00:00
• Before: Biscoe J
• File Number(s): 2011/247958; 2011/251741

Judgment

1 BEAZLEY JA: I agree with Sackville AJA.

2 SACKVILLE AJA: Two appeals have been heard together. The appellants are Huntlee Pty Ltd (" Huntlee ") and the Minister for Planning and Infrastructure (" Minister "). Each appeal is from a decision of the Land and Environment Court (Biscoe J) and is brought pursuant to s 58 of the Land and Environment Court Act 1979 (" LEC Act "). The primary Judge upheld a challenge by the first respondent to each appeal (" Sweetwater ") to a decision by the Minister to recommend that the Governor amend State Environmental Planning Policy (Major Development) 2005 (" MD SEPP ").

3 The Minister's decision to recommend amending the MD SEPP (" Recommendation Decision ") was made on or shortly after 2 December 2010. A consequence of the Recommendation Decision was that the Governor, acting on the advice of the Executive Council, made the State Environmental Planning Policy (Major Development) Amendment (Huntlee New Town Site) 2010 ("MD SEPP Amendment) on 21 December 2010.

4 The MD SEPP Amendment, if valid, effectively rezones a large area of land in the Lower Hunter Region, located south of Branxton (" the Site "). The rezoning permits residential development on land previously zoned as rural land under the relevant local environmental plans. The Site comprises approximately 1702 hectares, most of which is owned by Huntlee. Huntlee proposes to undertake a large-scale residential development on the Site over a period of 20-25 years. The intention is to ultimately erect about 7,200 dwellings accommodating about 18,000 to 20,000 residents.

5 The MD SEPP Amendment amends the MD SEPP by listing the Site as a " State significant site " in Sch 3 to the MD SEPP. The consequence of such a listing is that the proposed development is brought within Part 3A of the Environmental Planning and Assessment Act 1979 (" EPA Act "), thereby conferring power on the Minister to grant approval to the development.

6 The primary Judge made two declarations, as follows:

"1. ... the decision by the [Minister] to recommend that the Governor amend State Environmental Planning Policy (Major Developments) 2005 through the State Environmental Planning Policy (Major Developments Amendment (Huntlee New Town Site) 2010, gazetted on 31 December 2010, is void.

2. ... State Environmental Planning Policy (Major Developments) Amendment (Huntlee New Town Site 2010), gazetted on 31 December 2010 is void."

7 His Honour upheld two grounds of challenge to the Recommendation Decision:

• First, the Minister failed to comply with conditions in cl 6(1)(b) and (c) and cl 6(2) of State Environmental Planning Policy No 55 - Remediation of Land (" SEPP 55 "). These conditions purport to oblige a " planning authority ", in preparing an " environmental planning instrument " (" EPI ") to consider whether land is contaminated and whether remediation is necessary. An EPI is defined by s 4(1) of the EPA Act to include a State Environmental Planning Policy (" SEPP ") made under Part 3 of the EPA Act.

• Secondly, the Minister in making the Recommendation Decision took into account an irrelevant consideration, namely that an agreement entered into on 3 December 2010 between Huntlee, the Minister and another party (" 2010 Agreement ") was a voluntary planning agreement made in conformity with s 93F of the EPA Act. The primary Judge found that the agreement did not comply with s 93F(3)(g) of the EPA Act, in that it did not provide for the enforcement of the agreement " by a suitable means ", insofar as the agreement required Huntlee to make a monetary contribution of $1.1 million by instalments (" Development Contributions "). Since the Minister assumed that the 2010 Agreement had been made in accordance with the EPA Act, he had taken into account an irrelevant consideration.

8 The primary Judge concluded that the invalidity of the Recommendation Decision rendered the MD SEPP Amendment void. Accordingly, he granted the declaratory relief sought by Sweetwater set out in [6**] above.

9 The primary Judge rejected a third challenge to the Recommendation Decision based on apprehended bias. No issue relating to the third ground arises on the appeals.

10 The Minister has been joined as the second respondent to Huntlee's appeal, while Huntlee is the second respondent to the Minister's appeal. On the appeals, both Huntlee and the Minister were represented by senior and junior counsel. Both filed written submissions, Huntlee's submissions being particularly extensive. Huntlee's submissions in chief and reply complied with the page limits imposed by the Practice Direction by utilising single spacing and footnotes with minute font (a matter on which the presiding Judge commented at the hearing). While the respective submissions of the appellants differed in emphasis on some points, they argued for the same result and essentially covered similar ground.

LEGISLATION

EPA Act

11 Section 5 of the EPA Act provides that the objects of the legislation are as follows:

"(a) to encourage:

(i) the proper management, development and conservation of natural and artificial resources, ... for the purpose of promoting the social and economic welfare of the community and a better environment,

(ii) the promotion and co-ordination of the orderly and economic use and development of land,

...

(iv) the provision of land for public purposes,

...

(vi) the protection of the environment ..."

12 The Minister is responsible for promoting and co-ordinating environmental planning and assessment for the purpose of carrying out the objectives of the EPA Act: s 7. In discharging that responsibility, the Minister may exercise a number of functions including monitoring progress and performance in environmental planning and assessment and initiating the taking of remedial action where necessary: s 7(f) For the purpose of exercising these functions the Minister is incorporated as a corporation sole: s 8(1).

13 The Director-General of the Department of Planning, in the exercise of any function conferred on the Director-General by the EPA Act, is subject to the control and direction of the Minister except in relation to the contents of a recommendation made by the Director-General to the Minister: s 13(2). In addition to any other functions that may be conferred on the Director-General, s 15 provides that he or she may:

(a) submit to the Minister such proposals with respect to environmental planning and assessment as the Director-General considers necessary or appropriate, including proposals for the development and use of land ...

(b) consider and furnish reports to and advise and make recommendations to the Minister upon any matter or proposal relating to the development and use of land or to environmental planning and assessment which may be referred to the Director-General by the Minister."

14 Part 3 of the EPA (ss 24-74F) deals with EPIs. An EPI may be made in accordance with Part 3 for the purposes of achieving any objects of the EPA Act: s 24(1). A SEPP may be made by the Governor under Div 2 of Part 3: s 24(2).

15 Section 26 deals with the contents of EPIs, as follows:

"(1) Without affecting the generality of section 24 or any other provision of this Act, an environmental planning instrument may make provision for or with respect to any of the following:

(a) protecting, improving or utilising, to the best advantage, the environment,

(b) controlling (whether by the Imposing of development standards or otherwise) development,

...

(d) providing, maintaining and retaining, and regulating any matter relating to, affordable housing,

...

(f) controlling any act, matter or thing for or with respect to which provision may be made under paragraph (a) or (e)."

16 The Governor may prescribe the standard form and content of EPIs: s 33A(1). Subject to the EPA and the regulations, the form and subject matter of an EPI is, if there is no applicable standard instrument, to be as determined by the Minister: s 33A(9).

17 The Minister is not to recommend the making of a SEPP that relates to the declaration of the Sydney drinking water catchment (that is, a catchment area to which the Sydney Water Catchment Management Act 1988 applies) unless other specified Ministers approve or have been consulted, as the case may be: s 34B(4).

18 Section 36 addresses resolution of any inconsistency between EPIs as follows:

"(1) In the event of an inconsistency between environmental planning instruments and unless otherwise provided:

...

(c) the general presumptions of the law as to when an Act prevails over another Act apply to when one kind of environmental planning instrument prevails over another environmental planning instrument of the same kind.

...

(4) Nothing in this section prevents an environmental planning instrument from being expressly amended by a later environmental planning instrument, of the same or a different kind, to provide for the way in which an inconsistency between them is to be resolved."

19 Division 2 of Part 3 (ss 37-38) in their present form were inserted into the EPA Act by the Environmental Planning and Assessment Amendment Act 2008 (" EPA Amendment Act 2008 "). The Division provides for the making of SEPPs, as follows:

" 37 Governor may make environmental planning instruments (SEPPs)

(1) The Governor may make environmental planning instruments for the purpose of environmental planning by the State. Any such instrument may be called a State environmental planning policy (or SEPP).

(2) Without limiting subsection (1), an environmental planning instrument may be made by the Governor to make provision with respect to any matter that, in the opinion of the Minister, is of State or regional environmental planning significance.

38 Consultation requirements

Before recommending the making of an environmental planning instrument by the Governor, the Minister is to take such steps, if any, as the Minister considers appropriate or necessary:

(a) to publicise an explanation of the intended effect of the proposed instrument, and

(b) to seek and consider submissions from the public on the matter."

An EPI may be amended in whole or in part by a subsequent EPI, whether of the same or different type: s 74(1).

20 Part 3A of the EPA Act is concerned with " major infrastructure and other projects ". It applies to a development that is declared by a SEPP to be a project to which Part 3A applies: s 75B(1)(a). Division 2 of Part 3A provides for a process of assessment and public consultation to be conducted by the Director-General and for the Minister, after receiving the Director-General's report, to approve or disapprove the project.

21 Part 4 of the EPA Act is concerned with assessment of various kinds of development. Division 6 of Part 4 deals with development contributions. Subdivision 2 of Div 6 (ss 93F-93L) deals with voluntary planning agreements.

