Vines climbing up fence

I was pleased to be invited to deliver a short speech on this subject this morning, at a breakfast organised by the WA branch of the Urban Development Institute of Australia (UDIA). The rest of this post is the text of the speech and the accompanying slides. I only had ten minutes to cover a very interesting and contentious subject, and naturally there is a lot more to be said, so I welcome comments on this post as always.

OUTLINE OF ISSUES AND COMMENTS

Introduction

Thank you for the introduction.  I would like to thank the UDIA for the invitation to speak today and also to acknowledge Jane Bennett of Chappell Lambert Everett for the work she has done in helping to prepare me and others for today’s event.  My thanks also to the UDIA team, Debra Goostrey and Lynette Tay for their work.

Today’s topic-buffers and setbacks-is set out in the flyer for the event as follows:

‘First consider the inefficiency:

… a foreshore setback coupled with a wetland setback compounded by fire requirements;

secondly, consider the efficiency: 

… a wetland buffer as a low fuel zone for fire so as to avoid land loss through the additional setback

… a foreshore reserve receiving an open space that recognises the value to the community of the use of the area.’

The statement in the flyer goes on to say:

‘Setbacks and buffers are a particularly Hot Topic that impact on the cost of housing and undermine sustainability objectives.

An overcautious approach to buffers adopted by regulators can result in lost opportunities for both public and commercial recreation activities.’

In the 10 minutes available to me, I will explore these issues with particular reference to industrial buffers. Many of the underlying principles are applicable to all buffer and setback issues.

There are many types of buffer area and setback.  Jane Bennett will talk in more detail about the examples which now abound. As I said, my frame of reference will be industrial buffers.

However all these examples relate to the themes of today’s breakfast in that they all fundamentally concern the value of land, property rights and competition for land as a resource.

In its 1997 Statement of Planning Policy No. 4.1 State Industrial Buffer Policy, (SPP4.1) the Western Australian Planning Commission (WAPC) defines a buffer area as an:

‘… area within which sensitive uses are either restricted or prohibited.’

Although this is a definition in a particular policy document, for present purposes I will use it as a working definition.

I will return to SPP4.1 later.

My main proposition and indeed plea to the Government agencies, is that at the heart of the best approach to buffers of all kinds, is a need for nuance, flexibility and refinement.  I acknowledge that flexibility, like marriage, has its limits. The flexibility must be tempered with a degree of certainty, otherwise, again, like marriage, why have it?  I will return to the need for flexibility later.

The nature and purposes of buffers

Buffers exist to avoid or resolve competition for land as a resource.

Buffers can be off-site or on-site, an important distinction.  I will be referring to off-site buffers because they give rise to the question: should another’s land be used for the purposes of a particular private or public asset?

Need for dynamic Buffers

Buffers can be static or dynamic.

As I said earlier, my main argument is that the need for nuance, flexibility and refinement is at the heart of the best approach to buffers of all kinds.  By ‘nuanced’ I mean tuned to the particular local circumstances, including micro-climates, topography, surrounding uses, future planning of adjacent areas and the possibility that our modeling, even that relating to climate change, needs to be reappraised from time to time.

Buffers, where possible, should be dynamic in this sense and not static, except perhaps in unusual circumstances where at a strategic level the State sees fit to protect an historically and strategically important industrial area.  At least in the Perth metropolitan area there is only one, the Kwinana Industrial area, which is governed by  specialist legislation.

There are at least three reasons in favour of flexibility.

First, environmental law and policy assumes that over time standards change and the economic and technical capacity to abate environmental emissions increases with time.

Secondly, it is bad economics and environmental policy to sterilise land with static off-site buffers and setbacks.  With increasing urban sprawl it is untenable to assume that in a City like Perth or indeed regional centres like Geraldton, Albany and Bunbury, we can or should afford forever to supply buffer land to make commercial life easy for industrial operators and infrastructure providers and administrative life easy for regulatory agencies and policy makers.

We need to be open to taking flexible approaches to adaptation, which includes being flexible about the kind of development that can be approved, the duration of the approval and the way we monitor and verify the modeling underlying a buffer.

Thirdly, flexibility is inherent in the way our legal system deals with issues of use conflict and compensation for the use of others’ land for buffer purposes.

I have said that buffers can be static or dynamic and I have made a plea for dynamism.

Example of Static Buffer

An example of a static buffer area is seen in the City of Geralton’s Town Planning Scheme No. 5 (Geraldton Scheme), which has set lines around a landfill facility and a waste water treatment plant.

http://www.mcleodlawyer.com/wp-content/uploads/2012/10/Slide41.jpg

It is interesting to consider the Geraldton Scheme’s text relating to the buffers. We don’t have time to do that now.

