45 Cornelia Street Pty Ltd v Canterbury - Bankstown Council

The site and its context

1. The subject site is legally described as Lot 52 in DP 7298 and is located on the eastern side of Cornelia Street. The site presently contains a single storey dwelling with a carport and garage.
2. The development in Cornelia Street reflects the zone boundary location with the development on the western side of the street comprising a mix of dwellings and semi-detached dwellings of one and two storeys. The eastern side of Cornelia Street is characterised by a mix of apartment buildings of 3 storeys and single detached dwellings.

Planning Controls

1. The application is lodged utilising the provisions of State Environmental Planning Policy (Affordable Rental Housing) 2009 ('SEPP ARH'). This policy commenced in July 2009 with the "local character test" included at cl 30A via amendments on the 20 May 2011. This clause states: "a consent authority must not consent to development to which this division applies unless it has taken into consideration whether the design of the development is compatible with the character of the local area."
2. The planning experts are satisfied that the amended development is compatible the character of the locality (Exhibit 2). I accept their evidence.
3. There is no contention that the proposal fails to comply with the mandatory standards set out in cl 30(1) of the SEPP ARH, which are a precondition to consent.
4. Canterbury Local Environmental Plan 2012 ('LEP 2012') applies to the site. Pursuant to LEP 2012 the site is zoned R4 High Density Residential.
5. The proposal is defined as a 'boarding house' and is permissible, with consent, in the zone.
6. The development on the subject site is subject to the requirements of the Canterbury Development Control Plan 2012 Amendment 3 ('DCP 2012'). The clauses of DCP 2012 relevant to the appeal are: 1. Part 2 - Residential Neighbourhoods: Clause 2.1.1 Avoid isolating undeveloped sites Objectives O1. Land adjoining a development site is not left sterilised or isolated so that it is incapable of being reasonably developed under the applicable controls. 02. To encourage the development of existing isolated sites in a manner that responds to the sites, context and constraints and maintains high levels of amenity for future occupants and neighbours. Controls i. Do not isolate a neighbouring property so that it will be unable to reasonably accommodate redevelopment: • Isolation occurs where a property that adjoins a development site would be narrower or smaller than required and consequently would be incapable of accommodating the form of redevelopment envisaged by the Planning Controls. • In order to avoid the isolation of property, undertake negotiations with neighbouring owners to seek amalgamation and enable coordinated redevelopment, • If neighbouring landowners do not agree on terms for amalgamation, provide evidence of reasonable offers, including at least two recent independent valuations. ii. If the amalgamation of adjoining properties can't be achieved demonstrate that the remaining property has reasonable potential for redevelopment by means of a schematic design that demonstrates a building envelope and general room arrangement that comply with the currently-applicable planning controls.

Public submissions

1. The assessment of the original development application involved public notification to the surrounding neighbourhood in accordance with the Canterbury Development Control Plan 2012 (DCP 2012). These submissions are summarised as follows: 1. the development proposed is not in scale with the surrounding buildings and is out of character with the area; 2. the development will result in a loss of privacy to the rear yard and dwelling at 3 Edna Street; 3. the adjoining properties will have a reduced outlook to the sky and vegetation as a result of the development; 4. concerned that the development will result in a loss of solar access to the adjoining property; 5. increased noise and traffic; 6. a reduction in parking availability in the street, noting that on-street parking in Cornelia Street is already constrained; 7. potential for the development to be sublet, increasing the density and impacts arising from the development; 8. potential for poor behaviour or social issues arising from the itinerant nature of the occupants of the proposed boarding house; and 9. concern the application will have a detrimental impact on property values.

Expert Evidence

1. The applicant relied on the expert planning evidence of Mr Neil Kennan, and Council relied on the expert evidence of Ms Kerry Gordon.

Should the amended plans be renotified?

1. It was the agreed evidence of the planning experts that the proposed development falls within the requirements for notification in DCP 2012. The application was notified by the Council following the lodgement of the application. The planning experts note that there is no specified requirement for the re-notification of amended plans.
2. It was the evidence of Ms Gordon that the change in the building form to a single building would have a reduced impact to the rear properties, due to the increase setback of the proposed development. It was her evidence that the changed fenestration details on the side elevations would warrant the notification of the adjoining owners at 47 and 43 Cornelia Street.
3. It was Ms Gordon's opinion that a wider notification was not warranted on the grounds that the wider community concerns regarding traffic, parking and the use generally would not be affected by the amended plans.
4. Ms Gordon's evidence was agreed by Mr Kennan.
5. Following consideration of the evidence and the submissions of the parties the following orders were made by the Court on 16 October 2017: 1. The Respondent is to send copies of the amended plans (contained in Exhibit 1) to number 47 and 43 Cornelia Street for their comment for a period of seven days; 2. The responded is to forward to the Court and the applicants instructing solicitor a copy of any submissions received by 30 October 2017 so they can be considered in the assessment of the application.
6. Consistent with these Orders the Respondent sent the amended plans to 47 and 43 Cornelia Street by express post on 20 October 2017. The notification period ended on 27 October 2017 and no further submissions were received.
7. In finalising the assessment of the application I have considered the oral submissions made to the Court and the submissions made in relation to the original application.

