Newsletter Summer 2015

NEWSLETTER SUMMER 2015

This Edition

Site-Specific Amendments to Local Environmental Plans

Amendment to the Environmental Planning and Assessment Regulation 2000 (NSW)

How Many Tenders Do I Need?

The Importance of Building Life Cycle & Maintenance Costing

Keeping the Faith: Contractual Good Faith Obligations

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Global-Mark.com.au® Global-Mark.com.au® Global-Mark.com.au® SITE-SPECIFIC AMENDMENTS TO LOCAL ENVIRONMENTAL PLANS

The dynamic nature of town planning and planning site investigations as exclusive the ongoing need for environmental planning review of the land use table and conventional instruments to reflect community values and LEP development standards may fail to identify objectives is such that a Local Environmental the actual development potential of the land. Plan (LEP) should not necessarily be regarded Vice-versa, when the actual development as a static, or rigid form of development potential of the land is not recognised by the control. land use table and conventional development standards, it may be appropriate to consider Sites that have either high development a planning proposal, either to rezone the potential (consistent with a broader strategic land, amend development standards, or to policy or strategy), unique characteristics, include an additional permitted use within or other environmental attributes, often Schedule 1 of an LEP. require preparation of a planning proposal to address an amendment to an LEP. Where If a new LEP does not translate each and there is sufficient strategic planning merit, every land use definition from a previous an LEP can be amended to allow for greater LEP, this may result in an existing approved flexibility by allowing development that may permissible use becoming a prohibited use. previously have been prohibited, or non- Consequently, the existing development may compliant with development standards. not comply with applicable development standards, but warrants the flexibility However, it is not always appropriate to continue operating and to undergo to rezone a site when the consequences of enlargement or intensification without such actions may lead to inappropriate having to rely upon existing use rights for development outcomes elsewhere within the purposes of any subsequent development a Local Government Area (LGA). In application (DA). This type of LEP amendment situations where a broad rezoning cannot would be an appropriate use of Schedule 1. be supported, but the site warrants unique consideration of a land use (or development standard) that would otherwise prohibit In this case, a Council (or the NSW (or restrict) development that is suitable for Department of Planning and Environment) the site, it may be appropriate to consider may opt not to adopt a rezoning due to inclusion of the site and/or any relevant the adverse consequences of allowing other proposal within Schedule 1 of an LEP as an forms of inappropriate development across ‘Additional Permitted Use’. an entire LGA in that particular (new/ default) zone. Instead, Schedule 1 is able Schedule 1 of an LEP has the ability to to recognise the unique attributes of the site recognise specific land uses and development and promote appropriate development that standards that prevail (to the extent of any is within the public interest, consistent with inconsistency) over the permissible and broader strategic policies/strategies and prohibited land use table contained within able to be carried out without creating any a conventional LEP. Furthermore, a site may significant adverse environmental impacts. require unique application of development standards such as height, or floor space ratio Please contact State Planning Services (FSR), which can also be recognised in this (SPS) regarding amendments to an LEP that manner. may be appropriate for your site.

Hence, it is critical to check Schedule 1 of John McFadden an LEP when undertaking preliminary town Managing Director AMENDMENT TO THE ENVIRONMENTAL PLANNING AND ASSESSMENT REGULATION 2000 (NSW)

Amendments to the Environmental Planning Ku-ring-gai, Lane Cove, Leichhardt, City of and Assessment Regulation 2000 (NSW) Liverpool, Manly, Marrickville, Mosman, North (EP&A Regulation) came into force on 28 Sydney, City of Parramatta, City of Penrith, October 2015. The amendments are designed Pittwater, City of Randwick, City of Rockdale, to improve the notification of neighbours to land City of Ryde, Strathfield, Sutherland Shire, subject to a complying development certificate. City of Sydney, The Hills Shire, Warringah, Waverley, City of Willoughby, Wingecarribee, Changes Wollondilly or Woollahra

