A.P.T. PEDDLE THORP & WALKER PTY LIMITED v. SYDNEY CITY COUNCIL No. 10359 of 1997 [1997] NSWLEC 186 (4 December 1997 [1997] NSWLEC 2

Following the filing of the appeal against the Respondent's deemed refusal the Respondent (the Council), in exercise of the power conferred upon it by s96(2) of the EP&A Act, on 11 September 1997 determined the development application by refusing consent for the following reasons:- "(A) The proposed development would diminish the heritage significance of Transport House which is a heritage item identified in Schedule 1 of Central Sydney local Environmental Plan 1992 both internally and externally and would therefore be contrary to Central Sydney Local Environmental Plan 1992; (B) The proposed development would diminish the heritage significance of Macquarie Street, between Queen's Square and the Cahill Expressway, which is a heritage streetscape item identified in Schedule 3 of Central Sydney Local Environmental Plan 1992 and would therefore be contrary to Central Sydney Local Environmental Plan 1992; (C) The proposed development would diminish the heritage significance of Transport House and Macquarie Street and the quality of the Macquarie Street and Circular Quay Special Ares and would therefore be contrary to clause 12 (g), (i) and (n) of Central Sydney LEP 1996 (D) The proposed development would have an unacceptable impact on heritage items in the vicinity of the site, namely the Justice and Police Museum, The Royal Automobile Club and the Ritz Carlton; (E) The height of the proposed redevelopment is unacceptable in terms of its impact on the significance of Transport House and its impact on the scale of the surrounding streetscape."

The determination was made by the Central Sydney Planning Committee (the Committee) constituted by the City of Sydney Act 1988 because the proposed development is "major development" within the meaning of s31 of the Act (the estimated value of the proposal being $61.5 million) in respect of which, the Committee exercises the functions of under Part 3 of the EP&A Act "to the exclusion of the City Council": vide s40(1) of the Act. In so determining, the Committee adopted the recommendation of the Council's planning officers.

The Committee (which I shall hereafter refer to as 'the Council') had, on 26 June 1997 similarly determined an earlier development application proposed for the appeal site. The present proposal is a revision of the original proposal, designed to eliminate the shadow impact on the Botanic Gardens that would have been created by the original development proposal.

The reasons for the Council's determination are essentially the same as the issues raised by the Council on the hearing of the appeal (which had been filed in the proceedings before the Council's determination). In hearing the proceedings I have had the benefit of the assistance of Assessor Watts provided pursuant to s37(1) of the Land and Environment Court Act 1979.

The course of the hearing was somewhat unusual in as much as the Court received into evidence a multitude of expert reports prepared on behalf of the parties without the authors being required for cross examination (save for Ms Luczak the Area Planning Manager of the Council who had been responsible for preparing the reports to the Council on the Applicant's original and revised development applications) and the Court undertook a very extensive view of Transport House (externally and internally) and its environs, including Macquarie Street, Phillip Street, Bridge Street, Albert Street and the Botanic Gardens.

B. The Planning Controls Applicable to the Appeal Site

The appeal site is included in the City Centre Zone in terms of Central Sydney Local Environmental Plan 1996 (the LEP) which applies to "Central Sydney" being generally the land bounded by Sydney Cove in the north, Prince Alfred Park in the south, the Domain in the east and Darling Harbour in the west. The City Centre Zone is the dominant zone of land within Central Sydney.

The LEP repealed all prior local environmental plans except for Central Sydney Local Environmental Plan 1992 - Conservation of Heritage Items (the Heritage LEP) the operation of which is "not affected" by the LEP (vide cl 8(3) of the LEP).

Included in the express aims (cl 11) and objectives (cl 12) of the LEP are the following objectives: "(g) the protection of Special Areas of Central Sydney"; and "(n) the conservation of heritage items and areas."

There are 3 "Special Areas" designated on the Special Areas Map of the LEP which are geographically close to the appeal site, namely Area F (Circular Quay), Area G (Bridge Street/Macquarie Place) and Area H (Macquarie Street). The LEP defines "Heritage building" as a building with floor space area that is listed in Schedule 1 to the Heritage LEP . Transport House is so listed.

Clause 19(1) of the LEP permits development for any purpose within the City Centre Zone, but only with development consent and cl 15 requires the consent authority in considering a development application to have regard to the objectives of the zone. The objectives for the City Centre Zone are expressed in cl 18 of the LEP and include the following liberal and expansive objectives: "(a) to encourage Central Sydney's role and growth as one of the Asia-Pacific region's principal centres for finance, commerce, retailing, tourism, cultural activities, entertainment and government, (b) to permit a diversity of uses which reinforce the multi-use character of Central Sydney."

However other objectives include the following: "(h) to recognise and enhance the character of Special Areas, (i) to facilitate the conservation of items and areas of heritage significance."

Part 4 of the LEP contains controls on the height of proposed buildings and Part 5 of the LEP contains controls on the floor space ratios of proposed buildings. In each case the respective controls expressly declare that "the achievement" of the relevantly prescribed height of floor space ratio is "subject to compliance with" inter alia the Heritage LEP: vide cl 32(1) and cl 35(1) of the LEP.

It is common ground in the present appeal that apart from the application of the Heritage LEP, the proposed development complies with (i) the permissible purposes of development prescribed by Part 3 of the LEP, (ii) the height controls prescribed by Part 4 of the LEP and (iii) the floor space ratio controls prescribed by Part 5 of the LEP.

Accordingly the only issue concerning the relevant planning controls that is in dispute concerns the application of the Heritage LEP to the Applicant's development proposal.

The Heritage LEP which came into force on 3 April 1992 designates (i) in Schedule 1 buildings and works that comprise heritage items, (ii) in Schedule 2 elements of buildings that comprise heritage items; (iii) in Schedule 3 lands (ie lanes or streets) that comprise heritage items and (iv) in Schedule 4 places (eg lanes, streets, trees) that comprise heritage items. Clause 5 contains definitions which include the following: " "heritage item" means a building, part of a building, work, relic, place archaeological site, streetscape, tree or landscape or townscape item which is of heritage significance to the City of Sydney and which is described in a Schedule to this plan.

"heritage significance" means historic, scientific, cultural, social, archaeological, architectural, natural or aesthetic significance."