Relevant Court principles on site amalgamation and isolation

1. The Court has developed planning principles in a number of areas to assist in making consistent planning decisions. Importantly, planning principles are not legally binding and they do not prevail over councils' plans and policies (http://www.lec.justice.nsw.gov.au/).
2. The adopted planning principle of the Court when a site is to be isolated through redevelopment is Karavellas v Sutherland Shire Council [2004] NSWLEC 251 ('Karavellas v Sutherland Shire Council') at [17]-[19] as follows: "17 The general questions to be answered when dealing with amalgamation of sites or when a site is to be isolated through redevelopment are:· Firstly, is amalgamation of the sites feasible? · Secondly, can orderly and economic use and development of the separate sites be achieved if amalgamation is not feasible? 18 The principles to be applied in determining the answer to the first question are set out by Brown C in Melissa Grech v Auburn Council [2004] NSWLEC 40. The Commissioner said: Firstly, where a property will be isolated by a proposed development and that property cannot satisfy the minimum lot requirements then negotiations between the owners of the properties should commence at an early stage and prior to the lodgement of the development application. Secondly, and where no satisfactory result is achieved from the negotiations, the development application should include details of the negotiations between the owners of the properties. These details should include offers to the owner of the isolated property. A reasonable offer, for the purposes of determining the development application and addressing the planning implications of an isolated lot, is to be based on at least one recent independent valuation and may include other reasonable expenses likely to be incurred by the owner of the isolated property in the sale of the property. Thirdly, the level of negotiation and any offers made for the isolated site are matters that can be given weight in the consideration of the development application. The amount of weight will depend on the level of negotiation, whether any offers are deemed reasonable or unreasonable, any relevant planning requirements and the provisions of s 79C of the Environmental Planning and Assessment Act 1979. 19 In the decision Cornerstone Property Group Pty Ltd v Warringah Council [2004] NSWLEC 189, I extended the principles of Brown C to deal with the second question and stated that: The key principle is whether both sites can achieve a development that is consistent with the planning controls. If variations to the planning controls would be required, such as non compliance with a minimum allotment size, will both sites be able to achieve a development of appropriate urban form and with acceptable level of amenity. To assist in this assessment, an envelope for the isolated site may be prepared which indicates height, setbacks, resultant site coverage (both building and basement). This should be schematic but of sufficient detail to understand the relationship between the subject application and the isolated site and the likely impacts the developments will have on each other, particularly solar access and privacy impacts for residential development and the traffic impacts of separate driveways if the development is on a main road. The subject application may need to be amended, such as by a further setback than the minimum in the planning controls, or the development potential of both sites reduced to enable reasonable development of the isolated site to occur while maintaining the amenity of both developments."
3. Importantly in these proceedings, Council's DCP also has specific controls and objectives regarding site isolation. The DCP provisions are a mandatory consideration, and a focal point, of the assessment of the application. However Section 79C(3A) of the Act mandates a flexible application of the controls where the alternative solution is capable of meeting the required standards (Trinvass Pty Ltd v Council of the City of Sydney [2015] NSWLEC 151).

Can orderly and economic use and development of 43 Cornelia Street be achieved?

1. The agree evidence of the planning experts is: "It is agreed that if No. 43 Cornelia Street is isolated by the proposed development there is some development potential for No.43 Cornelia, however, it is unlikely that it could be development for a residential flat building as it would not be able to meet the requirements of the Apartment Design Guide. It is likely that the highest form of development possible on No.43 Cornelia would be development for a boarding house similar to that which is proposed in the amended development for No.45 Cornelia Street." (Exhibit 2)
2. The oral evidence of the planners concluded that the schematic design for No. 43 Cornelia Street lodged by the applicant (Exhibit D) should be amended to a single building form. It was the evidence of Ms Gordon that such a building form would have the capacity to meet the Council's DCP controls. It was her evidence that the extent and design of the third floor of the development would need to be modelled to ensure that the adjoining flat building maintained adequate solar amenity. This evidence was agreed by Mr Kennan.
3. In submissions, Mr Zoppo accepted, on the evidence of the planners, that it had been demonstrated No. 43 Cornelia Street could achieve orderly and economic use (boarding house) as an independent lot.

