The NSW Land and Environment Court refused this week to order a Sydney Council to process a development application while ICAC is investigating alleged corrupt dealings in relation to publicly owned land in Paddington.
This is a significant decision for communities opposing developments that raise corruption concerns.
NSW Land and Environment (LEC) Court judge Nicola Pain found that Woollahra Council (WMC) had 'not acted unreasonably' in declining to process a development application (DA) by Christian Sanchez's company CSKS Holdings. She backed Council's decision that it was not in the public interest to process the application.
CSKS Holdings have applied to build a two-story private childcare centre on land next to the Paddington Bowling Club at the top of Trumper Park in Sydney's Eastern suburbs. The developer currently leases the land from the Crown and subleases it to a tennis court business.
The court decision follows a year of campaigning by Friends of Quarry Street who raised many planning and potential corruption concerns about the development. Despite the concerns of the community group and Councillors, Council officers continued to recommend that Council approve the development.
The group issued a statement after the court decision. It congratulated "WMC councillors for their support in helping prevent development of precious green space in our inner city suburb. We thank the councillors for proving that 'community interest' is indeed a valid objection in our council area as well as in the LEC."
At the end of 2011, the then Minister for Trade and Investment Andrew Stoner acting on advice of Crown law officers gave approval for land leased to the Paddington Bowling Club to be transferred from the Club to property developer CSKS Holdings. This followed a seven year campaign by the company to get possession of the site and an Inquiry into potential corruption in the club's affairs. (This blog published the first report of the 2008 Inquiry findings earlier this year.)
In 2013, the Minister gave approval for CSKS Holdings's development application (DA) for a large private child care centre to proceed. The application was opposed by community group Friends of Quarry Street. Along with several Woollahra Councllors, Independent MP Alex Greenwich and Greens MP David Shoebridge, the group raised concerns about how the land had ended up in the hands of a small private company without any tender. In April, the Minister referred the issue to the Head of the Department of Trade and Investment Mark Paterson who requested an independent review by external lawyers.
In August, Paterson wrote to Woollahra Council stating that as a result of the review, the matter had been referred to NSW ICAC. He wrote, " had the review findings been known at the time land owner's consent was sought to lodge the DA, it is doubtful whether it would have been recommended. The Department is considering whether consent should be withdrawn at this stage." In fact, the Department did not withdraw the consent.
At this time, Legislative Council MP Greens David Shoebridge said that the government should "immediately withdraw consent until the matter is dealt with by ICAC. It is essential that the development does not proceed any further while there is a cloud hanging over the integrity of the development process." Local Independent MP Greenwich also wrote to Council asking it to defer consideration of the development application until after the ICAC investigation.
On August 18, Woollahra Council voted to defer the application until ICAC's investigation is complete. In early September, CSKS Holdings applied to the NSW Land and Environment Court for an order (called a writ of mandamus) that Council must proceed to consider the DA.
CSKS Holdings v Woollahra Council
The Land and Environment Court does have power to order Councils to consider applications if it considers that 'in the circumstances' intervention is warranted. CSKS Holdings argued that a 19 month delay in dealing with the application was 'unreasonable' and that even if the Council was not convinced that the Minister's consent for the development was valid, it could simply refuse the application on those grounds. ( It was unlikely that the Council would take this course as it is not in possession of all the facts needed to make such a determination.)
Woollahra Council's arguments
The Council argued that it had not refused to consider the application but had merely delayed it. Further it argued that when it had previously delayed the application to consider community concerns, CSKS Holdings had not complained. CSKS Holdings' reply to this argument was that it expected the DA to be eventually approved.
Most importantly, the Council argued that the 'Minister's consent might not be valid "if it is demonstrated that the consent was tainted or procured by corrupt conduct." For example, if a consent was obtained by fraud, it would not be valid.