Schedule 1 comprises approximately 400 buildings including "Transport House".

Schedule 3 comprises some 50 "heritage streetscapes" including Macquarie Street (from Queens Square to Cahill Expressway) and Bridge Street South (George to Macquarie Streets).

Clause 7 of the Heritage LEP imposes relevant controls on the "demolition" or "alteration" of a heritage item (both terms are defined by cl 5) and the erection of a building on land on which a heritage item is situated, the principal control being that such activities must not be undertaken except with the consent of the Council: cl 7(1) and (2). Allied or auxiliary controls are imposed by subclauses (3), (4), (5), (6) and (7) which provide as follows: "(3) The Council shall not grant consent to a development application required by subclause (1) or (2) unless it has taken into consideration the extent to which the carrying out of the proposed development would affect the heritage significance of the heritage item or heritage streetscape to its setting and to the City of Sydney. (4) The Council shall require that a conservation plan or a statement of heritage impact accompany a development application required by subclause (1) or (2) to enable the Council to fully consider the heritage significance of the heritage item or heritage streetscape and the impact of the proposed development on the heritage significance of the heritage item or heritage streetscape. (5) The Council shall not grant consent to a development application required by subclause (1)(a) or (2)(a) until 28 days after the Council has notified the Secretary of the Heritage Council of the receipt by the Council of the development and it has taken into consideration any views of the Heritage Council submitted to it during that period. (6) Subject to subclause (7), the Council may grant consent to a development application required by subclause (1)(a) or (c) which would result in the partial demolition of a building containing a heritage item only if it has taken into consideration the heritage significance of the whole of that heritage item and is satisfied that the development proposed:- (a) minimises disturbance to the significant fabric of the original heritage item; and (b) ensures that the architectural integrity and three dimensional appearance of such part of the heritage item as is to be retained is maintained. (7) The Council may consent to a development application required by subclause (1)(a) which would result in the total or substantial demolition of a heritage item only if the Council is satisfied that the heritage item cannot be preserved without rendering the site on which it is located incapable of reasonable or economic use."

In the present case the Applicant's development proposal falls within cll 7(1)(a), 7(1)(b) and 7(1)(d) - (it being noted that "demolish" is defined to include partial demolition). The Applicant's development application was accompanied by a "conservation plan" and a "statement of heritage impact statement", (in each case prepared by Mr John Graham) in accordance with cl 7(4) .

Clause 5 of the Heritage LEP includes definitions of these terms as follows: "conservation plan" means a document establishing the significance of a heritage item or heritage streetscape and the policies which would be appropriate to enable that significance to be retained in the future use and development of the item or streetscape; "statement of heritage impact" means a document which contains an assessment of the extent to which a development proposal may affect the heritage significance of a heritage item or heritage streetscape."

In accordance with cl 7(5) of the Heritage LEP, the Council notified the Heritage Council of NSW of the Applicant's development application and received, and took into consideration, the views of the Heritage Council. As will be seen, the Heritage Council opposed the tower component of the development proposal which comprises some 22 floors on top of Transport House in the Phillip Street sector (with necessary penetrations for foundations and support) approximating the height and half the width of the existing Inter-Continental Hotel tower.

In addition to the foregoing LEPs the proposed development is controlled by the provisions of Central Sydney Development Control Plan 1996 (the DCP). Section 2.9 of the DCP is entitled "Extensions to heritage items" and enunciates the relevant "strategy", "objective" and "provisions".

The "strategy" includes the following statement: "Heritage items are usually best conserved in their entirety (see figure 2.42). Refurbishment, extensions and new development adjoining a heritage item should be designed to respect and complement its style, form, proportions, materials and colours. In a few cases and subject to a Conservation plan, new development may incorporate a heritage item. In this situation, a substantial setback to the new development will be required. This setback should be sufficient to enable the heritage item to appear complete as a separate building, not a facade, when viewed from the street."

The "provisions" include the following prescriptions for the "style and height of extensions": "2.9.2 Where, in the opinion of the consent authority, and where a Conservation Plan indicates that the building is of such heritage significance as to warrant its retention in its current form, no extensions will be permitted. 2.9.3 Where, in the opinion of the consent authority, upper extensions are possible to a heritage item, such extensions are to be designed with sensitivity to the heritage qualities of the heritage item. 2.9.4 Where a Conservation Plan indicates that an upper extension to a heritage item should only be undertaken without a setback, the upper extension is to be designed and detailed in the traditional manner by replicating the design and detailing of the heritage building so that the addition appears as a 'seamless' extension to the original building. The height of upper extensions is to be determined by the consent authority having regard to a Conservation Plan. 2.9.5 Where a Conservation Plan indicates that upper extensions to a heritage item should only be undertaken with a setback, the setback is to be a minimum of 10 metres. A greater setback may be required in accordance with the Conservation Plan (see also Sections 2.2 and 2.3)."

It follows (and this was common ground between the parties) from the foregoing summary of the applicable planning controls, that the Applicant's development proposal may be permitted by the grant of development consent and that in determining the development application the Council (and on appeal, this Court) must have regard to relevant matters under s90(1) of the EP&A Act including the relevant provisions of the LEP and the Heritage LEP and the DCP ( s90(1)(a)(i) and (iv) ).

But in so concluding, it is necessary to further examine the relationship of the LEP and the Heritage LEP in their respective applications to the Applicant's development proposal.

Although it is clear that both planning instruments apply in the present case, I am concerned here to ascertain the precise relationship between instruments in their joint application. The first matter to note is that the LEP (though the later instrument) is expressed to "not affect" the Heritage LEP (cl 8(3) of the LEP). Secondly it is to be noted that one of the express objectives of the LEP is "the conservation of heritage items and areas" so defined by the Heritage LEP (cl 12(n) of the LEP). Thirdly it is to be noted that two of the principal controls imposed by the LEP, namely building height control (Part 4) and floor space ratio control (Part 5) expressly predicate the achievement by a proposed building of the prescribed height and floor space ratio limits "to compliance with" the Heritage LEP.

