Riverina Water County Council ats Nash Bros. Builders Pty Ltd [2016] NSWCA 225

Riverina Water County Council ats Nash Bros. Builders Pty Ltd [2016] NSWCA Local Government Legal recently acted for Riverina Water County Council (RWCC), in successfully defending an appeal lodged by Nash Bros. Constructions Pty Ltd in the Court of Appeal against an earlier Land and Environment Court decision of Justice Pepper regarding the validity of development servicing charges issued by RWCC for a large retirement village near Wagga. We previously reported in relation to the Land and Environment Court decision of Justice Pepper in our newsletter dated 8 October 2015.  Justice Pepper had held that the Developer’s development consent required the Developer to apply for a certificate of compliance under section 306 of the Water Management Act 2000 (the WM Act), and whilst no application had yet been made by the Developer, the future prospect of that application was sufficient for Council to exercise power under section 306 of the WM Act to issue the development service charges.  Her Honour had also held that section 608 of the Local Government Act 1993 (the LG Act) provided an alternative source of power for RWCC to issue the development servicing charges on the development.  The Appellants had challenged the conclusions reached by Her Honour on both sources of statutory power. Power under section 608 of the LG Act The Developer had submitted that the legislative scheme did not support the levying of the development servicing charge for a number of reasons.  First, it contended that the legislative scheme would not support alternative bases for levying a charge, namely one under the LG Act and one under the WM Act.  Secondly, the Developer contended that section 608(1) was not engaged, because the service of water supply was to be provided on an annual basis and was therefore excluded by the exception referring to provisions authorising annual charges under section 501 of the LG Act.  Thirdly, the Appellants contended that because the Respondent did not supply water to them, it was not entitled to recover a fee for service under section 608(1) of the LG Act. The Court of Appeal (by Basten JA at 34, 36; Ward JA at 113 – 114 and Macfarlan JA agreeing with Basten and Ward JJA at 38), held there was power to levy the development servicing charges pursuant to the broad power under section 608 of the LG Act.  The fact that the Council could choose to provide the services comprised in its water delivery system on an annual basis (and hence levy a fee under section 501 of that Act), did not preclude the power under section 608 being exercised where it did not provide or propose to provide the relevant services on an annual basis.  It was not necessary to show that the developers had been the direct recipient of the water supply before a development service charge could be levied. Power under section 306 of the WM Act In relation to the power under the WM Act, the Council had argued that condition 3 of the Appellant’s Development Consent obligated them to apply for a certificate of compliance in due course and that the Appellants by their actions in negotiating the payment of the development servicing charges with the Council, had applied for a certificate of compliance.  Further, Council argued that the power under section 64 of the LG Act and section 306 of the WM Act, authorised the Council to issue the development servicing charges as a precondition to the issue of the certificate of compliance.  In this regard, Pepper J (in the L & E Court), had held that no application had been made by the Appellants (notwithstanding their negotiations with the Council), but she accepted that condition 3 of the Development Consent did obligate the Appellants to apply for a certificate of compliance in due course and the future prospect of that application was sufficient for Council to exercise power under section 306 of the WM Act to issue the development service charges. Whilst the Appellants agreed that Pepper J was correct in finding that no application had been made for a certificate of compliance, they did contend that she had erred in holding that the future prospect of applying for such certificate was sufficient to give the Council power to impose the development servicing charges under section 64 of the LG Act.  The Developer contended that section 307(1)(b) of the WM Act was not engaged in the present case, because there had been no application and as such, the requirement to pay a fee was not able to be imposed. The Court of Appeal (by majority), held that the primary Judge had been incorrect in her determination of this aspect.  At paragraphs 90 – 91, Ward JA (with Macfarlan JA at 38 agreeing), held that the primary Judge erred in finding that there was power to levy the charges under section 306(2) of the WM Act on the basis that, in the absence of the making of an application for a certificate of compliance, the power to levy a charge under section 306(2) does not arise.  She held that the finding by the primary Judge that there was no application made by the Appellants to the Council for a certificate of compliance was determinative of this issue. On the other hand, Basten JA (dissenting on this ground at 18 and 21), held that section 306 of the WM Act was available as a relevant source of power in circumstances where the construction of the development was ongoing.  In the present case, under the development consent for the Retirement Village, the Appellants could not build without such a certificate and therefore section 306 allowed the Council to impose a development servicing charge. What does this mean for Council Water Authorities? The Court of Appeal’s decision means that there is a general power under section 608(1) of the LG Act, which can be relied upon for Councils to have the power to levy development servicing charges as a fee for service, regardless of whether a developer has applied for a certificate of compliance under the WM Act.  It also means that in instances where a developer is not obliged to apply for a certificate of compliance (ie: matters other than subdivision), or where a consent authority for a development application fails to include a condition requiring a certificate of compliance to be obtained, then development servicing charges can still be recovered by Councils issuing the appropriate invoice in accordance with the charges in its Development Servicing Plan or Operational Plan. Councils should continue to ensure that the development servicing charges are levied in accordance with the pricing methodology in their Development Servicing Plan and setting out these provisions in the Schedule of Fees and Charges in its Operational Plan.  Obviously, where a condition of consent requires a developer to apply for a certificate of compliance, Councils still have the power under section 306(2) of the WM Act to charge the development servicing charges under that provision (in conjunction with section 64 of the LG Act).  However, in instances where a certificate of compliance is not required to be obtained under a condition of consent, Councils can still charge the development servicing charges pursuant to its fee for service power under section 608 of the LG Act. Attached is a link to the Court of Appeal Judgment.