Antonakopoulus & Anor v Hurstville City Council

Background and proposal 7On 8 October 2008, council granted deferred commencement consent (08/DA-22) for alterations and additions to the existing building to provide one two storey townhouse, five single storey dwellings and garage parking (2008 consent). State Environmental Planning Policy No. 10 - Retention of Low Cost Rental Accommodation (SEPP 10) applied to the development. As part of the development assessment process, the Department of Planning gave its concurrence, subject to the imposition of conditions. The Department's assessment determined that the development would result in the loss of one of the six existing low rental units and would retain the other five units as low rental accommodation. 8The development application 12/DA-293 (original application) was lodged on 12 October 2012 and refused by council on 17 April 2013. The reasons for refusal were the application was not considered to be in character with the streetscape, did not provide sufficient landscaping and did not comply with the council's planning controls for rear setback and percentage of landscaped front area. 9The original application proposed the construction of an additional storey with mezzanine in the roof space above the existing units. The proposal would retain the 6 dwellings on the site with the ground floor providing two bedrooms within the existing footprint. Unit 1 also has a garage and a car space, which are accessed off Melvin Street. The new first floor would provide the kitchen, dining and living areas with terraces and a stairway providing access to a mezzanine area within the roof. A single storey addition at the rear of the building would provide attached garages for five cars accessed off the laneway. During the assessment of the application, the applicant confirmed that the proposal would retain low rental housing. 10At the commencement of the hearing, the applicant sought leave to amend the application. The main changes involve clarification of boundary setbacks and dimensions, change to roof form including the addition of a roof window to each of the mezzanines within what is now a gabled pitched roof (instead of the skillion roof originally proposed) and reconfiguration of the internal first floor layout of the front and rear dwellings to alter the location of the terraces to those units. The council did not oppose the amended plans subject to an order for costs under s 97B of the EPA Act. The applicant opposed the costs order on the basis that the changes are minor and mainly internal, no significant reassessment is required and they are responsive to the discussions of the experts. 11I granted the applicant leave to rely on amended plans (amended application) and consistent with the principles in Futurespace Pty Ltd v Ku-ring-gai Council [2009] NSWLEC 153, I accept council's submission that a costs order under s 97B of the EPA Act should be made. The amendments are not minor as they change the form, height and appearance of the building. Cumulatively, the overall effect changes the development in its context. While the amendments are responsive to the agreement of the experts, they required further assessment and additional changes were subsequently made. 12The hearing was conducted on the basis that the 2008 consent was operative. However, following the conclusion of the hearing the parties sought and were granted leave to reopen the hearing and call evidence on the basis that the 2008 consent had lapsed. 13The applicant proposed further amendments during the subsequent hearing, which delete the garage structures and provide at grade parking, landscaping and a continuation of the pedestrian footpath. The first floor terraces were reduced in width and provided with angled louvred privacy screens. The final version of the plans which incorporate the amendments was filed on 17 September 2013 and are the plans for which consent is now sought (the application).

Planning controls 14At the time the original application was lodged the site was within Zone No 2 (Residential Zone) under the provisions of Hurstville Local Environmental Plan 1994 (LEP 1994). Multiple dwellings and residential flat buildings are permissible with consent. The original application sought consent for "the conversion of six existing villa units into six two storey flats". The council report notes that the existing building is categorised as a residential flat building which is defined under LEP 1994 as: residential flat building means a building containing 2 or more dwellings, but does not include anything elsewhere defined in this clause except dwellings. 15The proposed development is referred to as a residential flat building but as the dwellings will have their own direct private access to a private open space area at natural ground level the council report notes that the proposed development will be for the purpose of "multiple dwellings" which is defined under LEP 1994 as: multiple dwellings means a building or buildings, consisting of 3 or more dwellings (whether or not attached), where each dwelling has an individual entrance and direct private access to private open space at natural ground level, and includes villas, town houses, terraces, cluster housing, and the like. 16Hurstville Local Environmental Plan 2012 (LEP 2012) commenced on 7 December 2012 and the site is zoned R3 Medium Density Residential under that plan. Multi dwelling housing and residential flat buildings are permissible with consent and have equivalent definitions to those in LEP 1994. 17Development Control Plan No. 1 Hurstville LGA (DCP) applies to the site. Section 4.3 provides specific controls for multiple dwellings and residential flat buildings and s 6.4 defines built form outcomes for land in Melvin Street South and part of Edgbaston Road. The controls for Block 3A include a 12m setback from the rear boundary to provide a deep soil landscaped area and design principles which seek to orient living and bedroom windows primarily to the rear gardens and to the street to achieve privacy outcomes. 18The parties agree that the existing building is a low rental residential building as defined under cl 47 of SEPP ARH. The parties disagree whether SEPP ARH applies to the development application for alterations and additions to the existing building, which is discussed later in this judgment.