The combined effect of all these express features of the LEP is that the Heritage LEP, in its field of operation, exerts paramountcy over the LEP. That field of operation (as provided by cl 2 of the Heritage LEP) is "the conservation of heritage items" by: " (a) integrating heritage conservation into the planning and development control process … (b) ensuring that the consideration of matters affecting heritage items is undertaken by the Council in the fullest possible knowledge of the significance of those items, and (c) ensuring that, in the future, development is undertaken in a manner that is sympathetic to and does not detract from the heritage significance of heritage items, and the distinctive character they impart to Central Sydney."

As I have previously noted the principal means employed by the Heritage LEP for achieving these express aims and objectives is cl 7 which imposes the requirement for consent to be obtained for (i) the demolition or alteration of a heritage item and (ii) the erection of a building or land upon which a heritage item is situated ( subclause (1) ) and imposes controls or restrictions on the power of the Council to grant the requisite consent ( subclauses (3), (4), (5), (6) and (7) ).

In further appreciation of the interrelationship between the LEP and the Heritage LEP in their joint application to the Applicant's development proposal the following proposition may be deduced:

The LEP enables the Council to grant development consent to the proposed development but the Heritage LEP limits or circumscribes the Council's power to grant that consent by requiring the Council: (a) to take into consideration the extent to which the carrying out of the proposed development would affect the heritage significance of the heritage item (comprising Transport House) or the heritage streetscape (comprising Macquarie Street); (b) to require the submission of a conservation plan and statement of heritage impact to fully consider the heritage significance of the heritage item and the impact of the proposed development on the significance of that item; (c) to notify the Heritage Council of the development application and to take into consideration any views of the Heritage Council submitted to the Council; and (d) to only grant consent to a development application which would result in the partial demolition of a heritage item if it has considered the significance of the whole of that item and is satisfied that the proposed development minimises disturbance to the significant feature of the heritage item and ensures that architectural integrity and three dimensional appearance of the retained part of the heritage item is maintained .

The reference to the grant of consent in both the LEP and the Heritage LEP is, of course, a reference to "development consent" under the EP&A Act : vide s4(1), s77(2) and s91 , ("development" having the expanded meaning ascribed by s75 of the EP&A Act in relation to those controls of the Heritage LEP imposed on the demolition of Transport House).

It is to be at once noted that the appeal has been conducted on the footing that all of the procedural requirements of the Heritage LEP have been satisfied in the present case and that the decision on the appeal depends entirely upon the exercise by the Court of the discretionary planning judgment required by s90 of the EP&A Act to be made in the respect of the Applicant's development application.

In contending for a refusal of development consent the Council has not contended that in terms of cl 7(6) of the Heritage LEP the Court cannot, as a matter of law, be satisfied of the requisite matters enunciated in that statutory provision. (This is in keeping with the Council's determination of the development application on the merits.) Rather the Council's case is that in the exercise of discretionary planning judgment the Court will, as a matter of merit, refuse development consent for the principal reason, in terms of cl 2(c) of the Heritage LEP, that the proposed development is not sympathetic to and does detract from the heritage significance of (i) Transport House, a heritage item, and (ii) the Macquarie Street streetscape heritage item.

Again it is to be noted that the Council's case focuses exclusive attention on the impact of the proposed development on the relevant heritage items. This feature of the Council's case (which again reflects the Council's determination) was criticised by the Applicant as being too narrowly confined and failing to have regard to other relevant matters in terms of s90 of the EP&A Act including the statutory planning controls and objectives advanced by the LEP (especially those objectives promoting the City's national and international standing, including the provision of high standard tourist and visitor accommodation).

It is true that cl 4 of the LEP requires the Council, in considering any development proposal, to have regard to the aims and objectives expressed in the Plan, and that the Court in determining the present appeal must likewise have regard to the express aims and objectives of the LEP, but as I have earlier noted those aims and objectives are diverse and potentially conflicting in a given case.

Moreover I take the Council, both in its determination and in its presentation of its case, in focussing upon the impact of the proposal on heritage items, to be merely demonstrating the transcending weight or emphasis that it places on the heritage impact of the proposed development, over any other legitimate consideration. In so proceeding the Council does not contest the Applicant's case based upon the perceived need by the Inter-Continental Hotel to provide additional hotel accommodation and facilities in order to maintain its five star ranking and the important tourist and commercial function performed by the maintenance and enhancement of such facilities in the City of Sydney especially having regard to community expectations of Sydney for the 2000 Olympics.

The competing case advanced by the Applicant is more comprehensive in scope in as much as it not only vigorously contests the Council's case concerning the proposal's impact on heritage items, but promotes the proposal as positively conserving important elements of Transport House and as satisfying important perceived needs for the Inter-Continental Hotel and for the City of Sydney in the provision of the highest standards of hotel accommodation.

Accordingly the competing cases require the determination of the following questions: (i) whether the proposed development is not sympathetic to, and detracts from, the heritage significance of heritage items (in particular Transport House and the Macquarie Street heritage streetscape); and (ii) if so, whether that impact requires refusal of development consent in the exercise of discretionary planning judgment or whether, having regard to other relevant considerations, that adverse impact is outweighed by those considerations to the extent that justifies the grant of development consent in the exercise of discretionary planning judgment.

As I have mentioned earlier, there was a wealth of expert evidence adduced going to this issue from eminent sources.

In support of the Council's case there were written reports from two consultant Heritage Architects, Ms Hill and Mr McDonald, two Heritage Architects on behalf of the Heritage Council of NSW, Mr Tanner and Mr Kelly, the Heritage Architect of the National Trust Mr Robertson, and the Council's Heritage Architect, Mr Romey.

On behalf of the Applicant there were written reports from two Heritage consultants Mr Graham and Dr Kerr.

In my judgment the most helpful manner to evaluate this evidence is to consider it by reference to the specific requirements of the Heritage LEP that I have earlier mentioned, which apply to the Court's determination in the same way they applied to the Council's determination.

These requirements are logically considered as follows: (i) the requirement for the development proposal to be accompanied by a heritage impact statement and a conservation plan: cl 7(4); (ii) the requirement to take into consideration the views of the Heritage Council of NSW: cl 7(5); (iii) the requirement to fully consider the heritage significance of the heritage item and to take into consideration the extent to which the proposed development would affect the heritage significance of the item: cl 7(3) and cl (4); and (iv) the requirement to be satisfied that the proposed development minimises disturbance to the significant fabric of the original heritage item and ensures that the architectural integrity and three dimensional appearance of the retained heritage item is maintained: cl 7(6).