The requirement that certifying authorities The requirement that certifying authorities must give occupiers of neighbouring land must give occupiers of neighbouring land which 14 days written notice of an application is within 20 metres of the boundary of land that for a complying development certificate for is the subject of the complying development development on land (other than on land within certificate seven days written notice of the a residential release area) that is to be carried person’s intention to commence work for out on a lot that has a boundary within 20 development on land that is not in a residential metres of the boundary of another lot on which release area and that involves: a dwelling is located that involves: a new building, or development specified under any environmental planning instrument an addition to an existing building, or that involves any of the following: the demolition of a building – a new dwelling; will now only apply to land in category 1 local government areas (see – an addition to an existing list below). dwelling; All other land is a ‘catergory 2 local development specified in Part 7 of government area’. Land that is a catergory 2 State Environmental Planning Policy local government area only needs to give two (Exempt and Complying Development days’ written notice. Codes) 2008 (the Demolition Code, or Category 1 local government areas means Ashfield, City of Auburn, City of development specified in Division 2 Bankstown, City of Blacktown, City of Blue or 7 of Part 2 of State Environmental Mountains, City of Botany Bay, Burwood, Planning Policy (Affordable Rental Camden, City of Campbelltown, Canada Housing) 2009, Bay, City of Canterbury, City of Fairfield, City of Hawkesbury, City of Holroyd, Hornsby, will now only apply to land in Hunter’s Hill, City of Hurstville, City of Kogarah, applicable local government areas (see Ku-ring-gai, Lane Cove, Leichhardt, City of list below). Liverpool, Manly, Marrickville, Mosman, North Sydney, City of Parramatta, City of Penrith, Applicable local government area Pittwater, City of Randwick, City of Rockdale, means Ashfield, City of Auburn, City of City of Ryde, Strathfield, Sutherland Shire, Bankstown, City of Blacktown, City of Blue City of Sydney, The Hills Shire, Warringah, Mountains, City of Botany Bay, Burwood, Waverley, City of Willoughby, Wingecarribee, Camden, City of Campbelltown, Canada Wollondilly or Woollahra. Bay, City of Canterbury, City of Fairfield, City of Hawkesbury, City of Holroyd, Hornsby, Patrick Holland Hunter’s Hill, City of Hurstville, City of Kogarah, Partner HOW MANY TENDERS DO I NEED?

The process of tendering has many factors B. Current and future project workload to consider such as which firms to select for submitting a tender, how long should the tender C. Suitability of its firm to the type of period be, and how many Tenderers should be project included in the tender panel. D. Size of project The decision about the number of Tenderers to seek submissions from will be informed by a E. Competing Tenderers number of factors: F. Assessment of risk in the project 1. Current market conditions Of these factors, only item E is initially the 2. The number of experienced firms for most unknown factor. During the tender process the project it ultimately becomes apparent to all Tenderers who their competition is and how many firms 3. Responses to an Expression of Interest will be submitting tenders. This will invariably campaign cause the Tenderers to approach the tender in a manner particular to its circumstances at that time. For this reason, in order to avoid 4. Scale of project the decisions of Tenderers to withdraw from tendering due to the competition, or take a less 5. Existing sample of pre qualified firms considered approach due to the perception that for tendering there are too many Tenderers, it is best to be transparent at the commencement of the tender 6. Time constraints process.

The primary intention of any competitive Advising each Tenderer of the proposed tender process will be to receive comprehensive, tender panel size and the competing firms well considered, and price competitive allows the Tenderer to more fully consider its submissions. Receiving such submissions can commitment to the tender process and in turn be achieved from a panel of two Tenderers as provide the same commitment to the Client that well as from a panel of six Tenderers. However it will submit a comprehensive, well considered, there are some fundamental considerations to and price competitive submission. This in be explored before making a decision on the turn allows the Client to make its decision on number of Tenderers to select. whether, for example, a small panel of 3 or a large panel of 6 Tenderers will provide the best Tenderers will make their decision to compete outcome for the project. based on at least the following factors: Mark Blizard A. Current tender workload Director THE IMPORTANCE OF BUILDING LIFE CYCLE & MAINTENANCE COSTING

The calculation of the estimated future replacement and maintenance early during lifecycle and replacement as well as the lifecycle of a building is important to not maintenance costs of building fabrics and only serve as historical cost data for future assets is important to establish a budget of estimates but also to be used as a benchmark the future costs to be incurred by the client to compare against estimated costs and to to maintain a building that will be suitable help the client to develop a strategy for to perform its desired function and retain its ensuring the actual costs don’t exceed the aesthetics. budget.

