Heritage restoration: what’s reasonable?

Is it unreasonable to expect an owner of a local heritage item to restore it, when the restoration cost is 60–70 percent of the value of the property?

The recent Land and Environment Court (LEC) appeal in Norm Fletcher & Associates Pty Limited v Strathfield Municipal Council[1] involving Pepper J cemented the Court’s earlier answer in the affirmative to this question.

In this appeal, her Honour determined that the Commissioner’s conclusion as to the reasonableness of such an impost, was rational, logical and reasonable.

The case demonstrates the LEC’s application of administrative law principles to interesting planning and environment scenarios: ie the reasonableness of restoration costs in the context of whether a development application for demolition of a heritage item should be refused.

The interesting part of the judgment related to Norm Fletcher & Associates Pty Ltd (Norm Fletcher) challenging the reasonableness of the Commissioner’s finding, in refusing consent to demolish the item, that repair and reconstruction work of a heritage item was not an unreasonable burden on the owner.

The heritage item: Camden Lodge

Camden Lodge is a bungalow built in 1916, located with associated buildings on large grounds in Homebush. The Strathfield Planning Scheme Ordinance 1969[2] listed Camden Lodge as an item of local heritage significance. It was sold to its present owner in 2009 for $2.5 million.

The development application

In 2012 a fire caused significant damage to the bungalow. Council wrote to the owner recommending that tarpaulins be placed over the remaining roof structure to protect the building and subsequently issued a Notice of Proposed Order requiring the owners to repair the building. However, the advice was not acted upon.

In 2012, Norm Fletcher lodged a development application seeking consent for the demolition of the dwelling and associated outbuildings. Council refused to grant consent. Commissioner Pearson dismissed Norm Fletcher’s appeal against the refusal.

The decision of Pearson C: Heritage value and cost of restoration

At first instance before Pearson C, Norm Fletcher’s heritage expert said that the required reconstruction would not provide sufficient authenticity and integrity for Camden Lodge to retain its heritage value.

The view of Council’s heritage expert was that the fire had not removed Camden Lodge’s heritage significance. The Commissioner concluded that she was satisfied that the building would continue to have heritage significance, which would be destroyed if the demolition were approved.

The Commissioner found that the cost of restoring the building would be around $1.5–$1.7 million. The central question in the case at first instance was whether this would be an unreasonable burden on the owner. This involved a balancing exercise which was not solely arithmetical but also considered the social value of retaining the heritage item. The Commissioner observed that the some of the cost was attributable to the owner’s failure to insure and maintain the property. It was found that the cost was not an unreasonable burden.

The section 56A appeal heard by Pepper J

In the proceedings before Pepper J, Norm Fletcher pressed two grounds of appeal:

  1. that the Commissioner erred in law by failing to give reasons or make findings for preferring the evidence of Council’s expert witness over that of Norm Fletcher’s expert witness (the ‘reasons’ ground)
  2. that the Commissioner’s finding, that the total cost of the repair and reconstruction work was not, in the context of the continuing heritage significance of the dwelling, an unreasonable burden on the owner, was irrational, illogical and manifestly unreasonable (the ‘Wednesbury‘ ground).

Justice Pepper dismissed both grounds. In doing so, her Honour reaffirmed the Court’s legal principles applicable to the determination of a section 56A appeal, the scope of the a Commissioner’s duty to give reasons, and principles regarding Wednesbury unreasonableness.

Below we focus on the second ground of appeal, that is, whether the decision was ‘illogical or manifestly unreasonable’.

No Wednesbury unreasonableness

After considering and dismissing the first ground of appeal, Pepper J considered the second ground of appeal which had been argued on the basis of unreasonableness in the 1948 case Associated Provincial Picture House Ltd v Wednesbury Corporation.[3]  This case introduced what is now known in administrative law as Wednesbury unreasonableness, which is a test for determining whether administrative action is so unreasonable as to render the administrative action void.

Her Honour noted that Wednesbury unreasonableness ‘requires the almost intolerably high threshold of the exercise of discretionary power in making a decision to be so unreasonable that no reasonable decision-maker could make it’.

In delivering judgment, Justice Pepper referred to the High Court’s recent 2013 decision in Minister of Immigration and Citizenship v Li[4] (Li), which integrated the concept of unreasonableness, rationality and logicality as a ground for judicial review. Li was a case in which the High Court made a rare finding of unreasonableness.  The High Court found that the Migration Review Tribunal’s refusal to grant an adjournment was so unreasonable in all the circumstances that it acted in excess of its jurisdiction in affirming the delegate’s decision to refuse the respondent’s visa application.

Justice Pepper cited a number of parts of the High Court’s test for unreasonableness. For example, Her Honour cited Gageler J in Li who stated:[5]

Judicial determination of Wednesbury unreasonableness is constrained by two principal considerations.  One is the stringency of the test that a purported exercise of power is so unreasonable that no reasonable repository of power is so unreasonable that no reasonable repository of power could have so exercised the power.  The other is the practical difficulty of a court being satisfied that the test is met where the repository is an administrator and the exercise of the power is legitimately informed by considerations of policy.

Justice Pepper also cited French CJ who stated:

The requirement of reasonableness is not a vehicle for challenging a decision on the basis that the decision-maker has given insufficient or excessive consideration to some matters or has made an evaluative judgment with which a court disagrees even though that judgment is rationally open to the decision-maker.

Unlike Li, Justice Pepper found that the Commissioner rationally articulated her reasons for finding that the burden of the cost of repairs was not unreasonable, adopting Council’s submission that:

‘minds may differ. The Appellant may disagree.  That is not enough.’

Her Honour found that the Commissioner’s decision was not purely quantitative, but qualitative, as it balanced the ‘the public interest of the retention of Camden Lodge as a heritage item, and the neglect of the present owner as a contributing factor in the considerable cost of restoration and repair’. In this regard, her Honour held that the reasoning was rational, logical and reasonable.  Her Honour found there was nothing in the outcome or the process which demonstrated unreasonableness in the relevant sense.

The case provides further guidance on Wednesbury unreasonableness as a ground of appeal in a planning context and highlights the difficulty that lies before appellants raising unreasonableness as a ground for judicial review.

[1] [2014] NSWLEC 157.

[2] Now replaced by the Strathfield Local Environmental Plan 2012.

[3] [1948] 1 KB 223.

[4] (2013) 249 CLR 332.

[5] Li (2013) 249 CLR 332 at 376.

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