However, it would be fair to say that the Geraldton Scheme provisions promote a static approach to planning for the future. They leave you in no doubt that it is going to be hard to rezone, subdivide or develop in that buffer land for a long time to come.  In theory, of course, the Scheme would be reviewed every 5 years, but we all know that does not happen.

Questionable Economics of Static Buffers

My earlier reference to the questionable economics of static buffers arises in this context.

We no longer live in a world where land is in plentiful supply, whether we are talking about Geraldton or Girrawheen.

Is there any substantive reason why the operators of public utilities should not be under the same environmental and planning regulations as every other industrial and infrastructure operator?

Of course I am being provocative and my comments may well be open to debate.  Let’s have it in the panel discussion. And if you see me rushing away at the conclusion of today’s event its not because I am worried about being set upon-I have to be somewhere else shortly after 9.00am.

Dynamic Buffers

An example of a dynamic buffer, in contrast to the static model we have just seen, is one which can be defined in an agreement between an industrial or infrastructure operator and a landowner, which contains mechanisms for redefining the buffer over time, as more money is spent on plant and equipment to reduce emissions and improve amenity.  It provides certainty and flexibility for both parties.

In one example, an agreement was used to lay down a regime for reviewing the buffer over time and reducing it as emissions were reduced and new modeling and verification showed that a reduced buffer was workable.

In two other examples, an agreement allowed an infrastructure provider to operate in accordance with easements and restrictive covenants which on the one hand allowed development to take place under various conditions and on the other gave the operator protection through easements to emit, again under various conditions.

Some Foundation Legal Issues

I will now turn to some legal aspects.  In these examples there was no buffer policy in place and the result has been stagnation on the one hand and litigation on the other.  So there would be something to be said for a dynamic buffer policy that avoided those problems.

Here is an aerial view of a site at Stowmarket, East Anglia.

The site was ripe for housing development under the applicable policies. I acted for a housing developer over 20 years ago who wanted to develop the green area. The only problem was this Molybdenum smelter on immediately adjacent land. The smelter’s emissions would make development of the land for housing untenable.

The developer’s team looked at this dispute over the development rights to the land, a classic use conflict, from a number of angles, starting with why the predecessor to the current English Environment Agency would not enforce the applicable environmental legislation to reduce or stop emissions.

We explored the possibility of an action in common law nuisance, under which an injunction would be sought to prevent the plant from operating in a way that blighted the development potential of the land, an idea I was to put to use successfully in respect of another site many years later. We also considered taking various actions against the environmental agency for not doing its job.

Nothing came of all that, for reasons I won’t go into here. You can see that the land remains undeveloped. I have no idea whether the plant complies with relevant laws and whether its emissions blight any of the adjoining land.

Fast forward to a case which did go to Court and was decided this year: Barr & Ors v Bifffa Waste Services Limited [2012] EWCA Civ 312.

That case concerned an action in common law nuisance against Biffa, the operator of a former quarry site, now used as a landfill waste facility.

In this case some local residents had sued the operator of the waste facility for the nuisance created by odour emanating from the plant. They live in an estate which you can see on this slide.

The court at first instance sided with Biffa, the facility operator.  However, the Court of Appeal overturned the decision of the Judge at first instance and rejected the approach of the lower Court.  Lord Justice Carnwath said:

‘The fundamental principles of law [in these matters] were settled by the end of the 19th Century and have remained resilient and effective since then.’

This statement is as true in Western Australia as it is in England. The same law applies here and can operate, despite any buffer which may be in operation (although a buffer could be a factor in litigation).

To understand buffers and the planning policy applicable to them, it is necessary to have a full appreciation of the all of the law applicable to the unauthorised interference with land, in particular the law of nuisance.

Unless interference with land is authorised by law, either damages or compensation must be payable for the unlawful activity or an injunction could be obtained to restrain the wrongdoing.

What has changed since the 19th Century is the growth of town planning as an overlay on the common law.

Although the picture is complex, underlying it are some quite fundamental principles, most of which have thankfully not changed since the nineteenth century.

The reason the common law hasn’t changed is that property ownership – call it property rights if you like – is fundamental to the functioning of a modern free market economy. We can’t examine this interesting subject here in detail, however, it should be borne in mind when preparing buffer policy.

I will now comment briefly on the development of Buffer policy in Western Australia.

Development of Buffer Policy in Western Australia

In 1995 the first draft of SPP 4.1 was released.  A final version was Gazetted in 1997. In the same year the Environmental Protection Authority (EPA) released its draft Guidance for the Assessment of Environmental Factors No. 3 Separation Distances between Industrial and Sensitive Land Uses 2005 (EPA draft Policy).  The EPA draft Policy took its final form in 2005 (EPA 2005 Policy).