Is the amalgamation of the sites feasible? Negotiations with adjoining neighbours.

1. The applicant relies on two affidavits by Mr Andrew Bova, an agent of the applicant, to establish the scope and timing of the negotiations with the adjoining neighbours. Mr Bova was also called to give evidence in the proceedings.
2. The Court heard lay evidence from Mr Ali Minkara, the son of the landowners at No. 43 Cornelia Street, in relation to his involvement in the negotiations on his parent's behalf.
3. Based on the evidence before the Court the negotiations that occurred can be summarised as follows:

• In May 2016, following the purchase of No. 41 Cornelia Street, Mr Bova directed the selling agent for that property to "approach the owners of 43 Cornelia Street, Wiley Park, for the purchase of that property" (Exhibit E);
• Following the selling agent's approach to Mr and Mrs Minkara, Mr Bova was informed by the agent that they were not interested in selling their property (Exhibit E);
• The architects were engaged by the applicant to prepare the development application plans for the subject site and the resulting development application was lodged with Council on 7 October 2016 (Exhibit E);
• Following a primary assessment of the development application Council wrote to the applicant on 23 January 2017 identifying a number of issues to be addressed to allow the assessment of the application to be completed. Issue one in that letter identifies that the application needs to address the issue of site isolation and in particular cl 2.1.1(i) of DCP 2012 and the planning principle in Melissa Grech v Auburn Council [2004] NSWLEC 40 (Exhibit E);
• Following receipt of the above letter Mr Bova engaged two valuers to prepare "an independent valuation of the adjoining property" (43 Cornelia Street) (Exhibit E);
• the valuation reports valued 43 Cornelia Street as follows: "Valuation of Elie Rouhana: Market Valuation Range: $950,000 - $1,050,000 (Exhibit K) Valuation of Mr Andrew Kazzi: Interest valued: Fee simple, vacant possession Market Value: $1,100,00" (Exhibit K)
• Following receipt of the two valuation reports Mr Bova attended 43 Cornelia Street, and made an offer to Mr and Ms Minkara of a purchase price of $1,200,000. In addition to that purchase price the applicant's offer included the funding of legal fees associated with the property transfer and the costs of the Minkara family obtaining their own valuation (Exhibit F);
• Further offers and correspondence occurred between Mr Bova and Mr Ali Minkara (on behalf of his parents) over the following months. In February 2017 Mr Minkara confirmed by email to Mr Bova that his parents had not agreed to the final offer of $1,350,000 with a delayed settlement of 15 months (Exhibit E).

Submissions

1. Mr Zoppo submits that the offers made by the Applicant to the owners of 43 Cornelia Street are not reasonable. He argues this on two grounds, firstly the timing of the offers and secondly the basis on which the valuations were derived.
2. Mr Zoppo submits that the applicants approach to the owner of No. 43 Cornelia Street on purchasing their site at 41 Cornelia Street did not constitute "negotiation" as envisaged by DCP 2012 or the planning principle. Further, he argues that the second approach did not occur until the requirement to address site isolation was raised by Council in January 2017.
3. It is his submission that the applicant has not met the requirement for negotiations between the owners of the properties to commence at an early stage and prior to the lodgement of the development application (Melissa Grech v Auburn Council [2004] NSWLEC 40).
4. Secondly Mr Zoppo submits that the valuations tendered by the applicant are based the purchase of No. 43 Cornelia Street as a residence, not as a development site. He argues that the valuations and the offers that followed were not reasonable in the circumstances as they do not consider the uplift in value derived from its potential redevelopment. In addition he argues that the delayed settlement incorporated in the final offer was unacceptable as it created a risk to the owners of No. 43 Cornelia Street in replacing their property in a rising Sydney market.
5. In the alternative it is Ms Duggan's submission that the applicant has met the objectives and controls relevant to site isolation in DCP 2012. Specifically she argues that the applicant has met objective 01 and control (ii) of cl 2.1.1 by demonstrating that No. 43 Cornelia Street can be reasonably developed under the DCP controls.
6. It is Ms Duggan's submission that the applicant has undertaken and provided evidence of negotiations with the neighbouring owners to seek amalgamation, as required by control (i) of cl 2.1.1. She argues that as the applicant has obtained two independent valuations. Given this it is Ms Duggan's submission that the applicant has satisfied the requirements of DCP 2012.
7. Further, to the extent the planning principle in Karavellas v Sutherland Shire Council applies, it is Ms Duggan's submission that: 1. The applicant approached the adjoining owner prior to the lodgement of the development application; 2. details of the negotiations have been provided to the Court in the affidavits contained in Exhibit E and F; 3. Two independent valuations have been provided; 4. the applicants offers to purchase were at least 14% above the market value of the property and included the costs of the legal and transfer fees; 5. The applicant attempted to accommodate the Minkara family by providing a range of offers with a variability in the purchase price dependant on the timing of settlement; and 6. The applicant has demonstrated a willingness to engage with the adjoining owners to seek amalgamation of the sites.
8. On the basis of the above it is Ms Duggan's submission that the requirements of DCP 2012 and the planning principle have be met by the applicant.