22 Section 93F provides as follows:

"(1) A planning agreement is a voluntary agreement or other arrangement under this Division between a planning authority (or 2 or more planning authorities) and a person (the developer ):

(a) who has sought a change to an environmental planning instrument,

...

under which the developer is required to dedicate land free of cost, pay a monetary contribution, or provide any other material public benefit, or any combination of them, to be used for or applied towards a public purpose.

(2) A public purpose includes (without limitation) any of the following:

(a) the provision of (or the recoupment of the cost of providing) public amenities or public services,

...

(c) the provision of (or the recoupment of the cost of providing) transport or other infrastructure relating to land,

...

(f) the conservation or enhancement of the natural environment.

(3) A planning agreement must provide for the following:

(a) a description of the land to which the agreement applies,

(b) a description of:

(i) the change to the environmental planning instrument to which the agreement applies, or

(ii) the development to which the agreement applies,

(c) the nature and extent of the provision to be made by the developer under the agreement, the time or times by which the provision is to be made and the manner by which the provision is to be made,

(d) in the case of development, whether the agreement excludes (wholly or in part) or does not exclude the application of section 94, 94A or 94EF to the development,

(e) if the agreement does not exclude the application of section 94 to the development, whether benefits under the agreement are or are not to be taken into consideration in determining a development contribution under section 94,

(f) a mechanism for the resolution of disputes under the agreement,

(g) the enforcement of the agreement by a suitable means, such as the provision of a bond or guarantee, in the event of a breach of the agreement by the developer.

(3A) A planning agreement cannot exclude the application of section 94 or 94A in respect of development unless the consent authority for the development or the Minister is a party to the agreement.

(4) A provision of a planning agreement in respect of development is not invalid by reason only that there is no connection between the development and the object of expenditure of any money required to be paid by the provision.

...

(10) A planning agreement is void to the extent, if any, to which it requires or allows anything to be done that, when done, would breach this section or any other provision of this Act, or would breach the provisions of an environmental planning instrument or a development consent applying to the relevant land." (Emphasis added.)

The expression " planning authority " in Div 6 includes the Minister: s 93C.

23 A planning agreement cannot be entered into unless notice has been given of the proposed agreement and a copy has been available for public inspection for a period of not less than 28 days: s 93G(1). A planning authority that has entered into a planning agreement must, while the agreement remains in force, include in its annual report particulars of compliance with the planning agreement: s 93G(5).

24 Section 93H of the EPA Act creates a procedure whereby planning agreements can " run with the land ". It relevantly provides as follows:

"(1) A planning agreement can be registered under this section if the following persons agree to its registration:

(a) if the agreement relates to land under the Real Property Act 1900 - each person who has an estate or interest in the land registered under that Act, or

...

(2) On lodgement by a planning authority of an application for registration in a form approved by the Registrar-General, the Registrar-General is to register the planning agreement:

(a) by making an entry in the relevant folio of the Register kept under the Real Property Act 1900 if the agreement relates to land under that Act, or

...

(3) A planning agreement that has been registered by the Registrar-General under this section is binding on, and is enforceable against, the owner of the land from time to time as if each owner for the time being had entered into the agreement.

(4) A reference in this section to a planning agreement includes a reference to any amendment or revocation of a planning agreement."

25 Section 93J(1) provides that a person cannot appeal to the Land and Environment Court against the terms of a planning agreement. This does not affect the jurisdiction of the Court under s 123 (s 93J(2)). That jurisdiction includes hearing proceedings brought by any person for an order to remedy or restrain a breach of a planning agreement or of a SEPP (ss 122(b)(ii),(vi), 123).

26 Section 93K empowers the Minister to give directions to any other planning authority as to the procedures to be followed in negotiating a planning agreement, publication of the procedures or other standard requirements.

Interpretation Act

27 Section 14 of the Interpretation Act 1987 (" Interpretation Act ") provides as follows:

"In any Act or instrument, a reference to the Governor is a reference to the Governor with the advice of the Executive Council ..."

COURSE OF EVENTS

28 The Site was identified as a " major urban release site " for up to 7200 dwellings in the Lower Hunter Regional Strategy (" LHRS "), which was released by the then Minister on 17 October 2006. The LHRS was said to represent:

"an agreed NSW government position on the future of the Lower Hunter. [The LHRS] is the pre-eminent planning document for the Lower Hunter Region and has been prepared to complement and reform other relevant State planning instruments."

The LHRS contemplated that a total of 21,700 additional dwellings would be built in the Cessnock local government area by 2031. The LHRS also identified portions of the southern section of the Site as proposed conservation lands.

29 On 22 December 2006, Huntlee Holdings Pty Ltd (the then proponent of the Site), the Minister and the Minister for Environment entered into a Deed relating to the Site (among other areas). The Deed and an associated Memorandum of Understanding contemplated that Huntlee Holdings Pty Ltd would provide certain land offsets and contributions in return for a rezoning of the Site.

30 In April 2009, the Lower Hunter Regional Conservation Plan (" LHRCP "), a partner document to the LHRS, set out a 25 year program for conservation planning in the Lower Hunter Valley. Clause 8.2.2 of the LHRCP referred to amendments to the EPA Act which had introduced planning agreements as:

"a voluntary facility for planning authorities and developers to negotiate flexible outcomes in respect to development contributions ..."

This was a reference to Div 6, Subdiv 2 of Part 4 of the EPA Act.

31 In the meantime, on 9 January 2009, the Governor, in accordance with a recommendation by the Minister, purported to make the State Environmental Planning Policy (Major Projects) 2005 (Amendment No 35) (" SEPP Amendment No 35 "). SEPP Amendment No 35 amended Sch 3 to the MD SEPP to nominate the Site as a State significant site and to rezone the Site to facilitate the development contemplated by the LHRS.

32 On 6 April 2009, Sweetwater commenced proceedings in the Land and Environment Court challenging the validity of SEPP Amendment No 35. On 19 October 2009, consent orders were entered declaring SEPP Amendment No 35 void. It appears that the orders were made in consequence of the decision of Lloyd J in Gwandalan Summerland Point Action Group Inc v Minister for Planning [2009] NSWLEC 140; 75 NSWLR 269.

33 On 23 November 2009, a representative of Huntlee Holdings Pty Ltd wrote to the Director-General requesting that the Site be considered as a State significant site.

34 On 26 February 2010, the Deputy Director-General wrote to interested councils and others confirming that, notwithstanding the decision in Gwandalan , the LHRS provided a secure foundation for planning and development proposals. The letter also advised that the LHRS had been re-endorsed by Cabinet.

35 In May 2010, Huntlee was incorporated for the purposes of carrying forward development of the Site.

36 On 6 July 2010, a deed was executed the effect of which was to terminate the 2006 Deed and the associated Memorandum of Understanding, insofar as they applied to the Site.

37 On 8 July 2010, a representative of Huntlee wrote to the Director-General requesting that consideration be given by the Minister to rezoning the site for a mix of uses by way of its inclusion as a State significant site in the MD SEPP.

38 On or shortly before 16 July 2010, a Departmental briefing note recommended to the Minister that he agree to investigate listing the Site as a State significant site. The Minister agreed to the recommendation and required the Director-General to arrange for a study to be undertaken as required by cl 8 of the MD SEPP.

39 On 24 September 2010, JBA Urban Planning Consultants Pty Ltd (" JBA ") submitted a State Significant Site Study (" SSS Study ") to the Department on behalf of Huntlee. Section 5 of the SSS Study stated at [5.1] that an amendment to Sch 3 to the MD SEPP was predicated upon a " suite of environmental contributions " including:

" · dedication of 5,612ha of environmentally significant land to conservation purposes;

· environmental contribution of $100,000 to be paid towards the recovery plan for the Persoonia Pauciflora

· environmental contribution of $1,000,000 to be paid towards the development of the Huntlee Conservation area of 607 hectares."

The SSS Study examined contamination issues at [7.6.2].

40 The SSS Study was placed on public exhibition on 29 September 2010. On 26 November 2010, JBA responded to the submissions received, including comments in submissions relating to mine rehabilitation and contaminated land.

41 On 14 October 2010, a draft planning agreement prepared on behalf of Huntlee was also put on public exhibition.

42 On about 2 December 2010, the Director-General provided the Minister with a briefing note headed " Huntlee - Voluntary Planning Agreement ". The briefing note referred to the suite of environmental contributions to be made by the proponents. The note recommended that the Minister execute the draft voluntary agreement. The Minister approved the briefing note.

43 On 3 December 2010, the 2010 Agreement was executed by the Minister and the Minister for the Environment. The other parties to the 2010 Agreement were Huntlee and Misthold Pty Ltd (" Misthold ") which owned a portion of the Site.

44 At about the same time as the 2010 Agreement was executed, the Director-General made a written recommendation to the Minister that he:

• form the opinion that the proposed MD SEPP Amendment was of State or regional environmental planning significance, pursuant to s 37(2) of the EPA Act;
• approve the manner and form of the proposed SEPP pursuant to s 33A(9) of the EPA Act; and
• recommend that the Governor, for the purpose of environmental planning by the State, make the proposed SEPP pursuant to s 37(1) of the EPA Act.

45 The briefing note accompanying the recommendation recorded that several submissions had raised concerns relating to contamination in former mining areas. The briefing note also recorded the Department's view that satisfactory remediation work could be carried out prior to any development. The documents attached to the briefing note included a Departmental summary of issues raised in submissions. The summary addressed the question of contamination in a little more detail than the briefing note itself.