The evidence 19The Court visited the site and heard evidence from objectors whose main concern was the privacy impacts of the proposal. The Edgbaston Road objectors considered that their rear private open space would be overlooked, particularly from the first floor terraces and that there would be aural privacy impacts from people using the property. The objectors were also concerned about loss of solar access, increased traffic and parking, the compatibility of the development with the character of the area and concerns regarding stormwater and drainage. 20The Court heard expert planning evidence from Mr A Ludvik, for the applicant, and Mr S McDonald, for the council. The experts held different opinions on a number of aspects in the amended application, principally the terraces and garages. However, the further changes in the application have generally resolved these concerns. 21Mr Ludvik stated that the retention of affordable housing and the footprint of the existing building preclude the provision of basement parking or a greater setback from the rear as required by the DCP. In his opinion, the DCP would require demolition of the existing building and despite the proposal not meeting the DCP requirements, it is consistent with the desired future character for the area. It improves the existing landscaping and parking on site and provides for the widening of the laneway and the continuation of the footpath. The orientation of the first floor terraces to the north will improve solar access and outlook of the units. Aural and visual privacy impacts to the rear yards of the Edgbaston Road properties are adequately addressed by the increased separation from the boundary (3.35m), landscaping and privacy screens. 22While Mr S McDonald maintains his opinion that the proposal is inconsistent with the form of development sought under the DCP, he acknowledges that the proposal is reasonable given that it retains the existing building and will continue to provide affordable housing. Further, he notes that the amenity for the future occupants would be greater than the amenity provided by the existing development and that there would be no unreasonable amenity impacts for the adjoining residents.

Submissions 23Mr Simington, for the council, acknowledged that the amendment in the application address and improve the proposal. Despite the agreement of the experts, he submits that there will be impacts from the proposal resulting from the intensification of the use and that the proposal is inconsistent with the desired future character sought by the DCP. 24Dr Berveling, for the applicant, submits that the DCP envisages a built form for residential flat buildings, which relies on demolition of the exiting building on the site. The proposal is for alterations and additions and will retain affordable housing. It is therefore appropriate that a flexible approach be applied to the DCP. Furthermore, he submits that the proposal is consistent with the desired future character sought by the DCP and does not result in unreasonable impacts. 25The key disagreement between the parties was whether a condition (condition 32(a)(ii) and 32(b)(b)) should be imposed which requires that units 2-6, which are to be used for affordable housing, should be managed by a registered affordable housing provider. The applicant accepts the other parts of this condition, which require that units 2-6 be used as affordable housing for ten years from the date of the occupation certificate. Condition 32 places these restrictions on the use of the land to ensure that the requirements of SEPP ARH are met. 26Council initially proposed a condition (Condition 22), which required the payment of contribution pursuant to s 94F(3) of the EPA Act to mitigate the impact of the loss of existing affordable housing. The parties agree that Condition 22 could be deleted on the basis that the units 2-6 of the proposal would be affordable housing. 27Dr Berveling acknowledges that Part 3 - Retention of Existing Affordable Rental Housing of SEPP ARH applies to the development application, as the existing building is a low rental residential building. He submits that the proposed development is "affordable housing" as per the definition in the EPA Act referred to in cl 6(1) of SEPP ARH. However, the development application was not made pursuant to SEPP ARH and that the divisions of Part 2 - New Affordable Rental Housing of SEPP ARH are not relevant to the development application. In Dr Berveling's submission, the application does not rely on the controls in Part 2 to gain consent, in particular, the application is not seeking the "FSR bonus" available under cl 13(2) of SEPP ARH. Consequently, the requirements of cl 17 of SEPP ARH are not relevant to the application. 