The 1997 policy remains applicable and I would certainly hope that remains the case for now.  Although the 1997 policy waters down its references to property rights in the 1995 draft, a draft replacement published in 2009 contains no reference to the protection of private property rights.  That policy is more general and perhaps more favourable to industry.  It does not mention compensation and gives greater prominence to a presumptive buffer distance policy in the EPA 2005 Policy.

Of particular concern to me is that an Appendix to the 2009 SPP singles out the Water Corporation for special treatment.  I light of what I have said, I do not believe that this is justified.

Conclusion

I have made a plea for flexibility in the context mainly of industrial buffers, but the underlying principles apply to all buffers and setbacks.  My plea has been for flexibility in policy setting, because we can’t afford not to be flexible, and because of the compatibility of that approach with important legal and economic principles.

This is not to reject the need for certainty which buffers can provide.  My view is, however, that the balance between public and private rights may be shifting too much away from private rights, something which will not necessarily benefit society as a whole.

That is all I have to say Mr Chairman and I will now hand over to you and the Panel

Glen McLeod,  24 October 2012

little blue house

On 17-19 April this year the High Court heard challenges by several tobacco companies to the validity of the Commonwealth’s tobacco packaging legislation, the Tobacco Plain Packaging Act 2011 (Cth) (Act).  The tobacco companies sought to rely upon a requirement in Section 51 (xxxi) of the constitution to the effect that the power of the Federal Parliament to make laws which provide for the ‘acquisition’ of property is limited by a requirement that it be exercised on ‘just terms’.  The companies argued that relevant provisions of the Act were invalid because they constitute an acquisition of the their intellectual property, otherwise than on just terms. The Commonwealth Constitutional power to make legislation to acquire and its concomitant ‘just terms’ qualification do not distinguish between different types of property. We can have property in shares, mining tenements, water and various other things, as well as land.

The Court found in favour of the Government. The decision was published on 15 August 2011[1] and the full reasons for that decision on 5 October. The relevant property in that case comprised various kinds of intellectual property, such as trademarks, patents and designs in the packaging and brands of the companies.

The Tobacco Packaging Case is now one of a long line in which a wide range of litigants have tested the meaning the Commonwealth Government’s constitutional power to make legislation providing for the acquisition of property. Many of the legal principles considered in the case are relevant to all types of property, including land.

The High Court has accumulated a formidable body of legal precedent decisions on the property acquisition power.  At issue, for example, have been laws concerning the marketing of apples and pears, a hydroelectric scheme, a car park, mining tenements and oil exploration rights in the Timor Sea, to name a few.

In all of these cases some kind of property was directly or indirectly taken or acquired in a way that the plaintiff clamed was beyond the power granted to the Commonwealth by section 51(xxxi).

It must be understood that the Constitution generally only says what the Commonwealth Government can do. Section 51(xxxi) the Constitution is not a direct statement of the citizens’ rights. It simply empowers the Commonwealth to make a particular kind of law. In contrast the Constitution of the United States of America (USA) in its Fifth Amendment, gives all citizens the right not to have their property taken by the Government, unless they are compensated. Therefore in the USA, anyone can challenge an action of a Government, State or Federal, which deprives them of property rights.

In Australia there is now a complex body of legal principles applicable to both Federal and State Laws, with a pedigree that goes back at least a thousand years in the English law we have inherited in Australia. We have added to this dense mass our own peculiar permutations, particularly through Commonwealth Constitutional law. For example, the simple idea in section 51(xxxi) of the Constitution that the Commonwealth can make laws to ‘acquire’ property provided it does so on just terms has been bedeviled by a number of complications.

The word ‘acquire’, for example, does not simply mean ‘take’. The Government must benefit in some way from the taking for it to be an ‘acquisition’ which triggers the constitutional requirement to provide just terms.  It follows that if the Commonwealth makes laws to take or extinguish property and it does not at the same time benefit from its actions, it does not have to provide for compensation to the property owner on just terms.   This is just an example which is illustrative of a confusing and difficult to penetrate area of law.

Property rights, however, have not been overlooked by the common law. When it comes to land, State law is much broader than Federal law.  What is not commonly appreciated is that the laws of the States arguably include a common law right, similar to the US Fifth amendment, to claim compensation for a taking, without the complication of showing that the taking was also an acquisition[2]. For a State to take property without paying compensation, it must be very specific in its legislation and not simply so it by ‘the back door’. The law requires honesty and transparency. Unsurprisingly, direct examples of a State trying to take property without compensation while complying with that requirement cannot be found. Unfortunately, various examples have been seen of the ‘backdoor’ method, including the taking of conservation areas and forcing subdividers to give up excessive areas of public open space.