46 The Minister endorsed the Director-General's recommendation and forwarded documentation to the Executive Council Secretariat of the Department of Premier and Cabinet to obtain approval of the proposed SEPP. The documentation included signed Executive Council minutes.

47 On 21 December 2010, the Governor made the MD SEPP Amendment. The SEPP records that " the Governor, with the advice of the Executive Council, has made the following State environmental planning policy under the [EPA Act] ". The MD SEPP Amendment was gazetted on 31 December 2010.

48 The MD SEPP, as amended by the MD SEPP Amendment, included the Site in Sch 3 as a State significant site. The Site was rezoned to include areas designated for residential development and a process established for the assessment and determination of development applications.

THE SEPPs

SEPP 55

49 SEPP 55 was gazetted in 1998. Its object is stated in cl 2:

"(1) The object of this Policy is to provide for a Statewide planning approach to the remediation of contaminated land.

(2) In particular, this Policy aims to promote the remediation of contaminated land for the purpose of reducing the risk of harm to human health or any other aspect of the environment:

(a) by specifying when consent is required, and when it is not required, for a remediation work, and

(b) by specifying certain considerations that are relevant in rezoning land and in determining development applications in general and development applications for consent to carry out a remediation work in particular, and

(c) by requiring that a remediation work meet certain standards and notification requirements."

50 Clause 6 of SEPP 55 provided as follows:

" 6 Contamination and remediation to be considered in zoning or rezoning proposal

(1) In preparing an environmental planning instrument, a planning authority is not to include in a particular zone (within the meaning of the instrument) any land specified in subclause (4) if the inclusion of the land in that zone would permit a change of use of the land, unless:

(a) the planning authority has considered whether the land is contaminated, and

(b) if the land is contaminated, the planning authority is satisfied that the land is suitable in its contaminated state (or will be suitable, after remediation) for all the purposes for which land in the zone concerned is permitted to be used, and

(c) if the land requires remediation to be made suitable for any purpose for which land in that zone is permitted to be used, the planning authority is satisfied that the land will be so remediated before the land is used for that purpose.

Note. In order to satisfy itself as to paragraph (c), the planning authority may need to include certain provisions in the environmental planning instrument.

(2) Before including land in a particular zone, the planning authority is to obtain and have regard to a report specifying the findings of a preliminary investigation of the land carried out in accordance with the contaminated land planning guidelines.

...

(5) In this clause, planning authority has the same meaning as it has in section 145A of the Act."

51 Clause 6(2) refers to a report specifying the findings of a preliminary investigation. It has been common ground in the present proceedings that the relevant preliminary investigation was the SSS Study of 24 September 2010. Clause 4 of SEPP 5 defines " contaminated land planning guidelines " to mean guidelines relating to contaminated land issued by the Minister and gazetted under s 145C of the EPA Act.

52 Clause 6(4) specifies a number of classes of land. There is no dispute in the present proceedings that the Site is within cl 6(4).

53 Clause 6(5) refers to s 145A of the EPA Act. Section 145A is within Part 7A of the EPA Act which is headed " Liability in respect of contaminated land ". Section 145A includes the following definition:

" planning authority , in relation to a function specified in section 145B, means:

(a) in the case of a function relating to a development application - the consent authority (or a person or body taken to be a consent authority), and

...

(b) in the case of any other function-the public authority or other person responsible for exercising the function."

54 In order to understand this definition, it is necessary to refer to s 145B of the EPA Act, which relevantly provides as follows:

" 145B Exemption from liability - contaminated land

(1) A planning authority does not incur any liability in respect of anything done or omitted to be done in good faith by the authority in duly exercising any planning function of the authority to which this section applies in so far as it relates to contaminated land (including the likelihood of land being contaminated land) or to the nature or extent of contamination of land.

(2) This section applies to the following planning functions:

(a) the preparation or making of an environmental planning instrument, including a planning proposal for the proposed environmental planning instrument,

...

(c) the processing and determination of a development application and any application under Part 3A

...

(f) anything incidental or ancillary to the carrying out of any function listed in paragraphs (a) - (e)."

55 A further cross-reference is required as the expression " public authority " is defined in s 4 of the EPA Act to include a government department and the Director-General, but not the Minister. Thus if the Minister, at the time the Recommendation Decision was made, was a " planning authority " for the purposes of cl 6, it must be because he was a " person responsible for exercising [a function identified in s 145B(2) of the EPA Act] ".

56 Clause 19(1) of SEPP 55 provides as follows:

"If this Policy is inconsistent with another State environmental planning policy, a regional environmental plan or a local environmental plan (whether made before or after this Policy), this Policy prevails, except as provided by this clause and section 36(4) of the Act."

MD SEPP

57 The aims of the MD SEPP include the following (cl 2):

"(a) to identify development to which the development assessment and approval process under Part 3A of the Act applies,

(b) to identify any such development that is a critical infrastructure project for the purposes of Part 3A of the Act,

(c) to facilitate the development, redevelopment or protection of important urban, coastal and regional sites of economic, environmental or social significance to the State so as to facilitate the orderly use, development or conservation of those State significant sites for the benefit of the State,

..."

58 The MD SEPP includes an inconsistency provision (cl 5) as follows:

"Subject to section 74(1) of the Act, in the event of an inconsistency between this Policy and another environmental planning instrument whether made before or after the commencement of this Policy, this Policy prevails to the extent of the inconsistency."

59 Clause 8(1A) states that Sch 3 to the MD SEPP describes " State significant sites ", including development on these sites that is a project to which Part 3A of the EPA Act applies.

60 Clause 8 provides as follows:

"(1) For the purposes of considering a proposed amendment to Schedule 3, the Minister may initiate an investigation into the proposal by requiring the Director-General to undertake a study or to make arrangements for a study to be undertaken for the purpose of determining:

(a) whether any development on the site should be declared to be a project to which Part 3A of the Act applies, and

(b) ...

(2) Any such study is to assess:

(a) the State or regional planning significance of the site, and

(b) the suitability of the site for any proposed land use taking into consideration environmental, social and economic factors, the principles of ecologically sustainable development and any State or regional planning strategy, and

...

(3) The Director-General is to make arrangements for any such study to be publicly exhibited with an invitation to the public to make written submissions.

(4) The Minister may direct that an inquiry be held as part of the investigation into a potential State significant site.

(5) The Director-General is to provide the Minister with a copy of any such study and any recommendations relating to it.

(6) This clause does not preclude an amendment of Schedule 3 without compliance with this clause."

MD SEPP Amendment

61 I have referred earlier to the making of the MD SEPP Amendment by the Governor and the circumstances leading to its making.

2010 AGREEMENT

62 The parties to the 2010 Agreement are the Minister, the Minister for Climate Change and the Environment and Huntlee and Misthold (the registered proprietor of part of the Site). Huntlee and Misthold are together referred to in the Agreement as the " Land Owner ".

63 The 2010 Agreement provides for the Land Owner to pay or make the Development Contributions set out in Sch 3. These included two environmental contributions of $100,000 and $1 million, respectively. The larger amount was to be paid by a first instalment of $100,000 (due on 31 January 2012) and six equal annual instalments of $150,000 commencing on 31 January 2014 (Sch 5).

64 Clause 2 of the 2010 Agreement states that the Agreement only operates if, among other things, the MD SEPP Amendment is gazetted. Clause 3 states that the Agreement is a " planning agreement within the meaning of section 93F of the [EP Act]".

65 The 2010 Agreement states that it may be enforced by any party in any court (cl 7.1).

66 Clause 9.2 deals with registration of the 2010 Agreement under s 93M of the EPA Act, as follows:

"(a) The Land Owner agrees it will procure the registration of the Planning Agreement ... under the Real Property Act 1900 (NSW) in the relevant folios of the register for the Land that it owns ... in accordance with section 93H of the Act.

(b) The Land Owner at its own expense will, promptly after the Planning Agreement comes into operation ..., take all practical steps, and otherwise do anything that the Minister reasonably requires, to procure:

(i) the consent of each person who:

A. has an estate or interest in the Land ...

B. is seized or possessed of an estate or interest in the Land ...;

(ii) the execution of any documents; and

(iii) the production of the relevant certificates of title,

to enable the registration of the Planning Agreement under the Real Property Act 1900 (NSW) ... in accordance with section 93H of the Act."

67 Clause 9.4 provides as follows:

"(a) The Land Owner acknowledges and agrees that:

(i) when this Planning Agreement comes into operation, the Minister is deemed to have acquired, and the Land Owner is deemed to have granted, an equitable estate and interest in the Land ... for the purposes of section 74F(1) of the Real Property Act 1900 (NSW) and consequently the Minister has a sufficient interest in the land ... in respect of which to lodge with the [Land and Property Management Authority] a caveat notifying that interest;

(ii) it will not object to the Minister lodging a caveat in the relevant folio of the Register for the Land ... provided the caveat does not prevent registration of any dealing ... other than a transfer, and

(iii) it will obtain the consent to the lodgement of the caveat of each person who has an estate or interest in the Land ..."

68 The Land Owner warrants that it has obtained the written consent of any mortgagee or chargee to the Land Owner entering into the 2010 Agreement and registration of the Agreement under the Real Property Act 1900 (" RP Act ") (cl 9.6(a)). The Land Owner also warrants that the mortgagee or chargee agrees that it will only exercise its rights subject to the rights of the Minister under the 2010 Agreement (cl 9.6(b)).