28Dr Berveling submits that although cl 17 of SEPP ARH does not apply to the development, the applicant will accept a condition, which requires that units 2-6 be used as affordable housing for ten years. However, the applicant does not accept the requirement that a "registered community housing provider" manage these units. Dr Berveling referred to the Housing Act 2001 (Housing Act) and the Housing Regulation 2009 (Housing Regulation), which contain the requirements for the establishment and operation of a registered community housing provider. In Dr Berveling's submission the units can be managed as affordable housing by the owner. He proposed a condition, which would require copies of all rental agreements to be submitted to council within one month of such an agreement being entered into, as a mechanism to ensure that the units are rented at affordable housing levels. 29Mr Simington submits that Div 1 of Part 2 of the SEPP ARH applies to the development. The relevant question is not whether the DA was 'made pursuant to' the SEPP. The application is made under s 78A of the EPA Act and under s 79C(1)(a)(i), the consent authority must consider any environmental planning instrument that is relevant to the application. 30Mr Simington refers to the decision in Central Coast Care v Wyong Shire Council (2003) 124 LGERA 320 where Lloyd J held that a development application had not been made pursuant to the State Environmental Planning Policy No 5- Housing for Older People or People with a Disability (SEPP 5) and therefore it did not apply to the development. His Honour states (at [27]): The language thus employed in SEPP No 5 suggests that it is not intended to apply universally, that is, to all such development. The reference in cl 10 to "allowing" such development "despite the provisions of any other environmental planning instrument" suggests that SEPP No. 5 is not an exclusive code. The subsequent reference in cl 11 to "development allowed by this Part" is a reference back to cl 10, that is, to development allowed by Pt 2 despite the provisions of any other environmental planning instrument. The various references to "a development application made pursuant to this Part" suggest that development applications may be made for development of the kind described therein other than pursuant to Pt 2 of SEPP No 5. If it was the intention of the legislature that SEPP No 5 was to be an exclusive code for such development, then it seems to me that more appropriate language would have been used, such as "development to which this Part applies" as under in cl 13 of SEPP No 33 - Hazardous and Offensive Development, or "a development application to carry out development for the purpose of..." as used in cl 12 of SEPP No 33, for example. As Mr Officer QC points out, all other State environmental planning policies apply to development of a kind which (by definition) is caught by the instrument as opposed to development for which an application is made pursuant to the Policy. 31Mr Simington also refers to the decision in Amalgamated Holdings Ltd v North Sydney [2012] NSWLEC 138 where Biscoe J reached similar conclusions based on the language and construction in State Environmental Planning Policy (Housing for Seniors or People with a Disability) 2004 (Seniors SEPP) which enable an application to be made pursuant to SEPP 2004. 32Mr Simington submits that the wording of the instruments under consideration in Central Coast and Amalgamated Holdings is different to the wording in SEPP ARH. Clause 10 in Div 1 of Part 2 of SEPP ARH states that '[t]his Division applies to development for the purposes of dual occupancies, multi dwelling housing or residential flat buildings...'. Part 1 of Division 2 of SEPP ARH consistently refers to 'development to which this Division applies'. There is no reference to 'a development application made pursuant to this Part', as there was in the provisions considered in Central Coast and Amalgamated Holdings. 33Mr Simington submits that the proposal is for "infill affordable housing" to which Div 1 of Part 2 applies. Furthermore, the development relies on minimum standards in cl 14 in Div 1 of Part of SEPP ARH that cannot be used to refuse consent, including landscaping (cl 14(1)(c)(ii)), deep soil (cl 14(1)(d) and minimum parking requirements (cl 14(2)(a)(ii)). 34As Div 1 of Part 2 applies to the development application, Mr Simington submits that it is appropriate to impose the condition required by cl 17 in Div 1 of Part 2 that the proposed development be used as affordable housing for 10 years and be managed by a "registered community housing provider"