There is a paucity of relatively recent judicial decisions on the State law in this area. However, perhaps with the ever widening reach of environmental law and policy and its effect on private property, there will be a ‘showdown’ between the State and a private land owner. The likelihood of that happening will be increased if environmental legislation does not have inbuilt mechanisms to protect private property, including ‘just terms’ compensation provisions and independent appeal rights.  Legal certainty about the rights attached to property is one of the essential features of a successful national economy and is bound up in the related legal subject, the rule of law[3].

The social and political reach of the Tobacco Packaging Case and the issues that are associated with it therefore go well beyond the immediate interests of the parties involved. The cause of big tobacco is hardly an easy one to progress in ‘polite society’ and few outside of that industry are likely to feel more than a momentary pang of regret for the loss of the alluring packaging that has been synonymous with tobacco retailing. The broader issues are not always that clear, however.

The famous Tasmanian Dams[4] case, for example, was a direct consequence of the Hawke Government’s designation as a National Park of a large area of Tasmania, following the ALP’s 1983 election win. A large part of Tasmania was declared a National Park and the High Court by only a four to three majority upheld the legislation, partly because it took the view that a taking of land which does not involve a benefit accruing to the Commonwealth, is not, for the purposes of the Constitution, an ‘acquisition’. It is noted that the question of whether or not there is a benefit is very fact specific and is likely to be an issue of contention in many cases.  Debate over the narrow win for the Government in the Tasmanian Dams case still arises from time to time.

There is little doubt that the Tobacco case will not be the last word on this subject. Given the volume and complexity in State environmental and town planning Law, it will not be surprising if a major case arises in one of the States’ Courts. The importance of these cases was summarized by Justice Michael Kirby when he was on the High Court. He said:

‘One of the institutional strengths of the Australian Economy is the Constitutional guarantee of just terms where the property interests of investors are required under Federal law. This Court should not undermine that strength by qualifying the guarantee. Neither the Court’s past authority nor economic equity requires such a result. If it can happen here it can happen again and investors will draw their inferences.’ [5]

It is to be hoped that this warning is remembered by future courts and governments.

[1] JT International SA v Commonwealth of Australia; British American Tobacco Australasia Limited & Ors v Commonwealth of Australia [2012] HCA 30.

[2] R. v Compensation Court of WA ex parte State Planning Commission and Anr (1990) 2WAR 242 and see first instance opinion of Pidgeon J: unreported, Compensation Court of WA, 1988-BCC 8800828

[3] See for example, Hernando de Soto, The Mystery of Capital, Why Capitalism Works in the West and Fails Everywhere ElseBasic Books, 2000 and Niall Ferguson, The Rule of Law And Its Enemies, BBC, 2012 Reith Lectures.

[4]The Commonwealth v. Tasmania  (1983) 158 CLR 1

[5]The Commonwealth v WMC Resources Ltd (1998) 194 CLR1 at p.102

boy on a ladder

The idea that development decisions should not be linked to the vagaries of local government decision-making has some appeal. Anyone who has had experience of the risk and frustration which can attend planning decision-making by local governments is likely to consider an alternative with a benign eye. The development assessment panel (DAP) system provided for under Part 11A of the Planning and Development Act 2005 (P&D Act), may therefore be attractive to developers. Under that system, generally major development applications and others delegated to DAP’s, must be determined by a DAP.* But be careful what you wish for. The council as decision-maker represents the entire community from which developers today arguably need a ‘community consent’ as much as their statutory consents. Disempowering the council may leave the locals with a feeling of disenfranchisement and frustration not consistent with expectations of modern citizens. Longer term that could make the system more complicated for applicants for development approval. This is not intended to raise an argument against the concept of DAPs, but rather to share some thoughts borne of recent experience, bearing in mind that under section 171F of the P&D Act the regulations implementing the system are to be reviewed  ‘as soon as practicable’ after the expiry of 2 years from the day on which the regulations were made. The relevant regulations are the Planning and Development Act (Planning and Development) Regulations 2005 (Regulations), which became effective on 1 July 2011.

Developers are potentially in a bind here. On the one hand many, at least in private, cavil at the local government decision making process. Yet most, these days, recognise that community approval of a project is necessary.

There will always be an intransigent minority in a local community who will say ‘no’ to any proposal, while uttering platitudes about not being against development. However, experience shows us that most people who initially oppose a particular development, may be more inclined to accept a decision to approve made by their elected representatives.