69 Paragraph 1 of Sch 10 to the 2010 Agreement provides that except where the Agreement has been released and discharged by reason of the Land Owner complying with all obligations:

"(a) ... the Land Owner must not sell, transfer or dispose of the whole or any part of the Land in excess of 10 hectares in aggregate ... unless before it sells, transfers or disposes of any such part of the Land to another person ( Transferee ):

(i) it satisfies the Minister acting reasonably that the proposed Transferee is financially capable of complying with such of the Land Owner's obligations under this deed ... as the Minister acting reasonably shall nominate must be adopted by the Transferee ( Required Obligations );

(ii) except as provided in the deed set out in Annexure A which is signed in accordance with paragraph 1(a)(iii) of this Schedule, the rights of the Minister under this deed are not diminished or fettered in any way; [and]

(iii) the Transferee signs a deed in the form set out in Annexure A to the Minister containing provisions under which the Transferee agrees to comply with the Required Obligations as if it were the Land Owner (including obligations which arose before the transfer or assignment) with respect to the land being sold, transferred or disposed of;

..."

70 The form of deed set out in Sch A to the 2010 Agreement is described as a " Novation Deed ". The deed substitutes the transferee for the transferor as a party to the 2010 Agreement and obliges the transferee to perform the Required Obligations (cl 2.1 (a), (b)). The transferor is released from all obligations and liabilities under the 2010 Agreement, except for those that the Land Owner had failed to perform at the date of the transfer (cll 2.1(c), 2.2).

71 Paragraphs 3 and 4 of Sch 10 are as follows:

" 3. Release

If the Land Owner sells, transfers or disposes of the whole or any part of the Land in excess of 10 hectares in aggregate and fully satisfies the requirements of paragraph 1 of this Schedule 10, the Land Owner will be released from its obligations under this Planning Agreement with respect to that Land being sold, transferred or disposed of.

4. Land Owner to retain obligations

If the Land Owner sells, transfers or disposes of the whole or any part of the Land in the manner identified in paragraph 1(a) of this Schedule 10 to a Transferee:

(a) the Land Owner may elect, by way of notice to the Minister, to continue to be bound by the obligations under the Planning Agreement in respect of the Land in lieu of the Transferee;

(b) the Minister agrees to release the Transferee from the requirement to comply with the obligations under the Planning Agreement in respect of that Land; and

(c) the Minister will do all things reasonably necessary to effect the release ...".

PRIMARY JUDGMENT

Failure to Comply with SEPP 55

72 The primary Judge first addressed Sweetwater's argument that the Recommendation Decision was invalid by reason of the Minister's failure to comply with the conditions in cl 6(1)(b) and (c) and cl 6(2) of SEPP 55. His Honour found (at [47]) that:

• the relevant contaminated planning guidelines were those entitled " Managing Land Contamination Planning Guildelines SEPP 55 - Remediation of Land 1998 "; and
• the SSS Study had been considered by the Department but had not been seen by the Minister.

73 The primary Judge held that the Minister was a " planning authority " for the purposes of cl 6 of SEPP 55, as his functions included " preparing " the relevant EPI, namely the MD SEPP Amendment. His Honour accepted (at [53]) that the EPA Act does not expressly identify who is responsible for preparing SEPPs and that the function of " making " SEPPs is expressly conferred on the Governor by ss 24(2)(a) and 37(1) of the EPA Act. However, the effect of s 38 was that the function of " recommending " the making of SEPPs " expressly belongs to the Minister ". While s 38 does not say to whom the Minister makes a recommendation, the primary Judge considered that it is implicit that the recommendation be made to the Governor.

74 The primary Judge observed (at [56]) that prior to the EPA Amendment Act 2005, s 37(1) of the EPA Act expressly conferred on the Director-General (then called the Director) the function of preparing SEPPs and submitting them to the Minister. Section 38(1) had expressly empowered the Minister to recommend to the Governor the making of a SEPP. While these provisions were no longer in the legislation, his Honour considered (at [58]) that the Minister was still responsible for preparing SEPPs and was therefore a " relevant authority " within cl 6 of SEPP 55. He relied on the following matters:

• the Minister's recommending function is part of the preparation of a SEPP;
• if the Minister neither prepared nor makes a SEPP (as the present appellants had suggested), the Minister would not receive the benefit of the exemption from liability conferred by s 145B(1) and (2)(a); and
• s 145B(2) indicates that the statutory process of making a SEPP is divided into " preparation " and " making " and, since the recommending function is not part of the making of a SEPP, that function must be part of the preparation of the SEPP.

75 Even if that reasoning was not correct, his Honour considered (at [63]) that the Minister rather than the Director-General was responsible for preparing a SEPP. Section 7 of the EPA Act showed that the Minister's functions are broad. Moreover, the making of a SEPP results in delegated legislation and the Minister should be regarded as responsible for preparing delegated legislation. While officers of the Department had physically prepared the proposed MD SEPP Amendment, the briefing note was consistent with the preparation being done on behalf of the Minister rather than the Director-General (at [65]).

76 The primary Judge rejected the present appellants' submission that cl 6 of SEPP 55 did not apply at all because MD SEPP was inconsistent with SEPP 55 and by reason of cl 5 of MD SEPP, the later SEPP prevailed over the earlier. His Honour said that the object of SEPP 55 is to provide for a State wide planning approach to the remediation of contaminated land (cl 2(1)), while MD SEPP is designed to facilitate development of important sites. According to his Honour, the two are intended to give effect to harmonious goals and both can be obeyed (at [78]). They are therefore not inconsistent.

77 The next question was whether the Minister had complied with cl 6(2) of SEPP 55, which required the planning authority to obtain and have regard to a report specifying the findings of a preliminary investigation of the land carried out in accordance with the guidelines. The primary Judge noted that the SSS Study (the relevant preliminary investigation) had been seen by the Department but not by the Minister. A Departmental document referring to contamination issues had been appended to the December briefing note approved by the Minister. In the primary Judge's view, neither the Executive Summary in the SSS Study nor the Departmental document, which was based on the Executive Summary, adequately recorded the actual findings of the SSS Study. Therefore the Minister had not seen the findings and had not complied with the prescriptive requirements of cl 6(2).

78 The primary Judge also found that the Minister had not complied with cl 6(1)(b) or (c) of SEPP 55. His Honour held that those provisions required the Minister to be satisfied that the contaminated land, if remediated, would be suitable for all permitted uses. Since no summary of the remediation issues identified in the SSS Study was before the Minister, he could never have formed the requisite state of satisfaction.

79 The primary Judge rejected (at [100]) the present appellants' submission that breaches of cl 6 of SEPP could not produce any invalidity consequences. In his Honour's view SEPP 55 would be rendered a " dead letter " if breaches did not lead to invalidity, particularly in the case of a large scale development. Thus the MD SEPP Amendment was invalid.

80 Finally, on this aspect of the case, his Honour held (at [102]) that the Minister's power to recommend was statutory and not simply the exercise of executive power. The exercise of such a statutory power gave rise to justiciable questions. In any event, even if the Minister had exercised a non-statutory executive power, its exercise would be justiciable.

Taking into Account an Irrelevant Consideration

81 The primary Judge found that the Minister had assumed that the 2010 Agreement was made in accordance with the EPA Act. He accepted Sweetwater's submission that the Minister's assumption was wrong. The 2010 Agreement did not comply with the requirements of s 93F(3)(g) of the EPA, in that the Agreement did not provide for the enforcement of Huntlee's obligation to make a monetary contribution of $1.1 million by suitable means, such as a bond or guarantee.

82 The primary Judge accepted (at [124]) the appellants' argument that the obligation to pay monetary contributions was not an obligation " under the Planning Agreement in respect of the land " under cl 4 of Sch 10. It followed that the obligation could not be released under that provision.

83 However, his Honour rejected the appellants' submission that s 93F(3)(g) of the EPA Act should be construed to refer to enforcement by a means which the Minister considers to be suitable. He considered that the wording of s 93F(3)(g) indicated that the question of a " suitable means " of enforcement had to be decided objectively.

84 The primary Judge then held (at [126]) that the means of enforcement provided by the 2010 Agreement were not suitable as:

"... s 93F(3)(g), by its reference to 'suitable means, such as a bond or guarantee', requires an additional, independent and enforceable assurance that the developer's promises under the agreement will be honoured. There is breadth and flexibility in that requirement. Bonds and guarantees are not exhaustive but the suitable means should be ejusdem generis. In my view, the requirement is not satisfied by the contractual provisions on which the respondents rely that the planning agreement be registered and that a caveat may be lodged pending registration. Registration binds successors in title (s 93H) and, with the contractual machinery of novation, merely substitutes one contractual promisor for another. It provides no additional, independent and enforceable assurance for the developer's promises, nor for those of a successor in title."

85 In his Honour's view, (at [130]), the Minister's power to recommend the making of SEPPs was subject to limitations found in the subject matter, scope and purpose of the legislation. If the 2010 Agreement failed to comply with s 93F(3)(g), it was a subversion of the statutory scheme and an irrelevant consideration for the Minister to take into account.

