What are the Commissioner's powers in the Land and Environment Court's conciliation process?

Conciliation in the Land and Environment Court of NSW (L + E Court) is an important step, giving parties a serious opportunity to resolve the dispute (such as in relation to the grant of development consent or the compensation payable for compulsory acquisition) before incurring the significant costs of a full hearing. A novel argument that could have increased the powers of the Commissioner at conciliation and reduced the certainty of agreements reached at conciliation was recently considered – and rejected – by the NSW Court of Appeal.

Where an agreement is reached at or after a conciliation conference as to the terms of a decision that would be acceptable to the parties, section 34(3) of the Land and Environment Court Act 1979 (L + E Court Act) states that the Commissioner must dispose of the proceedings in accordance with the decision, and must set out in writing the terms of the decision, provided it is "a decision that the Court could have made in the proper exercise of its functions".

In McMillan v Taylor [2023] NSWCA 183, the Court of Appeal confirmed what is meant by the requirement that the decision be one "that the Court could have made".

This decision clarifies that a Commissioner cannot consider the merits of an agreement reached between the parties to determine if it is one that should be made.

The Commissioner does, however, need to be satisfied that the Court has jurisdiction to make the decision and that it is not an improper exercise of power in an administrative law sense.

This obliges the Commissioner to confirm that the Court has jurisdiction to make the decision on the terms of the agreement reached by the parties, but not to carry out an assessment of the merits of the agreement.

A neighbourhood dispute

In McMillan v Taylor, owners of a property were seeking council approval for a residential development. Their neighbours objected, and made two unsuccessful attempts to be joined to the proceedings, and then made oral submissions at a mandatory onsite conciliation conference. The council and owners reached agreement at conciliation, and the Commissioner gave judgment under section 34(3) of the L + E Court Act giving effect to the parties' agreement. Disappointed, the neighbours sought judicial review of the Commissioner's judgment on four different grounds, each of which was dismissed.

Ground 1: Must a Commissioner consider terminating the conciliation conference?

The Commissioner can terminate a conciliation conference "at any time, if the Court or Commissioner thinks it appropriate in the circumstances of the case".

The neighbours contended that, in light of their objections, the Commissioner failed to satisfy herself of whether it was appropriate in the circumstances for the Court to determine that the proceedings should not be dealt with under s 34AA(3) of the L+E Court Act, since their objections would not be considered if an agreement was reached at the conciliation conference. As the Court found that the Commissioner had in fact considered terminating the conciliation conference, the factual premise of the ground of appeal was not established.

However, the Court commented that Section 34AA(3) of the L + E Court Act did not impose a duty to terminate or consider terminating the conciliation. Nor was it necessary or appropriate for the Court to decide on the circumstances in which the power to terminate should be exercised. The Court of Appeal commented that it would be unusual for the Commissioner to terminate a conciliation conference unless it was at the request of a party, without an element of improper conduct.

Ground 2: The neighbours were denied procedural fairness

A person adversely affected by a decision should have an opportunity to be heard, however the content of the obligation to provide procedural fairness depends on the statutory context.

The neighbours in this case were aggrieved because their submissions at the conciliation were not taken into consideration in the agreement reached by the parties, whereas their objections would have been heard by a Court presiding over any final hearing of the matter. The neighbours argued that the judgments on the joinder applications had led them to believe that they could participate in the hearing process before the Court, which ultimately did not occur because of the agreement reached at conciliation.

No jurisdictional error resulted, as the neighbours did not have a statutory right for their objections to be treated in a particular way. Only objectors of designated development had a right of appeal against a grant of consent.

Grounds 3 & 4: Merit considerations

Through Grounds 3 and 4, the neighbours argued that the Commissioner, in making her decision under section 34(3) had:

• failed to take into account an amendment to the local environmental plan; and
• granted a consent which was legally uncertain.

Ground 3 was resolved by the finding that the Commissioner need only be satisfied that the Court had jurisdiction to make the agreement reached between the parties, not satisfy itself of the merits of decision reached. There was no obligation on the Commissioner to assess evaluative matters. In this regard, the Court of Appeal considered that the scope of the requirement was to avoid circumstances where an agreement between the parties sought to confer on the L+E Court jurisdiction which it does not have under the L+E Court Act.

The claim for uncertainty (Ground 4) was on the basis that the location of the stormwater absorption trench was a factual matter that did not raise a jurisdictional issue. This was not a circumstance where the consent approved works that were significantly different to a development application, which could support the finding that the consent was invalid.