The approach of viewing the initial Innovations in technology of the building capital costs as well as maintenance and materials and methods of installation as well replacement costs when making decisions on as assets purchased could offer significant the building asset, material and installation cost savings to clients provided the costs method during the design stage of a project are viewed holistically. The minimization of is known as the Life Cycle Costing approach. future lifecycle and maintenance costs is also It considers the use of alternatives and the interrelated with the concept of sustainable determination of the overall costs to be construction. incurred for each alternative to enable the client to make informed decisions on which Quantity Surveyors that have experience option would offer more value and meet in this field offer the client added value their specific requirements. besides the usual cost planning and control services over the design and construction An estimate of the lifecycle and phases of a building. They could also develop maintenance costs is usually broken down a budgetary estimate of future lifecycle into various building elements and replacement and ongoing maintenance components as well as assets which have costs as well as assist in the choice of the different lifecycle periods. A client could alternative building assets, materials and also determine these costs over a certain installation methods which would offer duration; for example over the contract greater value to the client from a lifecycle duration with a Facilities Management costing perspective. Service provider. Ran de Fonseka The collation of the actual costs for Quantity Surveyor KEEPING THE FAITH: CONTRACTUAL GOOD FAITH OBLIGATIONS

It is important to keep in mind the for Public Works.1 Here the Principal had the obligation to act in good faith in commercial right to cancel a building contract if: and building contracts. The obligation is sometimes specifically written into many 1. The Contractor defaulted; and contracts, but may otherwise be implied by a Court if there is a dispute about the contract. 2. The Contractor was unable to show cause as to why the contract should In a competitive market, with tight time not be terminated. frames and competing demands, it might be easy to lose focus on good faith obligations, The Contractor defaulted, and the right but NSW and Australian case law highlight to terminate was exercised even though the the importance of keeping the faith. Contractor had responded that it was willing and able to complete the contract. The Court What is ‘good faith’? held that the power to terminate had to be exercised reasonably, and upheld an award The meaning of term ‘good faith’ is for damages in favour of the Contractor. somewhat broad and perhaps a little bit unclear, but Australian Courts have indicated This case dealt with a specific contract that acting in good faith can generally be and set of circumstances, and each case will said to involve: be treated differently based on its facts. Nevertheless the key lesson from cases like 1. Parties to a contract acting this is to always keep in mind whether good cooperatively and reasonably faith obligations might apply to the exercise in respect of their rights and of any particular right under a contract. obligations, particularly when exercising an express right to Things to remember terminate; The extent to which an obligation of good 2. Not acting capriciously, and exercising a degree of restraint on faith is included in a contract will depend self-interest when exercising rights on the particular contract, however keep in and meeting obligations under the mind the following two points: contract; and 1. In order to limit obligations of 3. Not acting in ‘bad faith’. good faith with any certainty, there should be explicit terms contained within the When does good faith apply? contract, whether by blanket limitation, or by confirming a party’s right to ‘sole’ Although Courts in Australia have been or ‘absolute’ discretion in the exercise of a somewhat circumspect and in some cases specific power; and reluctant to imply good faith obligations into contracts, it is now fair to say that a general 2. In order to impose obligations of obligation to act in good faith applies to all good faith with certainty, a contract should contracts to some extent. This is particularly contain a blanket duty, or specific constraints the case in the exercise of discretionary on a parties exercise of a right by reference rights such as rights to terminate or to to good faith and reasonableness, e.g. ‘… withhold approval. must not unreasonably withhold’.

A good example is the seminal case of Tamara Helm Renard Constructions (ME) Pty Ltd v Minister Senior Associate

1 (1992) 26 NSWLR 234. Acknowledgements

The following organisations regularly partner with Contact Us EPM and contributed to the content of this newsletter. www.epmprojects.com.au Patrick Holland - Partner Environmental Planning Law McCullough Robertson Level 16, 55 Hunter Street Sydney NSW 2000 PO Box 124 Ph: (02) 9270 8610 Fax: (02) 9270 8699 E [email protected] Suite 2, Level 5, 655 Pacific Highway www.mccullough.com.au ST LEONARDS NSW 2065 Ph: (612) 9452 8300 Fax: (612) 9452 8388 John McFadden - Managing Director Strategic & Statutory Planners State Planning Services P.O. Box 394 Pyrmont NSW 2009 Ph: (02) 9552 1525 Fax: (02) 9552 1525 Key Contacts E [email protected] www.stateplanningservices.com.au Andrew Graham Managing Director Mobile: 0419 732 021 Helena Golovanoff - Partner Email: [email protected] Construction Law Kennedys Level 31, 2 Park Street Sydney NSW 1235 Stephen Welsh Ph: (02) 8215 5999 Fax: (02) 8215 5988 Director E [email protected] www.kennedys-law.com.au Mobile: 0417 307 860 Email: [email protected]

Damon Bissell - Director Mark Blizard Cost Management & Control Director MDA Australia Level 3, 160 Pacific Hwy North Sydney NSW 2060 Mobile: 0438 126 778 Ph: (02) 9929 8000 Fax: (02) 9929 8363 Email: [email protected] E [email protected] www.mda-aust.com.au

Johan O’Brien Director Mobile: 0414 917 904 Email: [email protected]