Findings 35Clause 6 of SEPP ARH provides: 6 Affordable housing Note. The Act defines affordable housing as follows: affordable housing means housing for very low income households, low income households or moderate income households, being such households as are prescribed by the regulations or as are provided for in an environmental planning instrument. (1) In this Policy, a household is taken to be a very low income household, low income household or moderate income household if the household: (a) has a gross income that is less than 120 per cent of the median household income for the time being for the Sydney Statistical Division (according to the Australian Bureau of Statistics) and pays no more than 30 per cent of that gross income in rent, or ..... 36The development application and statement of environmental effects do not refer to the proposed development being for affordable rental housing. However, subsequent correspondence from the applicant, the evidence and the submissions in these proceedings confirm that five of the six units are proposed to provide affordable housing that meets the definition in cl 6(1)(a) of SEPP ARH. The experts assessed the application on this basis and Mr McDonald gave significant concessions and flexibility to the provisions in the DCP on the basis that the proposal would retain and alter the existing building for affordable housing. 37The key disagreement between the parties is whether the provisions of Div 1 of Part 2 of SEPP ARH apply to the development so that the requirements of cl 17 must be imposed, or whether condition 32 in the form proposed by council should be imposed. 38Part 2 applies to new affordable housing. Division 1 of Part 2 applies to Infill affordable housing. Clause 10 of Div 1 of Part 2 provides: 10 Development to which Division applies (1) This Division applies to development for the purposes of dual occupancies, multi dwelling housing or residential flat buildings if: (a) the development concerned is permitted with consent under another environmental planning instrument, and (b) the development is on land that does not contain a heritage item that is identified in an environmental planning instrument, or an interim heritage order or on the State Heritage Register under the Heritage Act 1977. (2) Despite subclause (1), this Division does not apply to development on land in the Sydney region unless all or part of the development is within an accessible area. (3) Despite subclause (1), this Division does not apply to development on land that is not in the Sydney region unless all or part of the development is within 400 metres walking distance of land within Zone B2 Local Centre or Zone B4 Mixed Use, or within a land use zone that is equivalent to any of those zones. 39The development application meets these requirements. I accept Mr Simington's submission that SEPP ARH is a relevant environmental planning instrument to consider under s 79C(1)(a)(i) of the EPA Act in the determination of the development application. Div 1 of Part 2 applies to dual occupancies, multi dwelling housing and residential flat buildings and therefore applies to the development application. The development does not comply with the landscaping or minimum car parking requirements of the DCP and relies on the controls in cl 14 of SEPP ARH that cannot be used to refuse consent. 40As Div 1 of Part 2 applies to the development application the requirements of cl 17 of SEPP ARH must be met. Clause 17 provides: 17 Must be used for affordable housing for 10 years (1) A consent authority must not consent to development to which this Division applies unless conditions are imposed by the consent authority to the effect that: (a) for 10 years from the date of the issue of the occupation certificate: (i) the dwellings proposed to be used for the purposes of affordable housing will be used for the purposes of affordable housing, and (ii) all accommodation that is used for affordable housing will be managed by a registered community housing provider, and (b) a restriction will be registered, before the date of the issue of the occupation certificate, against the title of the property on which development is to be carried out, in accordance with section 88E of the Conveyancing Act 1919, that will ensure that the requirements of paragraph (a) are met. (2) Subclause (1) does not apply to development on land owned by the Land and Housing Corporation or to a development application made by, or on behalf of, a public authority. 41The applicant does not object to a condition being imposed that meets the requirements of cl 17(1)(a)(i) but objects to requirements in cl 17(1)(a)(ii) on the basis that Div 1 of Part 2 does not apply to the development. However, for the reasons stated above this condition must be imposed. 42Even if I am wrong in accepting Mr Simington's submissions that Div 1 of Part of SEPP ARH applies to the development, I find that it would be appropriate to impose Condition 32 and that such a condition would pass the "Newbury tests" (see Newbury District Council v the Secretary of State for the Environment (1981) AC 578) in that the condition firstly has a planning purpose; secondly, fairly and reasonably relate to a permitted development; and thirdly, is itself reasonable. 