I shall consider each of these requirements in turn.

(i) The Conservation Plan and the Statement of Heritage Impact

Mr Graham prepared the Conservation Plan and Statement of Heritage Impact in April 1997. According to the documents they are to be read together in the sense that the former document enunciates conservation policies for Transport House which were developed concurrently with the Applicant's development proposal "to adaptively reuse Transport House" in order "to guide the development and so ensure the retention of the cultural significance of the place": vide Section 6.1 of the Conservation Plan.

The Conservation Plan in Section 2 contains a brief description of the history and use of Transport House, since its construction in 1938; in Section 3 describes its existing heritage status; in Section 4 provides an assessment of the significance of Transport House; in Section 5 describes the proposed development and in Section 6 enunciates policies to guide the development so as to ensure retention of the cultural significance of the place as assessed in Section 4.

At this stage it is only necessary to note that in Section 4 the assessment of heritage significance is said to proceed according to the booklet "The Conservation Plan" (1996) by Dr Kerr and the assessment adopts graduated levels of significance, including: "A items of exceptional significance B items of considerable significance"

Section 4.2 includes the following statement: " Level A is reserved for items of exceptional significance which warrant inclusion on National Registers of significant buildings. Items on the threshold of this level include the facades and principal spaces within the building."

Both the Macquarie Street and Phillip Street facades of Transport House are assessed at level A, which according to Policy 4 (in Section 6.3) "should be preserved or restored".

The Statement of Heritage Impact contains the following commentary on the external effects of the proposed development: "The effect of the new work on the cultural significance of Macquarie Street is insignificant as the single storey vertical extension is set back from the line of the parapet and is in scale with the adjoining Ritz Carlton Hotel. According to the April 1938 edition of "Building" magazine, the building, at least structurally, was designed to accommodate such an extension. The tower is seen to be sited on Phillip Street and clearly belongs in scale to the late twentieth century buildings prevalent in the precinct. The new work respects the form of the existing tower of the Inter-Continental Hotel, however the detail is modified to reinforce the heroic "skyscraper modern" form of the facade of Transport House. The set-back of the tower from the northern boundary diminishes its visual impact on the adjacent Police Station and Courthouse when viewed from Circular Quay. Retention of the standard escalator within the building has the potential to reinvigorate this part of Phillip Street as it will enable easy access for patrons of the Exhibition Hall."

Mr Graham's Conservation Plan was criticised by the Heritage Council of NSW and by Mr McDonald.

At its meeting held on 31 July 1997 the Heritage Council resolved that the Conservation Plan "was an inadequate document to guide the conservation of the building". The resolution was based upon a number of concerns of the Heritage Council expressed by the Council, the crux of which, is that the Plan was "a mix of conservation plan and heritage impact statement" with the consequence that instead of conservation policies being enunciated in proportion to the assessment of heritage significance of the item, and any development proposal thereafter being evaluated in the light of those policies, the development proposal had in effect been evaluated in advance of the enunciation of relevant conservation policies. Moreover the Conservation Plan was deficient in not particularly evaluating the impact on Transport House and its heritage setting of the high tower component of the proposed development.

Mr McDonald's criticism of the Conservation Plan is to similar effect and extends to a criticism of the Statement of Heritage Impact.

Whereas I can readily appreciate the force of these weighty criticisms of the Conservation Plan and the Statement of Heritage Impact, in large measure I think that the grounds or cause for criticism are inevitable given the requirements of the Heritage LEP for a development application to be accompanied by a conservation plan and/or a statement of heritage impact. Firstly it is to be noted that the definition of both terms that I have earlier set out are integrally linked with a particular development proposal. This linkage is consolidated by cl 7(4) of the Heritage LEP.

It is this extrinsic linkage that necessarily distinguishes a conservation plan as required by the Heritage LEP from a conservation plan as that term has come to be understood as a term of art eg. as described in the booklet "The Conservation Plan" (1996) by Dr J S Kerr.

Almost as a matter of definition or presupposition, a conservation plan that is required by the Heritage LEP will contain policies that accommodate and promote the proposed development. In this sense it is difficult, if not impossible, for the result of the conservation plan and heritage impact statement to be other than an accommodation and promotion of the proposed development. However this consequence, in the result of such a conservation plan, does not necessarily justify the process whereby the enunciation of conservation policies is dictated or predetermined so as to accommodate the proposed development for such a process smacks of putting the cart before the horse! And it is this apparent reversal of due process that I would understand to be the crux of the criticism by the Heritage Council and Mr McDonald of the Conservation Plan in this case, and it is, in my judgment, a criticism of substance and not merely of form or semantics. In my opinion, a properly prepared conservation plan as required by the Heritage LEP is one that serves a similar function and effect to an environmental impact statement required under the EP&A Act in respect of a designated development in the sense that the particular development is justified environmentally.

In my opinion, an allied conceptual difficulty or confusion is encountered in Mr Graham's faithful employment in his Conservation Plan of key terms found in Dr Kerr's booklet "The Conservation Plan" which in turn adopts the same terms defined in the "Burra Charter". Those terms such as "conservation", "maintenance", "preservation", "restoration", "reconstruction", "adaptation" and "compatible use" are obviously appropriate and apt terms in the enunciation of conservation policies for recognised heritage items, but are singularly inapt to notions of the redevelopment of places containing heritage items. In my judgment the high rise tower component of the Applicant's development proposal is not embraced by the conventional terminology employed by the Burra Charter and Dr Kerr's "the Conservation Plan" which terminology is wholly adopted by Mr Graham in his Conservation Plan. In particular I am quite unable to adopt the proposition (inherent in Mr Graham's description of the proposed development as the adaptive re-use of Transport House) that the addition of a twenty-two storey tower to the existing component of Transport House at the Phillip Street sector of the appeal site, qualifies as an "adaptation" (defined as "modifying a place to suit proposed compatible uses") of the heritage item.

But again, in fairness to Mr Graham's Conservation Plan the difficulty I have exposed is almost the inevitable outcome of any application of conventional conservation policies and terms to justify what must be regarded as a development proposal involving a major redevelopment of the place constituted by Transport House.