86 The primary Judge thus considered that taking into account the 2010 Agreement when it did not comply with s 93F(3)(g) led to the invalidity of the Recommendation Decision. His Honour reasoned (at [135]-[138]) as follows:

"135. ... If the planning agreement is entirely void, then it is not a matter of the developer being relieved of the obligation to make a contribution. It is a matter of the developer failing to achieve the desired outcome of rezoning for which it entered into the agreement in the first place. If the respondents' submission were to be accepted, then non-compliance with s 93F(3)(g) is of no consequence. That is, there is no sanction for non-compliance and it does not result in invalidity. Parliament has mandated the content of planning agreements. Just as the statutory notification provisions are essential requirements ... so too must be the provisions mandating the content of planning agreements (at least in the case of substantial breach). The developer's promises under the 2010 Agreement are a quid pro quo for obtaining a valid ... MD SEPP Amendment. Parliament has allowed this sort of agreement but has strictly regulated its content and public notification.

136. The whole point of s 93F(3)(g) is to provide an assurance that the developer's promises will be met, particularly in the event of the developer's insolvency. That requirement is in the public interest, which the Second Reading Speech described as 'the overriding consideration', I do not accept that parliament intended that this requirement, which it expressed in mandatory terms, can simply be disregarded without consequence. The 2010 Agreement lies outside the statutory scheme ...

138. ... Indicators supporting a conclusion of invalidity of the Recommendation decision include the importance of s 93F(3)(g) as protection against the developer's breach, particularly if coupled with insolvency; its mandatory terms; and the fact that the contrary conclusion would strip s 93F(3)(g) of all efficacy. Further, in this case, it is not just that the planning agreement did not comply with s 93F(3)(g). In addition, the Minister, on the limited material before him, must have assumed that it did. In my opinion, the Minister's Recommendation decision is invalid. The factual context does not affect that conclusion."

REASONING

Invalidity Flowing from Non-Compliance with SEPP 55

87 The appellants, particularly Huntlee, advanced numerous arguments challenging the primary Judge's conclusion that the Recommendation Decision was invalid by reason of non-compliance with cl 6 of SEPP 55 and that, accordingly, the MD SEPP Amendment was invalid. The arguments, in summary, were as follows:

• The primary Judge made a fundamental error in assuming that a failure to comply with cl 6 of SEPP 55, when making the Recommendation Decision, could lead to the invalidity of the MD SEPP Amendment.
• A failure to comply with cl 6 of SEPP 55 did not in any event render the Recommendation Decision invalid.
• The primary Judge had erroneously concluded that the Minister was the " planning authority " for the purposes of cl 6 of SEPP 55. The authority responsible for preparing an EPI was either the Director-General or the Department, not the Minister. Thus the Minister had not failed to comply with cl 6.
• Even if the Minister was the planning authority, there was sufficient material in the Director-General's briefing note forwarded on or about 3 December 2010, to enable the Minister to comply with the requirements of cl 6.
• The Recommendation Decision was not " justiciable " since it was " inherently political " in character.

Significance of the Recommendation Decision

88 The power to make an EPI, including a SEPP, is conferred on the Governor: EPA Act, s 37(1). The reference to the Governor in s 37(1) is to the Governor acting with the advice of the Executive Council: Interpretation Act, s 14. There is nothing in the EPA Act which states expressly that a recommendation by the Minister is a required step in the making of an SEPP. (The Minister has power under Div 3 of Part 3 of the EPA Act to make EPIs for local government areas, known as local environmental plans (LEPs). However, no issue arises in this case as to the Minister's power to make LEPs.)

89 As the primary Judge pointed out, prior to the EPA Amendment Act 2008, s 39(1) of the EPA Act empowered the Minister, on the submission by the Director-General of a draft SEPP, to recommend to the Governor the making of a SEPP in accordance with the draft. The Minister was not to make a recommendation except with respect to matters he or she considered were of State environmental significance: s 39(3). The Governor was empowered to make a SEPP in accordance with the Minister's recommendation: s 39(4). The EPA Amendment Act 2008 repealed s 39 in that form.

90 The EPA in its current form contains two references to a Ministerial recommendation for the making of a SEPP or an EPI. Section 34B(4) says that the Minister is not to recommend the making of a SEPP relating to the declaration of a Sydney water catchment area unless other specified Ministers approve or have been consulted. Section 38 states that before recommending the making of an EPI, the Minister is to take such steps as the Minister considers appropriate to publicise the proposed instrument and to seek submissions from the public. An EPI includes a SEPP: s 4(1).

91 Both ss 34B(4) and 38 assume that the Minister has power to recommend the making of a SEPP. They do not identify the source of any such recommending power. Nor do they provide any indication as to whom the Minister's recommendation is to be made.

92 None of the parties disputed that the Minister had power to recommend that the Governor make a SEPP, although they all accepted that the Governor, when making a SEPP pursuant to s 37(1) of the EPA Act, had to act on the advice of the Executive Council. Huntlee contended (in the context of its non-justiciability submissions) that the making of a recommendation by the Minister is an exercise of executive power, there being no statutory provision authorising the making of a recommendation. Sweetwater submitted that the primary Judge correctly characterised the Minister's recommendation as the exercise of a statutory power, on the basis that ss 34B(4) and 38 of the EPA Act clearly assume the existence of such a power.

93 I think that the better view is that a Ministerial recommendation to make a SEPP is an exercise of executive power. Once the EPA Amendment Act 2008 repealed s 39(1), which expressly conferred a statutory power on the Minister to recommend the making of a SEPP, the EPA Act no longer empowered the Minister to recommend the making of a SEPP. It is true that ss 34B(4) and 38 of the EPA Act assume the continued existence of a Ministerial power of recommendation. But that assumption is made good if the Minister has the executive power to recommend the making of a SEPP. To construe ss 34B(4) and 38 as conferring a Ministerial power of recommendation involves interpreting a restraint on power as a positive conferral of power. That is a strained construction of the provisions, at least where an alternative source of power is readily ascertainable.

94 Mr Beech-Jones SC, who appeared with Mr Hutton for Sweetwater, pointed out that if the Minister's power was not statutory, questions might arise as to whether a recommendation by the Minister is reviewable (if at all) in the Land and Environment Court or the Supreme Court: see Land and Environment Court Act 1979, ss 20(2),(3), 71. This may be so. But I do not think it is a reason to take a different view as to the source of the Minister's power.

95 In any event, regardless of the true source of the Minister's recommending power, there is nothing in the EPA Act which leads to the conclusion that the making of a " valid " Ministerial recommendation is a necessary precondition to the Governor exercising the power conferred by s 37(1) to make a SEPP. That power is conditional only on the advice of the Executive Council and the additional statutory requirement that the SEPP be " for the purpose of environmental planning by the State " (see also EPA Act, s 26). Even if ss 34B(4) and 38 of the EPA Act can be read as providing a statutory basis for the Minister's power to make a recommendation with respect to the making of a SEPP, they cannot be construed as imposing an essential pre-condition to the exercise of the power conferred by s 37(1). Indeed Mr Beech-Jones accepted that the Governor could make a SEPP without the Minister recommending that such action be taken. This could occur, for example, if Cabinet approves the making of the SEPP without the Minister agreeing or even where the Minister opposes the making of the SEPP. Whatever political consequences might flow, the Minister's recommendation would not be needed for the Executive Council to advise the Governor to make the SEPP and for the Governor to act on that advice.

96 It follows that, whatever the effect of a failure to comply with cl 6 of SEPP 55 on the Recommendation Decision, the consequence is not that the MD SEPP Amendment is invalid. The MD SEPP Amendment was made by the Governor under s 37(1) of the EPA Act on the advice of the Executive Council. The power conferred by s 37(1) could be validly exercised regardless of the status of the Recommendation Decision.

Clause 6 as a Constraint on the Power to Make a SEPP

97 Mr Beech-Jones advanced an alternative submission, not foreshadowed in his written submissions, that cl 6 of the SEPP 55 constrains the exercise of the power conferred by s 37(1) of the EPA Act. As I understood the argument, it was that s 26(1)(a) and (f) of the EPA Act authorise the making of a SEPP which, in its terms, prevents the making of a subsequent SEPP dealing with a particular planning issue except after a specified process has been undertaken. Section 26(1)(a) authorises an EPI to make provision for protecting the environment, while s 26(1)(f) allows provision to be made for controlling any matters with respect to which provision may be made under par (a).

98 I have some difficulty in understanding how the Governor's statutory power to make a SEPP can be exercised so as to constrain the Governor subsequently exercising the same power in order to repeal, amend or modify the earlier SEPP or to alter the statutory process for making SEPPs in the future. It may be possible for Parliament to authorise expressly subordinate legislation which specifies procedural requirements that must be complied with before subordinate legislation dealing with a particular topic can be subsequently promulgated. An example might be if Parliament empowered the Governor to make regulations specifying mandatory procedures to be followed before the Governor could subsequently exercise the regulation-making power to deal with a particular topic. This would involve the ultimate legislative body empowering a subordinate law-making authority to constrain the exercise of that authority's own powers in a manner analogous to that upheld in a different context by the High Court in Attorney-General for New South Wales v Trethowan [1931] HCA 3; 44 CLR 394.