43The parties agree that the existing building is a residential flat building containing "low rental dwellings" and that Part 3 of SEPP ARH applies to the development application as it proposes to "alter or add to the structure or fabric of the inside or outside of the building" (cl 50(1)(b)). Consequently, the Guidelines for the Retention of Existing Affordable Rental Housing (Guidelines) and the matters in cl 50(2) of SEPP ARH must be taken into account. These include (a) whether there is likely to be a reduction in affordable housing on the land to which the application relates ...... (g) whether the imposition of a condition requiring the payment of a monetary contribution for the purposes of affordable housing would adequately mitigate the reduction of affordable housing resulting from the development, 44While the application retains the same number of units it involves comprehensive internal and external refurbishment of the building with the potential to enable significantly higher rents to be charged, which could result in the loss of the existing low income dwellings. However, this loss is to be offset by the provision of new affordable housing accommodation and consequently there is no need to require the payment of a monetary contribution. However, in accepting this, I need to be satisfied that the proposal will continue to be for affordable rental housing. 45The applicant estimates that the proposed rents for the new two bedroom units will be $340-$370 per week which is a level of rent that meets the requirement in cl 6(1)(a) of SEPP ARH. However, there is no evidence to support that this is market rent or that significantly higher rents would not be able to be achieved if the units were placed on the open market. Given the rental figures provided for the existing units ($280-$300 per week for 2 bedroom unit and $250-$270 per week for one bedroom unit), it would appear that higher rents for the significantly upgraded building could be achieved. 46Even if the units are rented at the amount indicated by the applicant, there is no mechanism to ensure that the households, which rent the units would meet the income thresholds for affordable housing in cl 6(1)(a). The alternate condition suggested by Dr Berveling does not achieve this outcome but merely demonstrates the rents to be charged, not the income level of the households, which would be difficult to accurately determine as part of a lease agreement. The Housing Act and its Regulations illustrate the complexity of determining those households that are eligible for affordable housing as well as the difficulty in managing affordable housing. It is therefore appropriate that the units be managed by a registered community housing provider to ensure that they are rented by households who are eligible for affordable housing. In the absence of such a condition, I would have no confidence that the development would not result in a loss of affordable rental housing, which must be taken into account under cl 50(2) of SEPP ARH. 47Furthermore, the experts placed considerable weight on the retention of affordable rental housing as justifying the variations in the DCP. Mr McDonald found on balance that the development was reasonable given that it retains an existing building which is used for affordable housing and it will continue to provide affordable housing. Further, he notes that the amenity for the future occupants would be greater than the amenity provided by the existing development and that there would be no unreasonable amenity impacts for the adjoining residents. While I accept this opinion, I would not reached the same conclusion if the building were not to provide affordable rental housing. 48The retention of the existing building, which is of little merit, places constraints on achieving the built form envisaged for the site under the DCP, in particular, the 12m setback from the rear boundary, the provision of basement parking and orientation of living areas and bedrooms to the street and rear open space to minimise privacy impacts. The retention and alterations and additions to the existing building is acceptable in the context of retaining existing affordable housing but would not be justified if a multiple unit development or a residential flat building were proposed that did not provide affordable housing. Based on the evidence of the experts, I accept that the built form of the development is not incompatible with the existing or desired future character of the area such that it would warrant refusal of the application.

Orders

1. The appeal is upheld.
2. The development application for alterations and additions to an existing residential flat building at 44 Melvin Street, Beverly Hills, with a new first floor and mezzanine in the roof space, associated parking and landscaping with five (units 2-6) of the six multiple dwellings to be used as affordable housing, is approved subject to the conditions in Annexure A.
3. The exhibits, except Exhibit 10, are returned.
4. Pursuant to s 97B of the applicant is to pay those costs of the council that are thrown away as a result of amending the development application on 6 August 2013, as agreed or assessed. Annelise Tuor Commissioner of the Court

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: 15 November 2013