In truth I would consider the Conservation Plan to be a conventional conservation plan only so far as concerns the retention and adaptive reuse of Transport House but not so far as concerns the tower component of the development proposal, which is incapable of constituting "the conservation" of the heritage item, both as a matter of fact and as a matter of law.

However even if I were to wholly adopt these criticisms it does not mean that in this case there has been no compliance with cl 7(4) of the Heritage LEP. This is because cl 7(4) most importantly assigns to the Council, and not the author of the Conservation Plan or statement of heritage impact, the ultimate responsibility of determining the impact of the proposed development on the heritage significance of the heritage item or heritage streetscape.

In the circumstances I find that the Conservation Plan and statement of heritage impact which accompanied the Applicant's development application complied with the requirements of cl 7(4) of the Heritage LEP but that the two documents are vulnerable to the criticisms that I have referred to, in as much a they appear to reverse the normal process of conservation policies being first enunciated in response to the assessment of heritage significance and thereafter the development proposal being evaluated by reference to the enunciated policies.

However, notwithstanding the inadequacies in the documentation, the ultimate decision on the impact of the development proposal on heritage significance is a matter for the Council (and on appeal this Court) and not for the author of the documents. (ii) The views of the Heritage Council of NSW submitted pursuant to cl 7(5) of the Heritage LEP.

By letter dated 22 July 1997 the Heritage Council advised the Council that at its meeting on 8 May 1997 the Heritage Council after considering the Applicant's development application resolved as follows: "1. Transport House is an item of heritage significance to the State, and an integral part of the Macquarie Street heritage precinct which is of significance to the State; 2. it welcomes the adaptive reuse of Transport House and is willing to assist the developer in exploring alternative schemes to the ones so far proceed; 3. any adaptation of a heritage item should not diminish the significance of the item; 4. adaptation of Transport House, involving minor alterations and additions is acceptable, and the Heritage Council believes Transport House could be modestly enlarged with the addition of two or three levels on the condition that they are of sympathetic design; and 5. the addition of multiple storeys to Transport House is unacceptable as it would diminish the significance of the item and the surrounding heritage precinct."

The Heritage Council's views were considered by the Council at its meeting of 11 September 1997 together with written advice received from the Council's Heritage Architect, Mr Romey. Those matters were collected and summarised by the Council's Area Planning Manager in her detailed written report on the Applicant's development application, with particular reference to the impact of the proposal on (i) the external form and scale of Transport House; (ii) the significant interior spaces, details and finishes of Transport House and (iii) adjacent heritage items, and in particular upon the adjoining heritage buildings comprising the former Phillip Street Police Station and Law Courts. The conclusion expressed was that: "the proposal is nevertheless unacceptable as it is considered that the construction of a major tower form on such a significant heritage item will seriously prejudice both the heritage significance of Transport House itself and upon its context"

Clause 7(5) of the Heritage LEP requires the Council (and hence, on appeal, this Court) to take into consideration the views of the Heritage Council.

In addition to those views the Court has the benefit of the expanded submission (exhibit H) made on behalf of the Heritage Council by Mr Howard Tanner, the Deputy Chair of the Heritage Council, assisted by Mr Kelly, the Senior Specialist employed by the Heritage Office.

In passing I should note that somewhat anomalously cl 7(5) of the Heritage LEP only requires the Council to notify the Heritage Council of a development application which involves the demolition (in whole or in part) of a heritage item or building on a heritage streetscape.

Although the Applicant's development application involves partial demolition of elements of Transport House (not affecting the Macquarie Street and Phillip Street facades), but for that fact, the Heritage Council's views which focus particular concern on the tower redevelopment component of the development proposal would not have been required to be taken into account in terms of cl 7(5) of the LEP.

It would appear desirable for consideration to be given by the Council to broadening the scope of cl 7(5) to include all development applications required by cl 7(1) and cl (2) of the Heritage LEP, or at the very least a development application required by cl 7(1)(d) to be notified to the Heritage Council.

(iii) The affectation or impact of the proposed development on the heritage significance of Transport House and the Macquarie Street heritage streetscape.

Consideration of these matters is required by cl 7(3) and (4) of the Heritage LEP. The range of affectation or impact ranges from nil to slight at one end of the spectrum of possibility or probability, to major or radical at the opposite end of the spectrum. Even where the impact is assessed as major or radical it nonetheless remains legally possible for development consent to be granted subject to the Council being satisfied of the matters stipulated in subclauses (6) and (7) of cl 7 of the LEP dealing respectively with results of partial and substantial demolition. Subject to these two legal constraints, the outcome is otherwise left to the exercise of discretionary planning judgment. This would appear to accord with the aims or objective expressed in cl 2(a) of the Heritage LEP, namely to "conserve heritage items by integrating heritage conservation into the planning and development control processes".

However it is to be noted that the overall aim is "to conserve" heritage items, and it is also to be noted that the aim or objective expressed in cl 2(c) of the Heritage LEP is "to conserve heritage items by ensuring that, in the future, development is undertaken in a manner that is sympathetic to and does not detract from the heritage significance of heritage items".

Accordingly it is reasonable to conclude, in my opinion, that the requirements of cl 7(3) and (4) to consider the impact or affectation of a proposed development upon the heritage significance of the heritage item in the present case is satisfied by the exercise of a planning discretionary judgment which promotes the express aims and objectives of the Heritage LEP of "conserving heritage items by ensuring that development is sympathetic to and does not detract from the heritage significance of the heritage item". In so concluding I recognise the need for the exercise of discretionary planning judgment to fulfil the obligations imposed by s90 of the EP&A Act and in this respect, recognise the possibility that even if the consideration of heritage impact yields the conclusion that the development proposal is not sympathetic to, or detracts from, the heritage significance of the heritage item, other relevant considerations may outweigh that conclusion, and thereby be reflected in the ultimate decision in the exercise of statutory discretion. However such a result involves the weighing of the relative importance of those competing considerations.

For the present I am concerned to make relevant findings on the heritage impact of the proposed development. In this respect the expert evidence adduced by the Council is almost overwhelming in its concerted opinion that in particular the high rise tower component of the proposed development is significantly unsympathetic to, and significantly detracts from, the heritage significance of Transport House.