99 There is, however, nothing in s 26 of the EPA Act which can be construed as conferring power on the Governor to make SEPPs that curtail or constrain the Governor's power to make a subsequent SEPP without following the procedures laid down in the earlier SEPP. The contrast between the " manner and form " provisions of s 5 of the Colonial Laws Validity Act 1865 (Imp) at issue in A-G v Trethowan and the terms of s 26(1)(a) and (c) of the EPA Act is stark. The latter Act is not concerned with authorising procedural limitations on the making of SEPPs by the Governor in exercise of the statutory power conferred by s 37(1) of that Act. Accordingly, even if the MD SEPP Amendment was made without complying with the procedures laid down by cl 6 of SEPP 55, the later SEPP was not thereby rendered invalid. Section 37(1) of the EPA Act empowered the Governor to make the MD SEPP Amendment in accordance with the procedures laid down in the EPA Act and the Interpretation Act.

100 Contrary to Mr Beech-Jones' submission, this does not mean that cl 6 of SEPP 55 is ultra vires. The operation of cl 6 is not confined to (or even concerned with) the procedures involved in the making of a SEPP pursuant to the power conferred by s 37(1) of the EPA Act. It is capable of applying to action that occurs before those procedures are formally invoked. If, for example, a Department acts in apparent contravention of cl 6 of SEPP 55, an aggrieved person might well be able to obtain relief pursuant to s 123 of the EPA Act (read with s 122(b)(ii)) (see [25] above).

101 For these reasons, the primary Judge was in error in concluding that the MD SEPP Amendment is invalid by reason of non-compliance with cl 6 of SEPP 55.

Was the Recommendation Decision Invalid?

102 None of the parties addressed the question of whether there was any utility in making a declaration that the Recommendation Decision was invalid (assuming it was), if the status of that Decision did not affect the validity of the MD SEPP Amendment.

103 The Land and Environment Court has the same civil jurisdiction as the Supreme Court would have, but for s 71 of the LEC Act, to make declarations of right in relation to, inter alia, any right, obligation or duty imposed by an environmental planning law, including the EPA Act: LEC Act, s 20(2)(c). (Section 71 provides that certain proceedings may not be commenced or entertained in the Supreme Court.) There is no doubt that the Land and Environment Court's jurisdiction to grant declaratory relief is broad and its discretion to do so is not subject to close fetters: Forster v Jododex Australia Pty Ltd [1972] HCA 61; 127 CLR 421, at 435, 437-438, per Gibbs J (with whom McTiernan, Walsh, Stephen and Mason JJ relevantly agreed); Johnco Nominees Pty Ltd v Albury-Wodonga (New South Wales Corporation) [1977] 1 NSWLR 43, at 51-53, per Street CJ; at 57-58, per Moffatt P. Nonetheless, a court may decline to grant declaratory relief if there is no utility in doing so: The Dairy Farmers' Co-Operative Milk Co Ltd v Commonwealth [1946] HCA 49; 73 CLR 381, at 391-392, per Latham CJ, Rich, Dixon, McTiernan and Williams JJ: Johnco Nominees , at 54, per Street CJ; at 59, per Moffitt P; Rivers v Bondi Junction-Waverley RSL Sub-Branch Ltd (1986) 5 NSWLR 362, at 373, per Kirby P; at 376, per Hope and Priestley JJA. Given that the status of the Recommendation Decision cannot affect the validity of the MD SEPP Amendment and given that the MD SEPP has been validly amended, there would seem to be little utility in granting Sweetwater declaratory relief in relation to the Recommendation Decision.

104 In any event, I do not think that cl 6 of SEPP 55 rendered the Recommendation Decision invalid. Clause 6 provides that:

"In preparing an [EPI], a planning authority is not to include in a particular zone ... any land ... if the inclusion of the land in that one would permit a change of use [unless the planning authority has taken other steps]."

105 Clause 6 adopts the definition of " planning authority " in s 145A of the EPA Act. Section 145A provides that " planning authority " means, in the case of any function other than those identified earlier in the definition, " the public authority or other person responsible for exercising the function ". The Minister is not within the definition of " public authority " (EPA Act, s 4(1)). Thus the Minister is a planning authority for the purposes of cl 6 only if he or she is " [an]other person responsible for exercising the function ".

106 The only function referred to in cl 6 of SEPP 55 is " preparing an [EPI] ". Clause 6 says nothing about making an EPI, either in general or in relation to the making of a SEPP. The EPA Act itself distinguishes between the preparation and making of an EPI: see, for example, s 145B(2).

107 I have referred earlier to the debate as to whether a recommendation by the Minister to the Governor that a SEPP be made is an exercise of executive or statutory power. Whatever the answer to that question, it does not seem to me that cl 6 of SEPP 55 should be read as referring to such a recommendation. At the point the Minister recommends to the Governor that the SEPP be made, the process of preparation of the SEPP has concluded and the process of making the SEPP has commenced. Had cl 6 been intended to embrace the actions of the Minister in recommending that the Governor make a SEPP, clearer language would have been used. It might have been expected, for example, that if a quintessentially Ministerial function associated with the making of a SEPP was within the intended scope of cl 6, the Minister would have been expressly mentioned rather than being referred to, through an incorporated definition, as " other person responsible for exercise of the function ".

108 The Minister's Recommendation Decision was not invalidated by cl 6 of SEPP 55 as cl 6, on its proper construction, did apply to it.

Was the 2010 Agreement an Irrelevant Consideration?

Appellants' Submissions

109 The appellants, between them, also advanced numerous criticisms of the primary Judge's conclusion that the Recommendation Decision was invalid because the Minister had taken into account an irrelevant consideration and that this resulted in the invalidity of the MD SEPP Amendment. Their arguments included the following:

• The criterion specified in s 93F(3)(g) of the EPA Act (" suitable means ") does not create an objective jurisdictional fact, but entrusts an evaluative judgment to the Minister as the relevant decision-maker. The Court's role is therefore limited to determining whether it is open to the Minister to decide that a planning agreement provides for enforcement of the agreement by a suitable means.

• If, contrary to this submission, the test posed by s 93F(3)(g) is objective, the primary Judge's reliance on the ejusdem generis principle of construction was misplaced.

• The primary Judge wrongly focussed exclusively on the means of enforcement of the obligation to make a monetary contribution. Section 93F(3)(g) does not require a suitable means of enforcement for each and every obligation, but only a suitable means for enforcement of the substance of the agreement.

• If it is correct for the Court itself to determine whether the 2010 Agreement provided for a suitable means of enforcement of the obligation to make monetary contributions, the Agreement did so by facilitating the registration process under s 93H of the EPA Act.

110 Sweetwater supported the primary Judge's conclusions. I shall refer further to its submissions in addressing the issues raised in this aspect of the appeals.

Planning Agreements under the EPA Act

111 The provisions relating to planning agreements were introduced into the EPA Act by the Environmental Planning and Assessment (Development Contributions) Act 2005 (" 2005 Act "). The Explanatory Note to the amending legislation stated the general object of the legislation:

"The object of this Bill is to amend the [EPA Act] to extend the means by which planning authorities may obtain development contributions to be applied for the provision of public amenities and public services and for other public purposes. As an alternative to obtaining contributions towards public amenities and public services through the imposition of conditions of development consent (as is currently provided for under section 94 of the [EPA], a council or other consent authority may (if authorised by a development contributions plan) impose a condition of development consent that requires applicants to pay a levy of the percentage of the proposed cost of the development. In addition, planning authorities (including the Minister) will be specifically authorised to obtain development contributions for any public purpose through voluntary planning agreements with the developer. " (Emphasis added.)

112 The Minister's Second Reading Speech explained that voluntary planning agreements had been used for some time, but that greater accountability was required:

"The practice of entering into planning arrangements to provide agreed infrastructure and appropriate public benefits, in addition to or as an alternative to section 94, is not new. Planning arrangements have existed for some years and in recent times have merged as a market response for development or redevelopment of large-scale sites in single ownership such as the Australian Defence Industries site at St Marys and in the Greystanes development.

However, the legal framework surrounding agreements is uncertain and the existing practice is often hidden from public scrutiny and is, therefore, unaccountable. The bill seeks to make best practice in planning arrangements common practice. The amendments set out in the bill clarify and make the approach less cumbersome by expressly acknowledging the role planning agreements play as part of the development contributions system. Planning authorities and developers will be able to voluntarily enter into planning agreements under which the developer is required to dedicate land free of cost, pay a monetary contribution or provide any other material public benefit, or any combination of them, to be used for or applied to a public purpose.

...

The bill will enable communities and the Government to scrutinise the public infrastructure decisions made by planning authorities. The absence of a regulated, fair and transparent system of planning agreements creates an environment conducive to some practices recently reported in the press. However, the system of planning agreements provided for in the bill will ensure that all arrangements between planning authorities and developers are transparent and in the public interest so that the public have the opportunity to comment to the responsible planning authority about the proposed planning agreement and that planning authorities are accountable in the collection and expenditure of funds and the provision of facilities."

NSW Parl Deb, Leg Ass, 8 December 2004, at 13,539-13,540.

113 Some features of the legislative scheme introduced by the 2005 Act (EPA Act, Part 4, Div 6, Subdivs 1, 2) should be noted:

• The scheme provides for voluntary agreements to be entered into between a planning authority (including the Minister) and a developer who seeks a change to an EPI or who proposes to make a development application (s 93F(1)).