Calls for members of the local community to have a ‘third party’ right of appeal against an approval, could be rejected justifiably, so long as the final decision at a local level is in the hands of an elected body. The case for third party appeals could become stronger if the decision is made by a DAP.

Early experience of the new DAP system in WA suggests that it also has the potential to alienate the locals and it may not have sufficient legal robustness to withstand a court challenge by disaffected members of the community.

One problem I have seen so far with DAPs, which may lead to court action, is confusion by the DAP as to its role. At this early stage, there is evidence to suggest that some DAP members may think that their role is to make good planning decisions. In a sense that is correct. At the same time the decision must comply with the local planning scheme and that should not be covered over by too strong a desire to make what the DAP considers to be a good planning decision.

Compliance will be enhanced by following well-established written and unwritten processes, for example adhering to the rules of natural justice and ensuring that everyone who at law has a right to be heard is given a proper opportunity to exercise that right. If the DAP goes straight to its view of the best outcome, despite the local planning scheme, then the decision runs the risk of being flawed and susceptible to legal challenge.

Unfortunately, it also seems the legal regime under which DAPs were established may be built on unstable foundations. This is because local planning schemes have, under the P&D Act the status of parliamentary legislation.  They are not mere guidelines. Some members of the local community are likely to have a legal right, or ‘standing’, to challenge a DAP decision which is at variance with a local planning scheme.

The DAP system was established largely by the Regulations. Legally, they cannot conflict with a local town planning scheme and if they do, they may be struck down by a court: section 43(1) of the Interpretation Act 1984. For example, currently, the Regulations allow a DAP to amend its final decision.  See regulation 17 of the Regulations. The Regulations are legislatively inferior to town planning schemes. See Section 87(4) of the P&D Act. For at least that reason it is legally impossible for regulations to provide for the amendment of a decision made under a planning scheme, once the decision has been made.

Ultimately, these concerns will have to be tested in a court and the prospect of that happening is likely to be hastened if a community is disaffected and feels it has not been given an adequate opportunity to have its say. While the DAP procedure allows for community members to be present when decisions are made and, indeed, to make comments, their calls for third-party rights of appeal would be understandable if the final decision is not made by their elected representative.

If a system lacks an adequate means by which a local community can have its say, those who oppose a development may be forced to seek other avenues of redress, including the law, or even direct action. Needless to say, such consequences are unlikely to promote the happiness of most people involved, including the developer.

Niall Ferguson in one of this year’s, BBC Reith lectures made the case against the reflexive use of more regulation as a way of addressing complex issues, on the ground that it leads to a subversion of the rule of law, in favor of the rule of lawyers. Most lawyers are well aware of the likely unpopularity of that prospect.

Experienced lawyers also know, as a general rule, that more regulation does not necessarily lead to better outcomes. Regulation which transfers power from an elected to an unelected body is unlikely to be immediately attractive to many people in a local community. While democracy is a very bad form of government, to paraphrase a famous Churchillian aphorism, all the others are so much worse. Although the WA DAP system is now enshrined in law, it would be fair to say that for many ‘the jury is still out’ on its longer term effectiveness. This is not to say that it is beyond redemption but it may need some improvement.

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* Generally, development which has an estimated cost of $7 million must be decided by a DAP and, at the election of the Applicant, a proposal which costs $3 million or more may be decided by the DAP. These figures are respectively $15 million and $7 million for developments in the City of Perth’s municipal district.

A heritage house with plane trees in the foreground

Glen was featured in the 5-11 July issue of WA Business News. The article referred to the recent growth of some of Perth’s larger and well known legal and accounting firms. It made specific mention of Glen’s move against this trend to meet the market need for “the boutique niche operator, who can enhance the capacity of other professionals.” Subscribers to WA Business News can read the article here

Planning Institute of Australia

I was pleased to be the speaker and discussion leader at this Planning Institute of Australia WA (PIA) event, hosted and sponsored by Squire Sanders. The notes I used to lead the discussion can be found here. An article entitled Climate Change Law and the Real World , which I co-authored, with Professor Peter Newman is referenced in the notes and can be found here. It was a continuing education event and well attended by a strong body of town planners from the public and private sectors.

The event was video recorded and will soon be uploaded onto this website.

As is usually the case, the planners present were very responsive to the material and provided me with useful comments, some of which are noted at the end of the notes.

My thanks to the Chair of the event Chris Wark of Squire Sanders, Joel Gilman, the Chair of PIA’s Legal Chapter, who is responsible for the Programme and Emma de Jäger, PIA’s Executive Officer.