An apt representation of this concerted opinion is to be found in the following extract from the joint submission of Messrs Tanner and Kelly made on behalf of the Heritage Council: " (a) Impact of the development on the significance of the heritage item In terms of the impact of the development on the significance of the heritage item, it is submitted that Transport House is an item of State significance for its architectural, aesthetic, historic and streetscape values, and retains a high degree of integrity and authenticity, as described earlier in this submission. The principal objective of heritage conservation is to ensure the significance of the item is retained. Thus, the proposed adaptive reuse of spaces within Transport House for various hotel functions is considered to be compatible with its significance and is supported and encouraged… However, the proposed addition of a multi-storey addition on top of Transport House raises the crucial question: is this an appropriate means of conserving a heritage item of State significance? It is Council's opinion that the intensification of building mass represented by the proposed additional development conflicts with the significance of Transport House in terms of its siting, mass, form, height, density, scale, design, and external appearance, and its relationship to the buildings within the area. This conflict would result in a loss of the prominent identity of Transport House which is derived from its form, materials, character, and relationship to its site and surrounding buildings in the heritage precinct. The proposed development would transform Transport House from being a significant heritage item in its own right to simply an historically interesting podium of a contemporary high-rise building. The Heritage Council submits that consideration of the adverse impact of the development on the significance of the heritage item would lead to the conclusion that the application should be refused."

To similar effect are the opinions of Mr Robertson on behalf of the National Trust of Australia, Heritage consultants Mr McDonald and Ms Hill, and Mr Romey, the Council's Heritage Planner. These opinions are supported by the 'in principle' position adopted by the Historic Houses Trust of NSW opposing high rise buildings being constructed over recognised heritage buildings. They are also supported by the concerns about the tower component of the development proposal expressed by the Royal Australia Institute of Architects (NSW Chapter).

I find these concerted opinions weighty, and highly persuasive.

The competing opinions advanced on behalf of the Applicant are those given by Mr Graham and Dr Kerr, the latter possessing considerable and impressive experience in heritage conservation and being the author of the widely acclaimed booklet "The Conservation Plan" to which I have earlier referred.

Mr Graham's relevant expert opinions are essentially to be found in the Conservation Plan and Heritage Impact Statement that he prepared on behalf of the Applicant to accompany the development application.

I have already referred to criticisms of those documents made by the Heritage Council and other experts retained by the Council. But in the present context I am concerned with Mr Graham's opinions that can be set against the competing opinions advanced in support of the Council's case concerning the impact of the tower component of the proposal on the heritage significance of Transport House.

In Section 5 of his Conservation Plan Mr Graham, in the course of describing the proposed development, states the following (which I take to be his justification of the tower): "By not building above the eastern half of Transport House, the characteristically low-scale of the Macquarie Street townscape is preserved. The vertical extension of the western half is in keeping with the scale of the existing development in Phillip Street and in keeping with Budden & Mackey's "skyscraper modern" design intent."

The other relevant amplifying comment is found in Section 6 of the Conservation Plan which enunciates the applicable conservation policies, including Policy 6 which states: "Any new development should be located above the western half of the building"

This Policy is supported by the following reasoning: "The stylistic "skyscraper modern" treatment of the Phillip Street facade lends itself to vertical extension, which can be either a continuation of the existing form (if the materials are the same) or be set back in line with the adjacent tower of the Inter-Continental Hotel. In either case the "skyscraper modern" expression of Transport House should be used to establish the character of the new work. Because of the finite form of the Macquarie Street facade and its proximity to the Botanic Gardens, any extension to the Macquarie Street half of the building should be subservient to the existing structure. This is likely to limit its height to a single storey. Architecturally, a well considered new development could be the same height and width as the existing Inter-Continental Hotel, however the resultant overshadowing of the Botanic Gardens dictates that the height be constrained so as not to have such an effect, at least until after lunch in mid winter."

In his separate statement of evidence (Exhibit 5) Mr Graham reaffirms these opinions. His opinion on the tower component of the proposed development is provided in his discussion of the 'height' of the proposal and its impact on the existing building as follows: "Because of the consistently low scale of the sandstone buildings along Macquarie Street, it is not appropriate to position a tower on the eastern portion of the site. The western portion is not so constrained and this is demonstrated by Budden & Mackey's choice of a skyscraper idiom for the buildings. At the time of construction its eight storey height dominated Phillip Street. The proposal to use Budden & Mackey's modernist Phillip Street building as a podium for a new tower is architecturally practical and financially sensible. It allows the public facilities to have an architectural expression independent from the bedroom accommodation and it restores the building to public life."

Dr Kerr endorsed Mr Graham's assessment of the heritage significance of Transport House although assessing its significance "in a national context" he would have it ranked on the second highest level (ie. level B) being places of "considerable significance" reserving to the highest level (ie. level A) "the few 'exceptional' buildings in Australia, such as the Sydney Opera House". However nothing turns on this difference as the evidence unanimously attests to the heritage significance of Transport House, which is listed on all national, state, city and institutional registers of heritage buildings.

However according to Dr Kerr, such an appraisal of Transport House "does not mean that change is inappropriate, rather that care should be taken to understand those attributes of the building and its context that make it significant, and to retain, reinforce (or minimise any adverse effect on) that significance in any development".

Dr Kerr regarded Mr Graham's assessment as "creat(ing) a hierarchy peculiar to the building that is of maximum use in making decisions on what to retain, what to adapt and what to remove".

Dr Kerr describes the tower component of the proposed development in the following terms: "The proposal as set out in the tower plans supplied is for a tower annexe to the Inter-Continental Hotel to be built above the Phillip Street wing of Transport House…. Transport House is a linked pair of buildings presenting differently presented exteriors to Macquarie Street and Phillip Street. The proposal is not for a tower rising through a gutted building with the original facade applied like a postage stamp to its face. Instead it is for a pair of buildings retained in the round with intact external form and detailing, and adapted internal configurations with most key spaces retained. In this it is a considerable advance on most of the developments erected behind and above retained city facades in the city over the last decade".