• The legislation does not expressly empower the Minister to enter into a planning agreement. However, s 93F(1) plainly assumes that the Minister does have the power to do so. It does not appear to matter for present purposes whether the power arises by virtue of the Minister's authority to co-ordinate environmental planning and assessment (s 7) in consequence of a power implicitly conferred by s 93F(1) itself, or as an exercise of executive power.

• Section 93F(1) defines a planning agreement by reference to its content. The agreement is one under which the developer is required to do certain things, including dedicate land and pay monetary contributions to be used or applied for a " public purpose " (s 93F(1), (2)).

• Section 93F(3) states that a planning agreement " must provide " for seven specified matters, including " the enforcement of the agreement by a suitable means " (s 93F(3)(g)).

• The drafting of s 93F(3)(g) of the EP Act is somewhat curious. It speaks of the " enforcement of the agreement by a suitable means " rather than the enforcement of obligations created by the agreement. It also implies that the provision of a bond or guarantee is an example of enforcement of the agreement by a suitable means, when such a measure might better be characterised as providing security for the performance of the developer's obligations under the agreement.

• A planning agreement cannot be entered into unless a copy of the proposed agreement has been available for public inspection (s 93G(1)).

• The scheme does not specify the consequences of non-compliance with s 93F(3) or s 93G(1). However, the legislation does expressly state that a planning agreement is void to the extent it requires or allows anything to be done in breach of the EPA Act or an EPI (s 93F(10)). It also states that a provision is not invalid only because there is no connection between the relevant development and the object of expenditure of any money to be paid under the agreement (s 93F(4)).

• A person cannot appeal against the failure of the Minister to enter into a planning agreement or against the terms of the agreement (s 93J(1)). This does not affect the Court's jurisdiction under s 123 of the EPA (S 93J(2)). Section 123, read with s 122, specifically contemplates that any person may bring proceedings to the Land and Environment Court to remedy or restrain a breach of a planning agreement.

• The scheme makes specific provision for a planning agreement to be registered under the RP Act and to bind successors in title of the original developer (s 93H). However, this can only occur with the consent of the registered proprietor of the relevant land (s 93H(1)(a)).

An Objective Criterion?

114 Parliament may make the objective existence of a particular fact a condition of the exercise of a particular power and thus a jurisdictional fact: Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5; 199 CLR 135, at 148 [28], per Gleeson CJ, Gummow, Kirby and Hayne JJ. In such a case, the absence of the jurisdictional fact will invalidate the purported exercise of the power. In Timbarra Protection Coalition Inc v Ross Mining NL [1999] NSWCA 8; 46 NSWLR 55, Spigelman CJ (with whom Mason P and Meagher JA agreed) observed (at 64 [38]) that the two elements (which he characterised, respectively, as " objectivity " and " essentiality ") were inter-related:

"'Objectivity' and 'essentiality' are two inter-related elements in the determination of whether a factual reference in a statutory formulation is a jurisdictional fact in the relevant sense. They are inter-related because indicators of 'essentiality' will often suggest 'objectivity'".

115 Whether a factual reference in legislation creates a jurisdictional fact or commits the determination as to the existence of the fact to the repository of the relevant power (assuming these to be the available choices) is a question of statutory construction: Timbarra, at 64 [39]. Where that process leads to the conclusion that Parliament intended the factual reference to be satisfied only by the actual existence of the fact, a court exercising a power of review will undertake an inquiry, on the basis of evidence, as to the existence of the fact: Timbarra, at 64 [40].

116 A curious feature of the (rather limited) argument on this issue was that Mr Beech-Jones SC expressly disclaimed any submission that the Minister's alleged failure to comply with s 93F(3)(g) of the EP Act rendered the 2010 Agreement, or any portion of it, invalid. Mr Beech-Jones also disclaimed any suggestion that the primary Judge made a finding that the 2010 Agreement, or any provision in the Agreement, was void by reason of the Minister's breach of s 93F(3)(g). He took this course notwithstanding that his Honour's judgment (at [135]) possibly could be read as making such a finding.

117 It may be that Mr Beech-Jones' disclaimer was influenced by the provisions in s 93F expressly identifying circumstances that do or do not render a planning agreement void (s 93F(4), (10)). He may also have taken into account s 93J, which prevents a person appealing to the Land and Environment Court against the terms of a planning agreement. Be that as it may, once it is accepted that a breach of s 93F(3)(g) does not result in the invalidity of the planning agreement, Sweetwater's construction of s 93G(3)(g) as imposing an objective requirement is weakened. In the language used by Spigelman CJ in Timbarra, the absence of " essentiality " rather suggests that the relevant provision does not incorporate " objectivity ".

118 Other considerations point to s 93F(3)(g) vesting the determination as to whether a planning agreement provides " suitable " means of enforcement in the Minister or other planning authority. The sub-paragraph requires an evaluative judgment or assessment to be made, no doubt taking into account, among other relevant matters, the particular obligations created by the planning agreement, the risks and consequences of breach and (in the case of a developer who has sought a change to an EPI) the nature of the planning amendments sought. Legislation requiring evaluative judgments of this kind is not usually construed as specifying a jurisdictional fact or objective state of affairs to be determined by a court on the basis of evidence: Woolworths Ltd v Pallas Newco Pty Ltd [2004] NSWCA 422; 61 NSWLR 707, at 719-720 [58]-[61], per Spigelman CJ.

119 It is also significant that the Minister (or other planning authority) must determine the suitability of the means of enforcement while exercising the power to negotiate and enter into a planning agreement: cf Timbarra, at 65 [44]. Not only is a planning agreement a voluntary arrangement, it is not a precondition to a developer applying to change an EPI or seeking development consent. Indeed, s 93F(9) prevents a planning agreement obliging a planning authority to grant a development consent or to exercise any function in relation to a change to an EPI. A reference to a factual matter is more likely to be construed as specifying an objective criterion if it specifies a preliminary requirement to the exercise of a statutory power, as distinct from being an element in the formulation of the power to be exercised by the decision-maker: Timbarra , at 64 [44].

120 A further consideration is that the legislative scheme provides for a draft planning agreement to be publicly exhibited for a minimum period before the planning authority can execute it. The legislation therefore establishes a mechanism whereby interested persons and groups can comment on the terms of the draft, and draw attention to any failure to comply with the statutory requirements. That opportunity extends to pointing out matters that the Minister may have overlooked or to which he may have given insufficient weight when forming the view that the means of enforcement in the draft planning agreement are " suitable ".

121 Mr Beech-Jones disputed the characterisation of the judgment required by s 93F(3)(g) as " evaluative ". He submitted that a determination that the means of enforcement of an agreement is " suitable " does not involve policy considerations. However, a judgment can be evaluative if it involves weighing up a variety of considerations whether or not they involve " policy " issues. As I have explained, a judgment as to the suitability of means of enforcement may require a range of different and competing considerations to be taken into account.

122 Mr Beech-Jones also submitted that this Court should not lightly construe s 93F(3)(g) as imposing no enforceable obligation on the Minister or other planning authority. But the fact that a decision on a matter may be entrusted to a particular authority does not render the decision immune from scrutiny, although the grounds for curial intervention may be narrower.

123 Mr Beech-Jones also contended that his construction of s 93F(3)(g) would produce greater certainty for those who have to assess the legal and practical effect of planning agreements. It is not obvious why construing s 93F(3)(g) as imposing an objective requirement would lead to greater certainty. It would mean that a determination that the planning agreement included suitable means of enforcement would presumably be open to challenge (whether directly or indirectly, as in the present case) after the draft agreement has been publicly exhibited and the final agreement executed.

124 The better construction of s 93F(3)(g) of the EPA Act is that it does not specify a jurisdictional fact or a matter to be determined objectively by a court. I did not understand Mr Beech-Jones to submit that, if this was the correct construction, the Minister was not entitled to form the view that the 2010 Agreement incorporated a suitable means of enforcement of Huntlee's obligation to make the Development Contributions.

Enforcement by Suitable Means?

125 If the conclusion I have expressed in the preceding paragraph is incorrect, s 93F(3)(g) of the EP Act requires the court to determine for itself whether the 2010 Agreement provides for enforcement of the 2010 Agreement by a suitable means in the event of its breach by the developer. Since this question was fully argued, I propose to address it.

126 The primary Judge construed " enforcement by suitable means " in s 93F(3)(g) as requiring an additional, independent and enforceable assurance that the developer's promises under the planning agreement will be honoured (at [126]). His Honour held that the provisions in the 2010 Agreement allowing it to be registered pursuant to s 93H of the EP Act did not satisfy the statutory requirement because the effect of registration was merely to substitute one contractual promise for another. His Honour's construction of s 93F(3)(g) appears to have been based on, or at least strongly influenced by, the so-called ejusdem generis principle of construction. His Honour considered that the principle was attracted by the particular examples of " suitable means " specified in s 95F(3)(g).

127 The ejusdem generis rule of construction is a principle that allows general words in the statute to be restricted to the same genus as the specific words that precede them: The King v Regos and Morgan [1947] HCA 19; 74 CLR 613, at 623, per Latham CJ. Before the rule can be applied it is necessary to identify some genus which comprehends the specific case for which provision is made in the statute: Regos, at 623; Deputy Commissioner of Taxation v Clark [2003] NSWCA 91; 57 NSWLR 113, at 143 [126], per Spigelman CJ (with whom Handley and Hodgson AJA agreed). But, as Dixon J explained in Cody v J H Nelson Pty Ltd [1947] HCA 17; 74 CLR 629, at 649, the ejusdem generis principle of construction is not to be applied mechanically. It is a guide in the process of interpretation which must take into account the whole instrument and the subject matter: see, too, DCT v Clark, at 143 [127]-[129].