Findings

1. I am not persuaded by the submission of Mr Zoppo that the valuations obtained by the applicant do not represent the value of the property as a development site. By reference to Exhibit K I find that the valuations clearly note the property at 43 Cornelia Street is zoned as R4 High Density Residential. The comparable properties utilised in the valuation reports are similarly zoned, and in one case (78 Colin Street Lakemba) are approved for redevelopment. I am satisfied that the valuations tendered meet the requirements of DCP 2012.
2. On the basis of the evidence and submission I am satisfied that the applicant has met the requirements of cl 2.1.1 of DCP 2012 as follows: 1. It is the agreed evidence of the planners that the adjoining site is not left sterilised or isolated so that it is incapable of being reasonably developed under the applicable controls (Objective 01, Control I ); 2. the applicant has undertaken negotiations with the adjoining owners to seek amalgamation and enable coordinated redevelopment (Control i); 3. the applicant has provided evidence of reasonable offers being made to the adjoining owners and provided two recent independent valuations. 4. In considering the reasonableness of the offers made, I am satisfied that the offers were informed by two independent valuations that utilised representative sales evidence, they were provided in a timely manner and that the Minkara's were provided a reasonable time period in which to respond to those offers. Consistent with Karavellas v Sutherland Shire Council at [20] it is "not the role of the Court to enter into negotiations on a final purchase price but rather be satisfied that a reasonable offer has been made." 5. Finally based on the agreed evidence of the planners the applicant has demonstrated that the isolated property has reasonable potential for redevelopment by means of a schematic design that demonstrates a building envelope and general room arrangement that comply with the currently-applicable planning controls.
3. To the extent that the planning principle in Karavellas v Sutherland Shire Council assists in determining this application, I am satisfied that the proposed development is consistent with the criteria outlined by paragraph [25].
4. In terms of the issues raised by the public in submissions, it is common for boarding houses in low density residential areas to be opposed by a significant number of neighbours. The SEPP ARH however, encourages their development in such areas to provide an alternative form of housing subject to the development not being compatible with its context and the amenity impacts being acceptable. In this matter the experts are agreed that the compatibility test is met and that there are no unreasonable amenity impacts that arise from the development.
5. During the joint conferencing process the application was amended to minimise to an acceptable degree any adverse amenity impacts in terms of overlooking and overshadowing that the development may have otherwise caused to adjoining owners.
6. Whilst the potential impact on property values was raised by residents there is no evidence before the Court to suggest that the use would devalue properties in the vicinity of the subject site.
7. Traffic and parking are deemed to be satisfactory given compliance with the parking provision of the SEPP ARH. There are no safety or capacity issues raised by the Council. As the parking complies with SEPP ARH requirements, the amount of parking provided cannot be a ground for refusal.
8. I am satisfied that the conditions of consent include appropriate controls on noise and the ongoing management of the boarding house.
9. I have reviewed the evidence provided by experts to support the resolution of the contentions now agreed. I am satisfied that the experts have appropriately considered the issues raised by the contentions, the public, and the appropriate planning controls, and I accept their conclusions.
10. In considering the agreed conditions, the amendments made to the application and taking into consideration the issues raised by the objectors, I am satisfied that it is appropriate to grant consent to the proposal.

Orders

1. The orders of the Court are: 1. The appeal is upheld; 2. Consent is granted to Development Application No. 464/2016 for demolition of onsite structures and the construction of a three storey boarding house at Lot 52, DP 7298, 45 Cornelia Street Wiley Park, subject to conditions in Annexure A; 3. The exhibits are returned with the exception of Exhibit 1, A and C. ……………. D M Dickson Commissioner of the Court Annexure A (C) (1.03 MB, pdf) Annexure B (Plans) (19.3 MB, pdf)

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DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 November 2017