His relevant opinions in justification of the tower component may be summarised as follows: · The proposed development does not physically affect the existing Macquarie Street, Phillip Street and northern facades of Transport House. · The Council's objection that height and mass of the proposed tower would "overwhelm" Transport House and its neighbours thereby devaluing their character and significance, would be a valid objection if Transport House "was a freestanding heritage building in a low to medium rise precinct". But this is not the case since Transport House has towers to its south (Inter-Continental Hotel) its north (Quay Apartments) the north-west (AMP Building in Albert Street) and south-west (AMP building on Bridge Street). · What is important is how the tower relates to the eight storey Phillip Street facade and the northern facade - (i) the proposed tower relates to the existing facades below it and in the case of the Phillip Street facade of the tower, it represents 'a strong reinterpretation of the "heroic skyscraper modern" and (ii) the transition from "old to new work" is achieved by recesses and setbacks so as to allow the structures "above and below to retain separate (but related) identities".

Finally in his report in reply to the expert evidence adduced on behalf of the Council Dr Kerr stated that an evaluation of the present character of Phillip Street in the environs of Transport House involved a matter of perception - his perception being that the character was that "of towers punctuated by spaces and low buildings" whereas the Council's expert witnesses perceived it as "spaces and low buildings punctuated by towers".

It follows that the resolution of these two competing perceptions of the character of Phillip Street in the environs of Transport House is, according to Dr Kerr's opinion, potentially decisive of the competing opinions on the impact of the proposed tower development on the heritage significance of Transport House. This must be so, given Dr Kerr's express concession of the validity of the Council's objections that the tower would "overwhelm" Transport House and its neighbours, thereby devaluing their character and significance if Transport House were located in a low to medium rise precinct.

In my judgment Phillip Street in the environs of Transport House is not a precinct dominated by tower development. Indeed of the block bounded by Albert Street, Macquarie Street, Bridge Street and Phillip Street, the only tower building is the existing tower of the Inter-Continental Hotel, all other buildings in the precinct being low or medium rise heritage items listed in Schedule 1 of the Heritage LEP.

It is only as the precinct is extended to include developments on the western side of Phillip Street (which includes the two AMP tower buildings) that tower developments exert a pronounced physical and visual impact and influence.

Not only am I unable to accept the major premise for Dr Kerr's opinion (ie. that the character of Phillip Street precinct in the environs of Transport House is tower development punctuated by spaces and low buildings) but I am unable to accept his opinion that the character of development in the Phillip Street precinct provides an effective rebuttal of the Council's case that the tower component of the proposed development, by virtue of its height, scale and mass, adversely impacts upon the significance of Transport House, as a heritage item in its own right, quite apart from its setting (including its contribution to the Macquarie Street heritage streetscape.)

In my judgment the expert evidence adduced by the Applicant does not answer the Council's case that the proposed development, and in particular its tower component, significantly detracts from the heritage significance of Transport House.

Having regard to the totality of the evidence I decisively prefer the evidence adduced by the Council on this issue and find that the tower component of the proposed development significantly adversely impacts upon the heritage significance of Transport House, both in its own right and in its heritage setting (including its setting in the Macquarie Street heritage Streetscape).

Other adverse heritage impacts of the proposed development have been raised in the Council's case, but in my opinion that are not nearly so significant as the impact I have just discussed. Moreover they may extend to matters beyond the reach or scope of cl 7(3) and (4) of the Heritage LEP which is confined to the impact of the proposed development upon a heritage item or heritage streetscape. It is true that cl 7(3) refers to the "setting" of the heritage item and this reference may be sufficient to warrant consideration of the impact of the proposed tower on Transport House and its setting, which would include the adjoining heritage items being the former Police Station and Law Courts buildings. To the extent that cl 7(3) warrants consideration of the impact of the tower proposal on the adjoining heritage buildings to the north of Transport House I would find, preferring again the evidence adduced by the Council, that there would be an adverse impact on those heritage buildings, by virtue of the elimination of the present transition in scale between the low rise Justice and Police Museum buildings, through the mid-rise Transport House to the high-rise Inter-Continental Hotel and its replacement by the high-rise tower (set back only 3 metres from the northern boundary) which would visually overwhelm the low-rise heritage buildings. Contrariwise I do not find any significantly adverse impact on the Macquarie Street heritage streetscapes.

I should also mention one other matter concerning the proposed tower much discussed in the evidence, namely its impact on the significant interior sections of Transport House, especially the Registration Hall, by virtue of its necessary structural penetrations to provide foundations and support for the tower. This potentially adverse impact is far more problematic than the external adverse impact of the tower and I would prefer to not express a final opinion on this matter other than to say it is the one important demerit in the otherwise commendable proposal to refurbish and adaptively reuse the retained elements of Transport House.

In this respect I should acknowledge that the proposed development, but for the tower component, would in my judgment, result in the restoration of Transport House to its original glory in a suitable adaptive reuse for the purposes of the expanded hotel facility. This is a very positive beneficial impact on the heritage significance of the proposed development. However this undoubted beneficial impact is in my judgment far outweighed by the adverse impact caused by the tower component of the development proposal. Accordingly my overall finding on this matter is that the proposed development will have a significantly adverse impact on the heritage significance of Transport House (including in its setting).

E. Exercise of discretion Conferred by Section 90 of the Environmental Planning and Assessment Act 1979.

In view of these findings relevant to cl 7(3) and cl (4) of the Heritage LEP, and having regard to the express aims and objectives of that LEP, I am of the opinion that the planning discretionary judgment required in this case is to refuse development consent on the basis of those findings.

However the Applicant seeks to avoid such an ultimate result by reliance upon the following matters: (i) the fact that the Minister for Urban Affairs and Planning had declined to make an order pursuant to s130 of the Heritage Act 1977 in respect of Transport House, as had been recommended by he Heritage Council of NSW at its meeting held on 13 March 1997; (ii) the fact that Transport House had been sold into private ownership by the New South Wales Government in 1988 by public tender, in circumstances where prospective purchasers had been made aware of the views of the Department of Planning which recognised two development options, one of which was for a tower development over the Phillip Street sector of the site; (iii) the fact that the Council in the same meeting that refused development consent for the proposed development, approved a modified tower development on top of the group of heritage buildings comprising the Grace Brothers Mid City Store; and (iv) the fact that the proposed development would satisfy a need for the highest standard tourist and hotel accommodation in the City of Sydney and enable the Inter-Continental Hotel to expand and enhance its existing hotel facilities so as to maintain its status as a five star hotel.