128 Doubt has been expressed as to whether the ejusdem generis principle of construction applies where general words in a statute are followed (rather than preceded) by terms suggestive of a narrower genus: Bennion on Statutory Interpretation (5 th ed 2008), at [1242]. Assuming, however, that the principle can apply to a provision such as s 93F(3)(g), (in which general words are followed by specific examples), it is still necessary to identify a genus from those examples.

129 It is difficult to discern a genus in the specific examples of suitable means given in s 93F(3)(g), namely the provision of a " bond or guarantee ". A bond may take many different forms, including a deed poll by which an obligor binds himself or herself to pay a specified sum to the obligee: Butterworths Australian Legal Dictionary (1997), at 137. The provision of a bond would also include the obligor depositing a sum of money, whether with the obligee or a third party, in order to secure performance of an obligation. A guarantee is essentially a binding promise by one person to be answerable for the debt or obligation of another, should the latter default: J Phillips and J O'Donovan, The Modern Contract of Guarantee (Looseleaf ed), at [1.300]. A guarantee is not ordinarily self-executing, but must be enforced by the creditor or obligee against the guarantor if the obligor defaults. Unless the guarantor provides security, the guarantee is enforceable only as an unsecured promise.

130 The use of the general expression " suitable means " in s 93F(3)(g) of the EPA Act reflects the very wide range of obligations that a planning agreement may impose on a developer and the variety of mechanisms for enforcement of those obligations that may be " suitable ". For example, the 2010 Agreement obliged the Land Owner to transfer " Conservation Offset Lands " to the Minister: Sch 5, Table 2. If the Land Owner failed to transfer the Lands, the Agreement stated that it consented to the Minister compulsorily acquiring the whole or any part of the Conservation Offset Lands for $1.00: Sch 4, par 2.4. It was not suggested that this enforcement mechanism was not a " suitable means " of enforcement, notwithstanding that consent to compulsory acquisition for a nominal sum does not appear to have significant characteristics in common with a bond or guarantee.

131 It follows that the question of whether the 2010 Agreement provides for its enforcement " by a suitable means ... in the event of a breach by the developer " is to be determined in accordance with the ordinary meaning of the statutory language, unmodified by the ejusdem generis principle of construction. I am prepared to assume, without deciding, that Sweetwater is correct to submit that the question is to be resolved by considering separately each obligation created by the 2010 Agreement, rather than by taking a more global approach.

132 On this basis, it is necessary to identify the particular obligation in issue and the means, if any, provided by the 2010 Agreement for the enforcement of that obligation. " Suitability " is to be assessed by reference to whether the means of enforcement is likely to eliminate or reduce to a commercially acceptable level the risk that the obligation created by the planning agreement will not be performed and that the planning authority or the community will not receive the intended benefits. The assessment should take account of the commercial context in which the planning agreement is to operate, including the capacity of the developer to comply with the relevant obligation. A relevant factor is the likely availability and effectiveness of the specified means of enforcement.

133 In the present case, the relevant obligation is the Land Owner's liability to make the Development Contributions by a series of instalments amounting to $1.1 million ([63] above. The appellants relied on the Land Owner's agreement to procure registration of the 2010 Agreement under the RP Act and the subsequent registration of the Agreement (cl 9.2, [66] above) as the suitable means of enforcement of the obligation to pay the Development Contributions. The appellants do not rely on cl 7.1 of the 2010 Agreement, which provides that any party could enforce the Agreement in any court, as a sufficient means of enforcement of itself.

134 Under cl 9.2 of the 2010 Agreement, the Land Owner agreed to procure registration of the Agreement under the RP Act in the relevant folios of the land subject to the Agreement, in accordance with s 93H of the EPA Act. Once registered under s 93H, the 2010 Agreement is binding on and enforceable against the owner of the land from time to time " as if each owner for the time being had entered into the agreement " (s 93H(3)). As the heading to s 93H suggests, the effect of registration is that the 2010 Agreement runs with the land. The Land Owner's obligations are thus enforceable as personal obligations against the Land Owner's successors in title. The obligations do not bind the land itself, as would be the case with a mortgage or charge.

135 The 2010 Agreement addresses the risk that the Land Owner will fail to procure registration of the 2010 Agreement. It does so by deeming the Minister to have an equitable interest in the land sufficient to support the lodging of a caveat under s 74F(1) of the RP Act (cl 9.4(a)). The Minister must withdraw the caveat only when the Land Owner complies with the registration requirement (cl 9.4(c)). While the precise nature of the " deemed " equitable interest may be a matter for debate, these provisions create a mechanism enabling the Minister to hold up the transfer of the land until the Land Owner complies with its registration obligations or until the Minister has an opportunity to seek injunctive relief.

136 It is also necessary to take into account Sch 10 to the 2010 Agreement. It prevents the Land Owner transferring more than 10 hectares of the land unless the transferee first enters into a deed agreeing to comply with all the " Required Obligations " as if it were the Land Owner. Further, the Land Owner must satisfy the Minister than the proposed transferee is capable of complying with the Required Obligations (par 1(a)(i)). The form of deed as set out in Annexure A to the 2010 Agreement, as I have noted, effectively substitutes the transferee for the transferor as the party obliged to perform the relevant obligations and releases the transferor from its obligations.

137 The effect of this rather elaborate scheme is that the Land Owner's obligations run with the land by virtue of registration of the 2010 Agreement. This comes about because the Agreement specifically provides for registration under s 93H of the EPA Act. The Land Owner is not automatically released from its obligations if it transfers the land (or a portion exceeding 10 hectares) since s 93H makes no such provision. However, the Land Owner will be released from its future obligations if, before it transfers the land (or any portion exceeding 10 hectares), it complies with Sch 1, par 6. This can only happen if the transferee satisfies the Minister that it is capable of financially complying with the " Required Obligations " and the transferee signs the Novation Deed. The release operates in relation to the land that is transferred, but the obligations otherwise remain in place. If the transferee subsequently transfers the land, the subsequent transferee will be bound by the obligations created by the 2010 Agreement (EPA Act. s 93H(3)).

138 The mechanisms for enforcing the Land Owner's obligation to make the Development Contributions provided by the 2010 Agreement is essentially that the obligation runs with the land until the obligation is discharged. One important safeguard is that before any transfer takes place the Minister must be satisfied that the proposed transferee has the financial capacity to comply (relevantly) with the obligation to pay the Development Contributions. In making that assessment, the Minister is able to take into account the value of the land to be acquired and the transferee's capacity to service any loans it takes out to finance the purchase.

139 The enforcement mechanism provided by the 2010 Agreement does not necessarily eliminate entirely the risk that the Land Owner will default in making the Developer Contributions and the consequential risk that the contributions will never be made. But the 2010 Agreement takes advantage of the registration mechanism specifically provided for by the very legislation that introduced the statutory concept of a planning agreement under the EPA Act. The obvious purpose of that mechanism is to establish a means of enforcing obligations created by planning agreements against successive owners of land which is to be developed. The legislation itself therefore contemplates that registration of a planning agreement so that obligations run with the land may well constitute a suitable means of enforcing those obligations.

140 I accept that in assessing the suitability of the means of enforcement provided by the 2010 Agreement, it is material that the Land Owner may be released, in whole or in part, from compliance with its future obligations when it transfers the land. However, the Land Owner cannot be released unless the Minister is satisfied that the transferee has the financial capacity to meet the obligations it must assume as a deemed party to the 2010 Agreement and as a party to the Novation Deed.

141 The mechanism provided in the 2010 Agreement seems to me to establish a suitable means of enforcement of the obligation to make Development Contributions in the event of breach by the developer. The mechanism ensures that the owner of the land for the time being will be liable to make the contributions as and when they fall due. Safeguards are in place to minimise, if not eliminate entirely, the risk of insolvency by such an owner. Those safeguards include the effect of registration of the 2010 Agreement on successive owners of the land. For example, a transferee from an insolvent owner (or from that owner's representatives) will be bound by the obligation to make the Development Contributions in accordance with the terms of the 2010 Agreement.

142 This conclusion does not depend on, but receives support from, the fact that the land in this case comprises 1702 hectares in the Lower Hunter Valley. No valuation evidence was adduced in the Land and Environment Court. But it could hardly be in dispute that such an extensive area of land approved for residential development would have a value greatly in excess of $1.1 million.

143 For these reasons, the 2010 Agreement, objectively considered, provides a suitable means of enforcement of the obligation to make Development Contributions in the event of breach by the developer.

CONCLUSION

144 Both appeals should be allowed. Orders 1, 2 and 3 made by the primary Judge in Proceedings 40245 of 2011 should be set aside. In lieu thereof, orders should be made in Proceedings 40245 of 2011 dismissing Sweetwater's summons filed on 21 March 2011. Sweetwater should pay the costs of the appellants in the Land and Environment Court and of the appeals. However, Sweetwater should have a certificate under the Suitors Fund Act 1951 with respect to the costs of the appeals, if otherwise qualified.

145 TOBIAS AJA: I agree with Sackville AJA.

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Decision last updated: 12 December 2011