The department's letter had indicated "in no uncertain terms that, having now being apprised of certain facts", the Minister would have been unlikely to give his consent. The implicit suggestion was that the Minister 'was misled or deceived in some way.' For this reason, it is possible that the Minister's consent was induced by corrupt conduct and was not valid.
Given that it is now appropriate that it finds out the truth of the allegations, Council argued that it should now wait for the results of the ICAC investigation, especially since the Department has refused to give the Council a copy of the review.
Even if the corruption only involved earlier dealings with the land, " it is plainly not in the public interest that development consents be tainted or procured by corrupt conduct." In making this argument, the Council relied on recent decisions of the court in relation to how mining leases that are being investigated by ICAC should be handled which confirm that corruption allegations can be taken into account as a public interest consideration in decision making under the NSW EPA Act, even if allegations relate to earlier business or land dealings.
The Council submitted that although it is not aware of the exact allegations, it has reasonably concluded that they are sufficiently serious to warrant referral to ICAC, especially given the strong wording of the Department's letter.
The court decision
The granting of owner's consent for DAs is an important part of the laws governing development assessment. The Council acting as the consent authority under the EPA Act 'is required to take into account the public interest.' The range of public interest matters can be very wide, including "undefined factual matters." Corrupt conduct can be relevant to pubic interest. The Department's concerns were "more than speculative". The judge make it clear that her decision was not based on any finding that CSKS Holdings had any involvement in the matter under investigation even if the consent for the DA was corruptly granted. But "if the owner's consent is found to have been fraudulently or corruptly granted...there is arguably no valid DA for which development consent can be granted..."
Therefore Judge Pain decided that the Council has not acted 'unreasonably' or constructively refused the application through its delay. Until ICAC makes a finding or drops the investigation, the Council cannot know on what basis it should decide the application.
A number of players have been vindicated by the referral to ICAC and the decision of the court.
A year ago, the Friends of Quarry Street prepared a detailed dossier arguing for an Inquiry into the affairs of the Paddington Bowling Club and dealings with the site but were fobbed off by Minister Stoner acting on the advice of Crown Land officers, some of whom were involved in the land transfer.
The ICAC referral also vindicated the long held view of of ex-Mayor, now Councillor Andrew Petrie, that the issue was one in which private interests had been allowed to benefit from “underhand dealings with the government to the exclusion of the public”.When he voiced his concerns at Council several years ago, Petrie was threatened with defamation. Petrie told the author in March, that when he and others met with Labor Ministers and Crown Lands Director General Warwick Watkins:
“We were always defending. We had the land around it, we were the ones that were going to be impacted. It always really surprised me that however many ministers we visited ...we were always saying but minister, but minister, but minister. [CSKS] always seem to be there before we got there. That’s why we had to fight it so hard… it seemed at one stage that they had been given carte blanche to deal with the site as they wanted.”
This year, he and Councillor Katherine O'Regan took the Council's concerns to the Minister's office. Following their visit, an initial review of the lease was requested.
Greens Councillor Matthew Robertson has consistently argued in Council that the corruption allegations should be fully investigated before the application proceeded. When the Council was only given limited information by the Minister, Roberston asked for further questions to be asked of him. He was told by Mayor Toni Zeltzerat a Council meeting in May that 'It would be inappropriate to press him."
Independent MP Alex Greenwich and before him Clover Moore continually raised concerns about the land dealings with the NSW Labor and Liberal governments. MP Greens Lee Rhiannon ( now Senator) and more recently Greens David Shoebridge pursued questions in parliament. Rhiannon gave a speech in the Senate about the Paddington Bowling Club affair this year.
The author was also threatened with defamation by Shine Lawyers when New Matilda first published an investigation into these matters in February this year. Due to the several nature of the threats and demand for immediate costs, the article was removed and the investigation continued on this blog.
Unless community activists, politicians and independent journalists stand up to vested interests, underhand dealings in NSW simply get the green light.
There is much information that has not yet been published that is relevant to the ICAC inquiry. I hope to publish some more stories on this issue soon.