Of course none of these matters disturbs or displaces my findings on the heritage impact of the Applicant's proposed development, and of the tower component in particular. However they are undoubtedly relevant matters in the exercise of the statutory discretion conferred by s90 of the EP&A Act and as I have earlier indicated it is legally possible for the outcome in this case to be the grant of development consent, as a matter of discretionary planning judgment, despite my findings in respect of heritage impact, if there are other considerations (either individually or collectively) that warrant preponderating weight in the exercise of discretion.

Accordingly it is necessary to examine each of the matters relied upon by the Applicant.

(i) The Minister's decision not to make an order under s130 of the Heritage Act 1977.

In his letter to the Lord Mayor communicating his decision not to make the recommended s130 Order, the Minister acknowledged the Heritage Council's concerns "to ensure the retention of the significance of Transport House and the heritage precinct." However the Minister went on to express the desire that "the issues of heritage conservation associated with this development proposal be effectively resolved through constructive dialogue between the Heritage Council, the property owner and the Council".

The Minister urged the Council "to work closely with the (Heritage) Council to ensure that development of the former Transport House does not adversely impact on the significance of the building and the heritage precinct".

In my opinion the Minister's decision in this case not to make the recommended s130 Order under the Heritage Act, does nothing to derogate from (i) the views of the Heritage Council submitted pursuant to cl 7(5) of the Heritage LEP; (ii) the expanded evidence and submissions made on behalf of the Heritage Council in these proceedings; or (iii) my findings that the proposed development significantly adversely impacts upon the heritage significance of Transport House.

(ii) The Government's sale of Transport House in 1988 into private ownership.

The documentary evidence establishes that in promoting the sale of Transport House the public tender documents expressly recognised that "considerable development potential exists as the building is not the subject of any formal conservation orders". However the public tender documents included a "conservation statement" which stated, inter alia, that the building was regarded as an item of heritage significance and that "any development or refurbishment proposal will have to have regard to those features of the building which are of heritage value". They also included the letter from the Department of Planning which recognised the option for redevelopment by a tower over the Phillip Street sector of the site by retaining the existing building as a podium. However the letter pointed out the obvious "major constraint" by the demand for views and lighting from the Inter-Continental Hotel suites.

As it eventuated the purchaser of Transport House was to be the owner of the Inter-Continental Hotel and it was to be nearly ten years before a redevelopment proposal for Transport House was promoted.

Notwithstanding this background to the sale into private interests of the erstwhile Government building, it occurred too long ago to exert a substantial influence on the outcome of the present appeal. The obvious and principal reason for taking this view is the coming into force in 1992 of the Heritage LEP. It of course is the initiative of the Council and the fact that it creates effective controls in the interests of conserving heritage items, without any dependency upon the State Government action, including action taken pursuant to the Heritage Act, means that there is simply no justification in law or otherwise to fetter those controls by reference to statements contained in the public tender documents when the State Government in 1988 sold Transport House into private ownership.

Moreover any economic disadvantage suffered by the current property owner in not being able to redevelop Transport House to its maximum or optimal development potential, by virtue of the operation of the Heritage LEP, may be reduced by resort to the provisions of the LEP (cl 45) which authorise in certain circumstances the award or allocation of heritage floor space. In her report to the Council on the Applicant's development application the Area Planning Manager estimated the value of "transferable floor space" from Transport House in the approximate sum of $7.2 million.

Moreover it must be remembered that the absence of high rise development on Transport House advantages the existing Inter-Continental Hotel suites which enjoy uninterrupted views to the north.

In my judgment the sale of Transport House in 1988 does not justify a departure from the exercise of planning discretionary judgment that is required by my findings concerning the heritage impact of the proposed tower development.

(iii) The Grace Bros. Building's tower redevelopment.

The Council's decision to grant development consent for the tower component of the Grace Bros mid city redevelopment was made in 1993. Accordingly it is not correct to assert that the Council approved that tower component at the very meeting that it refused the Applicant's development application. What occurred at the meeting was the grant of a modification to the 1993 development consent.

Accordingly there is no foundation in the Applicant's claim that the Council's concurrent decisions manifest a contrariety or lack of consistency. I have examined the documents that were tendered in respect of the Grace Bros. redevelopment. I do not find anything in those documents that supports a finding of inconsistent decision making by the Council in respect of development proposals for heritage buildings. In the case of the Grace Bros. redevelopment the expert heritage agencies supported the proposal. In the present case they are unanimous in their opposition.

Again there is nothing in this fact that advances the Applicant's case.

(iv) Other advantages of the proposed development (counterbalancing heritage disadvantages).

I have earlier held that the beneficial impact of the proposed restoration and adaptive reuse of the retained elements of Transport House is outweighed by the significant adverse heritage impact externally caused by the tower component.

Concerning the other benefits of the proposal, as I have earlier held, the Council did not seriously contest this part of the Applicant's case, which I accept, namely that the City of Sydney is advantaged by the provision of the highest standard hotel/tourist accommodation such as the existing Inter-Continental Hotel has significantly contributed to in the past 12 years of its existence. I also accept the perceived need by the Inter-Continental Hotel to enhance and expand its current facilities in order to maintain its 5 star rating.

Ultimately in exercising the statutory discretion conferred by s90 of the EP&A Act it is a question of judgment and weight in balancing the relevant (and at times competing) considerations. In the present case I attribute greater and hence prevailing weight, to the disadvantages in terms of adverse heritage impact of the development proposal, compared with its competing advantages including its significant contribution to top class hotel and tourist facilities in the City of Sydney and adaptive reuse of the restored retained elements of Transport House.

In so assigning the relative weights to the competing considerations I would see my judgment as according due deference to the provisions of the Heritage LEP, which for the reasons that I have earlier given, enjoy a degree of paramountcy over the provisions of the LEP, in the exercise of discretion planning judgment required by my relevant findings in this case, particularly in respect of issues of height and floor space of the proposed tower which are the very features that create the adverse heritage impact of the proposal.

For all the foregoing reasons I make the following orders: 1. Appeal be dismissed. 2. Development consent be refused. 3. Exhibits be returned. 4. No order as to costs.

I HEREBY CERTIFY THAT THIS AND THE PRECEDING 47 PAGES ARE A TRUE AND ACCURATE COPY OF THE REASONS FOR JUDGMENT HEREIN OF HIS HONOUR MR JUSTICE N R BIGNOLD.

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.