This is a reminder that procedural fairness is one of the tenets of our legal system.

In Billyard Ave Developments Pty Limited v The Council of the City of Sydney [2025] NSWLEC 22, the ChiefJudge of the Land and Environment Court overturned the decision of Commissioner Walsh on grounds that the Commissioner had denied the applicant procedural fairness by elevating the status of objector submissions to “evidence” and had not given the applicant an opportunity to address those matters.

Despite the Council and applicant providing the Court with consent orders to approve the application, the Commissioner refused to grant development consent, on the basis of public submissions made by objectors that the proposed development did not address the housing needs of the community and would increase waste and environmental costs associated with construction.

In overturning the decision of the Commissioner, the Chief Judge stressed that while the Commissioner had the power to conduct a merits review of the development application because the parties had provided consent orders (rather than a section 34 agreement), the Commissioner was required to afford the parties procedural fairness by giving them an opportunity to address the objector issues raised but the Commissioner had not done so.

Background

The development application was for the demolition of two existing apartment blocks and the erection of two replacement apartment blocks on two parcels of land in Elizabeth Bay. The proposal would have, if approved, reduced the number of apartments from 28 apartments with 48 bedrooms, to 20 apartments with 58 bedrooms. The proposed buildings were in breach of the maximum height control and required a variation to the control pursuant to cl 4.6 of the Sydney Local Environmental Plan 2012 (SLEP).

The Commissioner had regard to public submissions made that the proposal would have the effect of reducing available housing in the area which, the objectors argued, was not in the public interest.

The Commissioner concluded that the proposal would reduce the amount of housing in the area (despite the increase in bedrooms in each new apartment) which, on his interpretation, was inconsistent with the objectives of the R1 General Residential Zone (R1 Zone) in the SLEP and not in the public interest, having regard to the public submissions made. Accordingly, the Commissioner found he could not approve the variation to the height control and refused the application.

Statutory Construction of “Objectives” of R1 Zone

On appeal, Preston CJ at [58]-[60] was critical of the Commissioner’s interpretation of the zoning objectives in the R1 Zone finding that the Commissioner misconstrued the phrase “the housing needs of the community” in the following ways:

• The objective refers to “needs” not “need”, which the Commissioner erroneously contrasted to a “want” which is not referred to in the R1 Zone objectives at all.
• It is a phrase that needs to be interpreted as a whole, rather than breaking down the meaning of each word individually, which misses the intention of the objective. The dictionary definition of each individual word is not a helpful method of statutory construction.
• It refers to the diversity of interests in the community, not just those members of the community who are disadvantaged and lack access to housing.

The R1 Zone is a broadly-applied standard, “not an objective that is bespoke tailored for SLEP or for any neighbourhood in the City of Sydney such as Elizabeth Bay” at [66].

The Chief Judge provided a helpful summary of the R1, R2, R3, and R4 zone objectives at [66]-[70] and stressed that “one of the key methods by which each residential zone provides for the housing needs of the community within the applicable residential environment is by prescribing the residential development that is permitted with consent in the zone” at [67].

At [71], Preston CJ stressed that it is by stipulating what housing is permissible in each zone that the housing needs of the community is addressed, and that there is “no “mischief” that the first objective of each zone is seeking to remedy”, being the mischief of housing inequality or inaccessibility. Preston CJ found at [72] that “the Commissioner’s search for the “mischief” which the first objective seeks to remedy was misguided”.

The Court held that the Commissioner erred on a question of law in misconstruing the first objective of the R1 Zone, such that his finding that the proposed development was inconsistent with that objective miscarried.

Procedural Fairness

At [79] of his Judgment, Preston CJ explained that for the Commissioner to refuse development consent on the basis that the proposed development was inconsistent with the objectives of R1 Zone because it resulted in less housing (on the Commissioner’s reasoning having regard to the public submissions made), the Commissioner needed to notify the parties and give them an opportunity to respond, rather than introducing the notion in his Judgment for the first time. This was, the Court found, the principal denial of procedural fairness which caused the Commissioner’s decision to miscarry.

In addition, the Commissioner had regard to two other matters raised by objectors but not in contention by the Council in the proceedings.

1. View loss had been an initial contention raised by the Council, but this issue was resolved from the Council’s perspective after the applicant amended its application. View loss was not in issue at the hearing. However, the Commissioner disputed the joint view of the parties’ experts on this issue, preferring the lay opinion of objectors and his own observations on the site view. The Commissioner but did not give the parties an opportunity to respond or provide further evidence to address the concerns raised by the objectors.
2. The Commissioner also raised the negative environmental effects arising from demolition and construction of the proposed development in his Judgment, but had not raised this issue at all with the parties during the hearing.

The Chief Judge held that each of these instances was a denial of procedural fairness, such that “the Commissioner denied Billyard natural justice in deciding the appeal on issues not raised by the parties and using information in a way that could not reasonably be expected by the parties” at [91].

Next Steps

The Chief Judge remitted the matter back before a different Commissioner of the Court to determine the application, finding that he did not, on appeal, have power to determine the application because the Commissioner had not been satisfied of the clause 4.6 request to vary the height standard.

The Court accepted the applicant’s argument that the matter should be determined by a different Commissioner however made clear that not all successful appeals will be remitted to a different commissioner. But here, there was a reasonable apprehension of bias that Commissioner Walsh had already pre-determined the factual issues that would need to be re-determined, and that the Commissioner’s errors of law (set out above) would adversely impact his merits assessment of the application.

In attempting to provide the parties with some practical advice, the Court observed that because:

a. the Council had not determined the application by refusing it before the application was heard by Commissioner Walsh (that is, the Class 1 application was commenced on a “deemed refusal” basis); and
b. the Commissioner’s decision had been set aside,

the Council was free to determine the application by granting conditions of consent rather than the parties needing to prepare the case for a fresh hearing before a new Commissioner.

Alternatively, the Court observed that the parties could ask the Court to arrange another conciliation conference pursuant to s34(1) of the LEC Act and, during that process, the parties could enter into an agreement pursuant to s34(3) of the Court Act. That section prevents the Court from considering “merit” issues and requires the Court to approve the parties’ agreement subject to being satisfied of jurisdictional matters.

The Chief Judge observed that while the Court could not order Council to pursue either of these alternatives, if Council were to insist on a fresh merits hearing where there are no outstanding issues in contention, then that conduct would be taken into account by the Court in determining whether the Council should pay the applicant’s costs (see [107]).

Key points

• A reference in the zone objectives of an LEP to providing for the housing needs of the area, is not to be interpreted to mean that new housing which otherwise replaces older stock (which may be perceived as more affordable) is not permitted. The housing needs of an area are referrable to what development, specified in the zoning table, is permissible with development consent in that zone.
• If Council has agreed that there are no longer any issues in contention in Class 1 proceedings, the better course is for the parties to agree to enter into a section 34 agreement rather than agree to consent orders. Entry into a section 34 agreement prevents the Court from carrying out a “merits” assessment of the application and only requires the Court to have regard to jurisdictional matters in making a decision in accordance with the parties’ agreement. In contrast, consent orders require the Court to conduct a hearing and be satisfied of the merits of a proposal which means taking into account objector concerns which may not be in issue between the parties.
• In a merits review, the Court must afford procedural fairness to the parties. This means the Court must give the parties’ notice of issues it considers important (for example, submissions made by objectors) and give the parties an opportunity to respond and adduce additional evidence if required to address those issues.